PA Employers Facing Potential Sharp Rise in Workers’ Compensation Costs
Pennsylvania businesses are required to purchase insurance that covers the costs of medical benefits and wages for employees. The costs may rise after steady declines of 62% over the past two decades. The state’s falling benefits came under threat in June after a decision by the state’s Supreme Court.
photo/ Gerd Altmann
The Supreme Court has thrown out a portion of the current law that dictates how workplace injuries are assessed.
Previous workers’ compensation laws, passed in 1996, limited the amount of benefits an employee could receive under workers’ compensation. The law allowed for employees, suffering the most severe injuries, to undergo a medical assessment after two years out of the job.
The guidelines of the law allowed for benefits to be capped at 10 years if the assessment found the worker to be 50% less injured at the point of the assessment. Lifetime benefits were provided if the worker was found to be more than 50% injured at the time of the assessment.
The court’s decision will change the state’s workplace injury statistics over the past twenty years. Businesses and lawmakers are calling on the Supreme Court to clarify the new law. Benefit costs are expected to rise on November 1 as much as 6.06%. The rate hike is the state’s highest in over twenty years.
The court found that the American Medical Association’s rating evaluations, which all physicians were required to follow, was “illegal delegation.” The AMA’s guidelines for disabilities are used in 30 states in workers’ compensation laws.
Businesses and lawmakers fear that the rate hike will push insurance premiums up by double digits for employers.
Pennsylvania’s Compensation Rating Bureau submitted a proposed rate hike on August 15. The bureau, a private entity, influences insurance rates in the state. The proposed rates were submitted to the Pennsylvania Insurance Department pending approval.
Companies remain unsure of what level of impact the new guideline changes will have in the long-term. Severe injuries, those leading to long-term or lifelong disability, remain a small portion of workers’ compensation claims. Long-term disability claims are the most expensive for employers and risky for insurers.
The Supreme Court’s decision leaves it “open” for those injured in the past 20 years to re-file for workers’ compensation. The ramifications of allowing re-files could lead to thousands of workers receiving permanent lifetime benefits.
Lawmakers are under pressure from businesses to take immediate action to ease the burden for businesses. Lawmakers are proposing a bill in September that would legally allow AMA guidelines to be used by physicians in the state.
Author: Jacob Maslow
