WCRI: Increase in Temporary Disability Duration per Workers’ Compensation Claim in Minnesota a Key Driver of Indemnity Growth in 2020, May Reflect Early Impact of COVID-19 Pandemic
Cambridge, MA (WorkersCompensation.com) - Duration of temporary disability (TD) benefits per claim in Minnesota increased nearly one week in 2020 for non-COVID-19 claims. This was a key driver of the increase in indemnity benefits per workers' compensation claim in that year, according to a recent study published by the Workers Compensation Research Institute (WCRI).
Both claims with TD benefits and claims with permanent partial disability (PPD) benefits and/or lump-sum settlement payments in Minnesota had increases of about one week in the average duration of TD benefits in 2020.
“Like in most study states, Minnesota experienced an increase in TD duration in 2020 (9 percent in Minnesota, 3–11 percent across 15 states). In contrast, this measure remained fairly stable in all states from 2015 to 2019,” said Ramona Tanabe, executive vice president and general counsel of WCRI. “The economic slowdown during the pandemic may be a factor underlying this general pattern. For example, an increase in the unemployment rate may affect workers' ability to return to work, and therefore lead to longer duration of TD benefits.”
According to the report, Minnesota experienced a sharp increase in the unemployment rate in April and May 2020. Growth in TD duration in 2020 was observed in most industry groups in Minnesota. For instance, TD duration increased one week in high-risk services, a category that represents the biggest claim share and includes industry sectors with significant job loss in Minnesota during the early period of the pandemic, such as restaurants and hotels. TD duration also increased in trade, manufacturing, construction, and low-risk services in Minnesota.
The following are among the study's other findings:
In 2020/2021, total costs per claim in Minnesota increased 3.6 percent for non-COVID-19 claims with more than seven days of lost time, a result of a large increase in indemnity benefits per claim offsetting a decrease in medical payments per claim and stability in benefit delivery expenses per claim with expenses.
The average weekly wage of Minnesota workers with injuries increased less than 2 percent in 2020, a slower growth rate compared with the increase of 3.3 percent per year from 2015 to 2019.
Growth in lump-sum settlement frequency and payments per claim in Minnesota was another driver of the 18 percent increase in indemnity benefits per claim in 2020.
The 22nd edition of CompScope™ Benchmarks for Minnesota provides ongoing annual monitoring of how indemnity benefits, medical payments, and benefit delivery expenses per claim in the state's workers' compensation system change over time, and how these metrics compare with 17 other states. This edition analyzes non-COVID-19 workers' compensation claims with injury dates between 2015 and 2020 (evaluated as of March 31, 2021), so it provides a look at how the pandemic impacted non-COVID-19 workers' compensation claims in the early months of the pandemic.