While healthcare has been a hot topic in the media the last few years, it’s a topic that’s an everyday necessity for high-risk industries. Workers’ compensation claims are rarely simple to resolve. The same can be said for the costs. While the main cost of these claims is workers’ compensation insurance, you must also account for indirect costs. The most recent data from the Social Security Administration indicates that medical benefits in 2014 amounted to $31.4 billion and wage loss compensation came to $30.9 billion*.

Although the frequency of claims has steadily declined, especially that of lost-time claims, the average cost for a lost-time claim is actually increasing. The cost of medical care has also increased recently. Advances in technology, increasing treatment costs and expensive medications can cause these numbers to further balloon. While medical costs once accounted for 30 percent of overall claim cost, that figure is now closer to 60 percent.

Indirect costs include hidden items such as downtime because of a worker’s injury and even overtime because other employees now must cover the absent worker’s hours. These incurred costs add up quickly. OSHA fines and legal fees may also be part of a claim.

Other indirect costs may include:

  • Cleaning and repair for equipment damaged in an accident
  • Wages to the injured worker for absences not covered under their claim
  • Lost productivity due to rescheduling job or employee’s timeline
  • Hiring and training a replacement worker
  • Administrative time accrued by other employees who must handle facets of the claim
  • Accommodation of the injured worker

However, workers who have a good relationship with their employer are less likely to have an extensive claim or to make subsequent ones. The loss of goodwill with one employee can affect the morale of the whole team.

The true cost of medical bills can be higher than just dollars. Not everything associated with a claim will always be covered under workers’ compensation insurance. These hidden expenses could even surpass the covered portion. Therefore it is important to be diligent with claim reduction and to have good practices and good people in place.

Reference: https://www.ssa.gov/policy/docs/statcomps/supplement/2016/workerscomp.html