According to a recent report from the National Academy of Social Insurance (NASI), U.S. workers may be seeing a decline in coverage and fewer benefits being paid out to injured workers for their injuries compared to previous years. Covid does play a part in these numbers, however, experts say that pre-pandemic data indicates already decreasing figures in terms of coverage and benefits. DOL officials singled out three trends from the report that have created particular concern for the future of workers’ compensation:
- Less workers covered by workers’ compensation
- States paying fewer total benefits to injured workers
- Some states are considering pathways to make workers’ compensation optional
Total Benefits Declined Significantly, Particularly Standardized Medical Benefits
Findings demonstrate that total benefits paid have decreased since 2016 from 62.7 billion to 58.9 billion; meanwhile employer costs have declined more than worker's benefits over the study period from 110.2 billion to 93 billion. Total benefits paid decreased 6.5 percent from 2016 to 2020, while standardized medical benefits fell by 24.8 percent in the same period. The significant fall in standardized medical benefits can be seen as troubling, with most workers’ compensation claims labeled as “medical only”, meaning no lost time to work. In all, more than half of U.S. states observed standardized benefit declines by at least 20 percent, with seven states witnessing their standardized benefits fall by more than a quarter. Hawaii is the only state to see an increase in benefit coverage over the study period.
Less Workers Covered Under Workers’ Compensation Could Be Attributed to Gig Economy
DOL personnel also observed that the number of workers covered under workers’ compensation fell noticeably in the study’s span, experiencing a reduction of 2.1 percent. Despite efforts to ensure more comprehensive coverage to industries across the economic spectrum, the fact remains that a significant number of workers remain without workers’ compensation insurance due to being in an independent contractor or because of misclassification. In Pennsylvania alone, 389,000 workers were misclassified by 49,000 employers per the state’s Department of Labor & Industry 2022 task force review. It is estimated that 10.6 million U.S. workers are currently classified as independent contractors, according to the Bureau of Labor Statistics. Some common occupations include rideshare drivers (i.e. Uber, Lyft, Doordash), technicians, and freelance workers. Independent contractor’s although maintaining flexibility and some autonomy, do forfeit important benefits such as workers’ compensation and unemployment.
Looking Ahead
While 2021 and 2022 data will likely present a clearer picture of the pandemic’s impact on workers’ compensation, lost coverage and declining benefits is a worrisome shift for the safety of US workers. Although the DOL is “cracking down” on misclassification, the effects of the gig economy have created confusion for employers and employees alike. For now, injured workers should seek clarity with employers regarding benefits and worker classification.
