Key Cost Drivers in Lost-Time Workers' Compensation Claims


According to NCCI, workers’ compensation benefits cost U.S employers billions of dollars annually. Seven states account for 50% of all workers’ compensation spend in the United States – California, New York, New Jersey, Oklahoma, Illinois, Connecticut, and Alaska.

The average cost of a lost-time workers’ compensation claim has increased every year for decades and now approaches $55,000 for a SINGLE lost-time claim! Medical costs associated with a single lost-time workers’ compensation claim now approach 55% of the total spend in contrast with only 48% of the total in 1998.

Key factors contributing toward the increase in medical and indemnity costs of workers’ compensation claims include 1) the aging workforce and the associated comorbidities (e.g., diabetes, hypertension, obesity), and 2) the perceived contribution of psychosocial factors (e.g., chemical dependency, distance from work, job dissatisfaction).

Studies continue to show that claims involving older workers cost more and have a longer length of disability on average than claims from their younger counterparts. The presence of even a single comorbid condition, such as obesity, has a multiplying effect on claim costs. Obesity has been shown to be one of the greatest claim cost drivers associated with workers’ compensation. Because of this rise in cost, proactive employers have been working to mitigate costs and educate employees before they become injured by deploying health and wellness programs, fit for duty testing, and pre-employment screening.

PMA’s team of experts is equipped to help you prepare, prevent, and minimize the impact of workers’ compensation claims that may arise as a result of these increasing trends. We apply an integrated holistic strategy – collaborating with our clients to assess their specific needs and to optimize costs and provide the highest quality service for their employees.

PMA can help your organization with claims prevention and management.  

Michael MacAulay, Senior Vice President, PMA Management Corp.

Mike is the Senior Vice President of Sales for PMA Management Corp., part of PMA Companies' TPA Operations.