Cost and Coverage Differences For California’s Workers’ Compensation Benefits:A Comparison of Benefits and Qualification Criteria For California And Selected

States

Presented At:The Western Risk & Insurance Association Meeting

January 2002San Diego

by Patricia Cheshier, Ph.D.California State University, Sacramento

2

Statement: “California’s workers’ compensation benefits rank below the national average in dollar terms but among the highest in premiums” Ellis (2001) Roberts (2001) (Fletcher (2001)

Why: “More extensive breadth of benefits, higher administration costs, more litigation in system, higher claims costs per covered employee” Safety & Health (2001) Ellis (2001) NCCI (2001) WCRI (2000) Holloway (2001)

3

Sources of Data:

Workers Compensation State Laws -Tables of Benefits. U.S. Department of Labor, Employment Standards Administration, Office of Workers’ Compensation (2001)

2001 Analysis of State Workers’ Compensation Benefits U.S. Chamber of Commerce (2001)

2001 State Codes and Regulations

NAIC

WCRI Benchmarks Workers Compensation Research Institute (2000)

National Council on Compensation Insurance

STATE CA CT FL GA MA PA TX WI

AverageMedical CostPer Claim

$5390 $4372 $5779 $6180 $2999 $5277 $7650 $5200

Average # ofVisits Per Claim

Average CostPer Visit PerClaim

28.5

$195

16.5

$277

19.5

$282

17.2

$327

17.5

$179

20.4

$248

28.4

$266

14.7

$343

Average # ofServices PerVisit

Average Payment PerService

3.3

$59

2.8

$99

3.1

$91

3.3

$99

N/C 3.4

$73

3.6

$74

2.7

$127

Table 1. Medical Claim Costs & Utilization -1998

WCRI Benchmarks (2000)

STATE CA FL IL MI NY OR TX

MEDICAL BENEFITS- Amt. Pd.

No Time/MoneyLimits

$10 Co-Pay After Max.Improvement

No Time/ MoneyLimits

No Time/Money Limits

No Time/ Money Limits

No Time/ Money Limits

No Time/MoneyLimits

PERMANENT/TEMPORARYTOTALDISABILITY Amt. Pd.

66.7%

(66.7%SAWW)

Max =$490/Wk.

66.7%

(100% OFSAWW)

Max =$571/Wk.

66.7%

(133% OFSAWW)

Max =$956/Wk.

80% ofSpendableEarnings(90% OFSAWW)

Max.=$644/Wk.

66.7%

Max =$400/Wk.

66.7%

(100% OFSAWW)

Max =$629/Wk.

75%

(100% OFSAWW)

Max =$533/Wk.

PHYSICALREHAB.

VOCATIONALREHAB.

No StatedLimit

$16,000 & 52 WksTDD Max.

Same AsMedicalBenefits$5000 Max.Drug Rehab.

52 Wks.

No StatedLimit

No StatedLimit

No StatedLimit

104 Wks.

Same AsMedicalBenefits

No StatedLimit

No StatedLimit

TTD Max.21 Mos.

No StatedLimit

No StatedLimit

Table 2. Differences In Amounts Paid For Benefits

STATE CA FL IL MI NY OR TX

DEATH BENEFITS

$5000 $5000 $4200 $6000 Fee Schedule

10 Times The SAWW

$6000

Table 2. (cont). Differences In Amounts Paid For Benefits

Differences In State Statutes That May Affect Qualifying For

Workers’ Compensation Benefits

STATE CA FL IL MI NY OR TX

TYPE OF LAW 1 Compulsory/ InsuranceRequired

Same Same Same Same Same Same

EXEMPTIONS: 2

BY NUMBER OF EMPLOYEES:

BY TYPE OF EMPLOYMENT: AGRICULTURAL

DOMESTIC SERVICE

No

No Exemptions

< 52 hrs.in Preceding 90 days or< $100.

< 4Employees

Yes, If<5 Regularor < 12SeasonalEmployees

Yes, Excluded

No

Yes, If<400AggregateMan-daysPer Quarter

Yes, Excluded

< 3 Employees

Yes, If <3EmployeesPer 13Weeks

Yes, If <35Hrs/Wk. For13 Wks.

No

Yes, If< $500Paid inPrev.Yr

Yes, If< 40Hrs/wk

No

NoExemp-tions

Yes, CertainCircum-Stances

No

Yes, EmployeesOf Inde-pendentContractors

Yes, Excluded

1. 2001 Analysis of Workers Compensation Laws. U.S. Chamber of Commerce, Statistics & Research Center.2. State Workers’ Compensation Laws - Tables. Department of Labor, Office of Workers’ Compensation Programs.

Table 3. Differences In Coverage Requirements & Employments Excluded

STATE CA FL IL MI NY OR TX

WAITINGPERIODS

3 Days-For TTD-Retroactive After14 Days

7 Days-RetroactiveAfter 20 Days

3 Days-TTD-Retroactive After 13 Days

7 Days-Retroactive After 2 Wks.(Immediate if Death

7 Days-Retroactive After 14 Days

3 Days-TTD-RetroactiveAfter 14 Days (Immediate if Inpatient)

7 Days-Retroactive After 4 Wks.

Table 4. Differences In Waiting Periods For Benefits

STATE CA FL IL MI NY OR TX

PERMANENTDISABILITY

AMOUNTSPAID

66.7%

Max =$490/Wk.

