01 Feb 2017’s Biggest Workers’ Compensation Trends (Part One)
Election and Workers’ Compensation
In 2017, one of the biggest issues was the impact of the election. Under the Obama Administration, the Department of Labor was adamant that reform needed to happen at the federal level. However, the Trump Administration recommended to the Secretary of Labor that the federal government needs to put a pause on getting involved with any state’s workers’ compensation issues. A major thorn in this approach is the gray area between compensation and social security disability.
Rates and Premiums of Workers’ Compensation
Rates and premiums were a big topic last year. Usually, workers’ compensation cycles are driven by shifts in competition. In the past two decades, rates have regularly increased every year while premiums jump up and down. It varies state to state, and some places like California and New York have higher rates.
Long-tail exposure in Workers’ Compensation
Long-tail exposures continue to be a challenge for employers. “Long-tail” refers to premiums that are collected today and have to cover losses for coming years. The long-term of the long-tails means it can have a big impact on employers and carriers alike. Advances in medical science is a major driver to claims-tail costs. With better medicine, we’re living longer and our medical benefits will naturally go up. Generally, new drugs also cost more than what they’ve replaced. These long-tail impacts are tough to predict.
Workers’ Compensation Treatment Guidelines
The treatment guidelines and return-to-work guidelines are critical for workers’ compensation stakeholders. Guidelines are put in place so that claims adjusters can be more efficient, but it can also get messy. With one of a kind formulas and guides, there’s no central consensus for physicians, suppliers, payers, and regulators.
Temporary Total Disability
Last year also marked a struggle with constitutional challenges. In 2016, workers’ compensation statutes were deemed unconstitutional in five states by the Supreme Court. The major issues were caps on temporary total disability benefits, caps for attorney fees, using the correct edition of the AMA guidelines, time limits for trauma claims filing, and exclusion of coverage for specific types of farm workers. Unconstitutional statutes require the law to be re-addressed from when it was enacted. This can drastically change the laws for existing claims.