Inflation impacts virtually all aspects of the economy, including some you might not expect. For instance, the insurance industry has been affected by the inflation of the past few years, with an especially hard impact on workers’ compensation claims. Various inflation-related factors have affected the workers’ compensation system, such as higher medical costs and workers’ comp insurance premiums for employers.
If you have recently suffered a work-related injury, you may be wondering how inflation could affect your claim. You can learn more by contacting experienced Albany workers’ compensation lawyer Paul Giannetti at (866) 868-2960.
How Medical Costs Are Affecting Workers’ Compensation
According to a recent report by the nonprofit National Council on Compensation Insurance (NCCI), which collects data on workers’ compensation, medical inflation in workers’ comp has been relatively moderate over the past decade. However, the recent inflation in consumer prices has prompted concerns that the workers’ compensation system could also be affected by rising medical costs.
Medical costs have risen in recent years due to numerous factors, but mainly due to rule changes regarding reimbursement from the Centers for Medicare and Medicaid Services (CMS). The cost of physician care has also risen approximately 3.5 percent between December 2020 and July 2021 and the cost of hospital outpatient care has increased by 4.5 percent. According to the Bureau of Labor Statistics, medical prices grew by 2.3 percent in February 2023 compared to the previous year, while overall prices increased by 6 percent.
Although medical inflation may be at a lower rate than the rest of the economy, the cost of medical care is still rising and leading to more expensive workers’ compensation claims. According to the NCCI, medical costs per workers’ comp claim rose by almost 18% between 2012 and 2021.
The Impact of Wage Inflation on Workers’ Comp
During the early days of the COVID-19 pandemic, job losses affected low-wage workers the most. But as the economy eventually began to recover, there was a labor supply shortage, which led to employers increasing wages to bring back workers.
This led to wages growing the fastest for these low-wage jobs. Wages grew by 15 percent in the leisure and hospitality sector, 10 percent in transportation and warehousing, and 9 percent in health care and social assistance.
However, wage inflation has had a relatively moderate impact on workers’ compensation, compared to its effects in other areas of the economy. According to a study by the NCCI, higher wages result in higher payrolls, higher benefits, and higher workers’ comp premiums, but without higher rates. Payroll is thus a solid exposure base, as it is inflation-sensitive and helps maintain a balance between premiums and benefits.
Workers’ comp benefits are also inflation-sensitive. Most indemnity benefits are paid as two-thirds of the injured employee’s pre-injury weekly wage. These benefits are subject to weekly minimums and maximums, which are indexed for wage inflation in New York and most other states.
Does New York Have Cost of Living Adjustments For Workers’ Comp?
Some states offer cost of living adjustments for workers’ comp payments, but unfortunately, New York is not one of these states. The weekly rate of your workers’ comp payments stays the same as the day you began receiving these payments.
These payments are determined by the Workers’ Compensation Board’s maximum weekly benefit schedule, which is updated each year. So, for example, if you were injured in 2015, your maximum weekly payment would have been $808.65. If it was a long-term injury and you are still on workers’ comp, these payments would remain the same even though the cost of living has risen significantly since then.
How Can Inflation Affect a Workers’ Comp Claim?
Higher workers’ compensation premiums can potentially affect the process of filing a workers’ compensation claim. The claims process was already complex even before the pandemic, as insurers have a profit incentive to find ways to reject or limit claims. With higher premiums, insurers have even more of an incentive to award workers’ comp benefits to injured workers, especially if there is any doubt as to whether the injury was work-related.
Learn More From Our Albany Workers’ Comp Lawyers
If you were recently injured at work and are having trouble navigating the workers’ compensation claims process, Albany work injury lawyer Paul Giannetti is here to help. Our firm can evaluate your case and guide you through the claims process, fighting for the full financial compensation you deserve for your injuries. Contact us today to learn more in a free consultation.