(66.7% ofSAWW)(UI Offset)

Max.Period =Life

66.7%

Max =$571/Wk.

(100% ofSAWW)(S.S. & UIOffsets)

Max.Period =DisabilityDuration

66.7%

Max =$956/Wk.

(133.3% ofSAWW)

Max.Period =Life

80% ofSpendableEarnings

Max.=$644/Wk.

(90% ofSAWW)(UI Offset)

Max.Period =DisabilityDuration

66.7%

Max =$400/Wk.

(SAWWN/A)

Max.Period =DisabilityDuration

66.7%

Max =$629/Wk.

(100% ofSAWW)(S.S.Offset)

Max.Period =DisabilityDuration

75%

Max =$533/Wk.

(100% ofSAWW)

Max.Period =Life or401 Wks.For Some

Table 5. Permanent Disability Benefit Differences

Source: State Workers’ Compensation Laws. U.S. Dept. of Labor, Employment Standards Administration, Office of Workers’ Compensation Programs, Division of Federal Employees’ Compensation.

STATE CA FL IL MI NY OR TX

MEDICAL BENEFITS- Amt. Pd.

No Time/$Limits

$10 Co-Pay Possible

No Time/$ Limits

No Time/$Limits

No Time/$Limits

No Time/$ Limits

No Time/$ Limits

PHYSICIAN SELECTION

Employer –Initial Selection(Free ChoiceAfter TimePeriod)

EmployerSelection

EmployeeChoice

Employer –Initial Selection(Free ChoiceAfter TimePeriod)

EmployeeChoice FromState AgencyApprovedList

EmployeeChoice

EmployeeChoice From W.C. Committee List

TYPES OF PROVIDERSCOVERED

Physicians, Psychologists, Acupuncturists Optometrists, Dentists, Podiatrists, Chiropractors, Nurses,PhysicalTherapists,MFC’s, CSW’s

Table 6. Medical Benefits: Differences In Providers Covered & Choices Allowed

STATE CA FL OR

OCCUPATIONAL INJURYDEFINITION

“injury …arising outof & in… course ofemployment…

“proximately caused by… employment”

“psychiatric injury… compensable… ifnot due totermination…within… 6 monthsof hiring”

“personal injury…fromaccident arising out of andin the course of employment”

“major contributing cause”

“accident … unexpectedor unusual event … thathappens suddenly”

“not “mental or nervousinjury due to stress,fright, or excitementonly… aggravation of avenereal disease… or dueto habitual use of alcoholor controlled substancesor… due to fear or dislikefor an individual becauseof race, color, ….”

“bodily injury… arisingout of & in the courseof employment

“major contributingcause”

“mental injury… ifnot due to … stress”

Table 7. Differences In Definitions In Statute

STATE CA FL OR

PERMANENTDISABILITY DEFINITION

“in determining percentages, account taken of “nature of injury … occupation … age of employee” in considering the “diminished ability of such injured employee to compete in an open laborMarket”

“anatomic or functional…loss…as a percentage of the body as a whole”

“percentage of body as a whole”

Table 7 cont. Differences In Definitions In Statute

STATE CA FL IL MI NY OR TX

VOCATIONALREHAB.

PHYSICALREHAB.

MandatoryPaymentsUsuallyCapped at$16,000

Max.Duration=52 Wks.

UnderMedicalBenefits

Max.Pd.=Costs

Max. Duration=104 Wks.

Max. =NoneStated

UnderMedicalBenefits

Max. =By Disability

Max.=NoneStated

Table 8. Rehabilitation Benefit Differences

STATE CA FL IL MI NY OR TX

Amt. DeterminedOnIndividualCase Basis

May BeAdded ToAward

Amt.DeterminedBy Agency

20% first$5,000;15% next$5,00010% forBalance

May BeAdded ToAward

Amt.DeterminedBy Agency

20%

May BeAdded ToAward

Amt.DeterminedBy Agency

30% RuleTimedPayments

May BeAdded ToAward

Amt.DeterminedBy Agency

Amt. DeterminedOnIndividualCase Basis

May BeAdded ToAward

Amt.DeterminedBy Agency

25% toMax. of $2,500

May BeAdded ToAward

Amt.DeterminedBy Agency

25%

May BeAdded ToAward

Amt.DeterminedBy Agency

Table 9. Differences In Allowances For Attorneys’ Fees

Table 10. Summary

GREATER COVERAGE IN CALIFORNIA

LESS COVERAGE IN CALIFORNIA

Number of Employees and Occupations Covered

Dollar Amount of Wage Loss Provided

Types of Medical Providers Covered

Choice of Medical Provider

Definition of Disability

Attorney Payments

Percent of Occupational Contribution To Injury

Psychiatric Injury Coverage