New Study Confirms Age as Strongest Risk Factor Associated with Increased Workers’ Comp Costs Related to COVID-19 Claims

By Thomas A. Robinson, J.D., co-author, Larson’s Workers’ Compensation Law

A recent study—the report of which has been accepted for publication in the Journal of Occupational and Environmental Medicine (JOEM)—appears to confirm anecdotal evidence that an employee’s age at the time of COVID-19 infection is the major factor associated with prolonged impairment and high costs of COVID-19 workers’ compensation claims [see “Attributes of Long Duration COVID-19 Workers’ Compensation Claims from 36 US States,” by Edward J. Bernacki, M.D., M.P.H., et al., JOEM, DOI : 10.1097/JOM.0000000000002523]. The study, which examined more than 13,000 accepted workers’ compensation claims related to COVID-19 across a significant segment of the American workforce, had another important finding: while only 5 percent of study claimants lost more than 30 days of time from work, their claims accounted for 65 percent of total workers’ compensation costs for COVID-19 cases. Moreover, once paid days lost from work moved beyond the 30-day time period, medical costs—but not indemnity—increased 800 percent. As indicated above, advancing age at the time of infection was the strongest risk factor associated both with increased workers’ compensation costs and time lost from work.

Structure of the Study

The study looked at data between January 1, 2020, and November 30, 2021, related to 13,356 individuals submitting COVID-19 workers’ compensation claims that were accepted by AF Group—a prominent workers’ compensation carrier that provides coverage for many large and small employers in 36 states. An additional important factor in the data: a large proportion of AF Group’s insurance clients engage in the provision of healthcare services. Healthcare service employees are assumed to face higher risk of COVID-19 infection than those in the general public. Indeed, of the claims studied, approximately 81 percent were filed by persons working in the healthcare field.

Death claims—some 0.7 percent of all COVID-19 claims examined—were excluded because the researchers felt their inclusion would bias the evaluation of the characteristics associated with long duration COVID-19 claims. The researchers excluded a small number of additional claims because they lacked information as to the claimant’s birth year. The final study population included 13,153 claims—7,530 medical-only and 5,623 indemnity. At the end of the study, 99.3 percent of the medical-only claims had been closed, versus 88.1 percent of lost-time claims.

The researchers crafted several important definitions. For example, they defined a “closed claim” as one that was inactive, with no further action expected. A claim was deemed to remain open if it was in litigation or had been denied as being not work-related. Denied claims were considered open for 90 days and then closed if no litigation was received during that relevant period. Litigated claims were kept open indefinitely, until all claims-related issues were resolved.

Descriptive statistics were examined related to closure rate, lost time, and cost variables (medical paid, indemnity paid, and total paid). The claims were also categorized as to claim type, gender, age group, and industry groups. Logistic regression analyses were utilized to examine the risks of having 30 or more lost time days, 60 or more such days, and total workers’ compensation benefits paid exceeding $10,000.

Study’s Findings

The researchers offer a number of important findings. Among them are the following:

1. Of all claims (COVID-19 and non-COVID-19) submitted, males had a higher proportion of lost time indemnity claims than females (46.1 percent versus 33.7 percent). This is particularly interesting when one considers the fact that the healthcare industry employs significantly more women than men. 81 percent of all claims studied involved healthcare employees. Females were over represented in COVID-19 claims compared to non-COVID-19 claims (73.1 percent versus 47.9 percent).

2. 70 percent of the claims filed were related to employees younger than 50 years old.

3. 62.6 percent of the claims studied did not result in any lost time from work. 33.5 percent of the claims resulted in fewer than 30 days of lost time. Only 5 percent resulted in lost time exceeding 30 days.

4. For those claims that resulted in lost time of greater than 60 days, medical expenses were three times greater than payment for the lost wages.

5. Two percent of claims in the category of workers with 60 or more lost days of work accounted for 53 percent of all costs. Those with no lost time—as noted above, more than 60 percent of the employees—accounted for less than 10 percent of all claims payments.

