Florida Saw Jump in Workers' Comp Cost per Claim in 2022-23, WCRI Report Shows

Call it the effects of wage creep during the pandemic, along with a little bit of creep in the duration of benefits.

Employers and insurers in Florida saw a 7% increase in total cost per workers’ compensation claim in 2022 and 2023, to just over $30,000 on average, due largely to higher wages and longer temporary disability benefits duration. That was the finding of an analysis by the Workers Compensation Research Institute, which compared COVID-19 pandemic-era costs in Florida and 16 other states.

“The large indemnity growth in 2022 was mainly driven by increases in the average preinjury weekly wage of workers with injuries and duration of temporary disability. In particular, wages in Florida grew 9.5 percent in 2022, faster than the increases in prior years,” notes the report, authored by WCRI researcher Rebecca Yang. Other study states saw similar cost increases.

The work echoed other studies that have found that as employers rebounded from the pandemic shutdowns, they were forced to pay higher wages to attract workers. That led to higher payrolls and higher weekly benefits for injured employees.

The trend was highlighted late last year when the Florida Division of Workers’ Compensation raised the 2024 maximum weekly indemnity benefit to reflect the big jump in average weekly wages. The average wage rose from $1,099 in 2021 to $1,260 in 2023 – a 15% increase. That much of an increase had not been since the high-inflation days of 1980, which saw a 20% spike in wages from two years earlier.

The reasons for a half-week increase in temporary disability benefits duration were also related to the economic realities of the pandemic. In many states, including Florida, TD duration increased in 2020, declined or remained stable in 2021, then increased again in 2022. High unemployment early in the COVID era may have kept some injured workers out of a job, leading to longer injury or benefits duration times, the WCRI report said.

Later, as employment rose nationwide, “the tight labor markets and the potential workforce shortages associated with this reality may have led to longer working hours and worse overall health among current employees.”

The study underscored what other analyses have found – that many employers were forced to hire less-experienced workers in 2022, which may have led to higher injury rates in some job classifications. Post-pandemic, employers have seen an increase in comorbidities for workers. Some employees may have had problems accessing medical care due to a shortage of health care professionals, the study said.

“These factors may have led to more severe injuries, prolonged recovery, and slower return to work,” the report noted.

The analysis found that duration of temporary disability in Florida increased in 2022 in most industry groups and across age groups with workers aged 35 and above at the time of injury. The report can be accessed here.

It’s too soon to know if the higher costs will put pressure on workers’ compensation rates in Florida. The state, like most others, has seen a steady drop in comp rates over the last two decades. Late last year, Florida regulators approved a 15% average decrease in rates.

WCRI also found that medical payments per claim have remained stable in recent years, in contrast to a 5% per-year increase in the years from 2017 to 2019. Part of the stability was due to a drop in the utilization of medical services at ambulatory surgery centers and other non-hospital providers, the report noted.

That cost stability could be positively impacted, at least to some degree, by new Florida limits on emergency room costs. Florida Gov. last week signed House Bill 989, which, among other changes, clarifies that emergency care, except those procedures subject to the maximum reimbursement allowance, must be set at 250% of Medicare’s rates, unless governed by a contract.

The “agency bill,” which addresses a wide range of issues identified by the Florida Department of Financial Services, also requires DFS to work with actuarial firms to develop maximum reimbursement allowances for emergency services.

Topics
Florida
Trends
Workers’ Compensation