New study suggests that a state’s workers’ compensation benefits often show little connection to the state’s overall comp costs
2007 reforms increased NYS rates significantly, but rates alone don’t explain high employer costs
New York State increased its maximum workers’ compensation benefits significantly in 2007, but the perception that higher benefits explain New York’s high overall comp costs is inaccurate, a new analysis of states’ workers’ comp benefit levels shows.
“There does not appear to be any direct correlation between high benefit levels and high compensation costs,” says the study, New York’s workers’ comp: high benefits, higher costs, by the Workers’ Compensation Policy Institute. The Institute is the research affiliate of the Public Employer Risk Management Association (PERMA).
Prior to the reforms, employers and taxpayers in New York were paying the 10th highest premiums as a percentage of payrolls in the country. Despite these high costs, injured employees received one of the lowest maximum benefits in the country: $400 per week.
Since 2007, benefits have risen from $400 to $803.21 per week. Comparative costs have also risen from 10th highest to 5th highest in the nation.
“In enacting the 2007 reforms, policymakers voiced the hope and belief that their approach – increasing benefits while enacting reforms to trim costs – would both raise benefits and lower costs,” the report said. “They were only half right.”
The 2007 reforms accomplished their goal of making benefit levels in New York comparable to most other states. However, New York still does not have particularly high benefit levels – which means they are not sufficient to explain why New York’s premiums are the nation’s 5th highest, the report shows.
The Institute’s study compares maximum benefit levels across the states. Mississippi has the lowest maximum benefit, $449.12, and Iowa has the highest at $1,543. While there is an enormous gulf between Mississippi and Iowa, a majority of jurisdictions, New York included, have established their maximum benefits in a relatively tight band ranging from just over $750 to just under $1,000 per week, the study notes.
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Paul Jahn is the executive director for the Workers’ Compensation Policy Institute and has nearly 30 years of experience in the workers’ compensation field.
The Workers’ Compensation Policy Institute is a think tank that examines how the workers’ comp system influences local taxes and services. The Institute focuses on nonpartisan policy research, issues and ideas pertaining to workers’ compensation policy in New York State, especially on how these policy issues affect public entities and New York’s taxpayers. The Institute conducts surveys, analyzes data, evaluates workers’ compensation issues, and “thinks outside of the box” to develop insights to share with municipal leaders, policy makers, journalists, and other opinion leaders. The Institute seeks to establish itself as the foremost expert in New York State on public entity workers’ compensation.
The Institute is a nonprofit organization, governed by a Board of Directors comprised of New York State municipal leaders, and counseled by an Advisory Board which includes workers’ comp and municipal experts both within New York State and in the national arena. The Institute is a research affiliate of PERMA.
2013 Workers Compensation Policy Institute