6. Advancing age was associated with a significantly increased probability of lost time exceeding 60 days. The employee’s industry category and gender were not, however, found to be associated with prolonged absence from work. This last point is interesting since, as noted above, men generally experienced a higher proportion of lost time indemnity claims than women. Many of the lost-time claims for men were of short duration.

7. For all lost time categories except 60 days or greater, the researchers noted that average indemnity payments were approximately the same as payments for the employee’s medical care. The researchers noted that this was consistent with what is usually seen in typical non-COVID-19 injuries. But, as noted above, once the employee remained out of work for 60 days or more, his or her medical costs exceeded lost time expenses by 300 percent.

8. 32 percent of workers’ compensation claims with 60 or more days of lost time were not closed at the end of the study, indicating that the costs of those claims would continue to increase.

Study Limitations

The researchers allowed that the power of the study—and the report—was strengthened by the professional experience of the research team, the team’s objective testing documentation, and a consistent leadership group that assessed each submitted workers’ compensation claim. The researchers acknowledged potential limitations, however, including the following:

1. The investigation evaluated COVID-19 workers’ compensation claims for only one insurance carrier, covering employees in 36 states, not the entire workers’ compensation risk pool from those states. The carrier studied underrepresents employment in some industries that have been heavily impacted by COVID-19, e.g., first responders.

2. Approximately 35% of the insured population studied by the researchers were employed in the healthcare and related industries. The researchers acknowledged, however, that in the United States, approximately only 11 percent of the working population is employed in healthcare.

3. The healthcare industry is associated with a higher percentage of female employment. In as much as this study reviewed claims data from an insurance carrier that is heavily involved in the healthcare industry, these findings may not be fully representative.

Commentary

As the study’s researchers reported, at the end of calendar year 2020, private carriers and state funds, representing some 56 million people, reported more than 80,000 pandemic-related COVID-19 workers’ compensation claims to the National Council on Compensation Insurance (NCCI). The estimated average incurred cost per COVID-19 claim was approximately $7,800. According to NCCI, COVID-19 claims accounted for about 11 percent of all workers’ compensation claims filed in 2020, but the incurred cost of those claims was estimated to be only about 3.5 percent of the total incurred costs. Based on that data, NCCI concluded that COVID-19 claims were generally low-cost, short duration claims and, generally speaking, the COVID-19 claim severity was lower than non-COVID-19 workers’ compensation claims.

This study confirms what many medical practitioners have been saying since the initial outbreak of COVID-19 in the United States: that while the effects of the disease are relatively benign for young, generally healthy individuals, nevertheless, as the patient’s age increases, particularly when coupled with one or more co-morbidities, such as obesity or diabetes, the recovery rate is significantly less positive and the cost of any workers’ compensation claim connected to the disease is significantly greater. This study provides important empirical evidence that indeed age is the most important factor in predicting the severity of COVID-19 among American workers. The study would tend to support the notion that the older an industry’s (or individual employer’s) work force, the higher the cost of compensable workers’ compensation claims related to COVID-19.

It is important to remember that this study does not examine the issue of compensability. As the researchers point out, most COVID-19 claims filed by healthcare workers are not contested. Nurses, physicians, and others in the healthcare industry are understood to face a higher risk of infection from COVID-19 than the general public and their claims are usually accepted.

That will likely not be the case in non-healthcare industries, particularly in the majority of states that have not enacted presumptions of compensability for broad swaths of employees within the jurisdiction. Where a significant percentage of COVID-19 workers’ compensation claims are denied and/or contested, the final cost of pandemic claims will be much more difficult to assess.

To my mind, that point does not diminish the importance of this study, however. Particularly since COVID-19, or one or more of its variants, appears likely to be with us for some extended period of time, employers, employees, and insurers may find it advisable to adopt programs that mitigate against the contraction of the disease by older employees, particularly those with co-morbid conditions.

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