I am not often asked, “Who pays for workers’ compensation?” because most people think they already know the answer. Most people think employers pay the full cost of work-related injury, illness and disease through premiums paid to a workers’ compensation insurer. The true costs, however, are borne much more widely.
Workers pay the biggest price. The loss of health, function, range of movement and even life itself is a huge cost that must be figured into the equation. Families, friends, dependents, community members, and neighbours also bear the costs in terms of tangible losses in their lives. In some provinces and states, workers also have to bear the first few days (for example, two-fifths of a week in Nova Scotia, three days in Washington State) as a waiting period.
In some jurisdictions the costs are also borne in part by the state. For some cases, the appeal structures, prevention programs, rate approval authorities, insurance commissioners, advocacy and ombudsman offices are often paid out of general revenues of the state or province. Certain states fund these, in whole or in part, by direct assessments over and above the premiums charged to employers.
In Oregon, for example, a charge of $0.028 (just under three cents) is collected from workers and employers for every hour —or part of an hour— worked, to fund cost-of-living increases to permanent disability and survivor recipients. The workers and employers split this charge; workers generally pay this as a payroll tax or deduction and the employers match and remit the total to the state. To augment federal funding, the state’s Occupational Health and Safety program assesses employers a straight 6.4% premium tax (2011; up from 4.6% in 2010).
New Mexico assesses workers $2.00 and employers $2.30, per quarter, to fund the operation of the New Mexico Workers’ Compensation Administration (WCA), which regulates, adjudicates, and provides education and assistance services to the workers’ compensation system.
California recently announced its assessments for 2011 as follows:
- WC Administration Revolving Fund Assessment/User Funding 0.014721
- Uninsured Employers Benefit Trust Fund Assessment 0.004101
- Subsequent Injuries Benefits Trust Fund Assessment 0.001776
- Occupational Safety & Health Fund 0.002467
- Labor Enforcement & Compliance Fund 0.002315
- WC Fraud Account Assessment 0.004348
That totals 0.029728 or about 3% in assessments paid as a tax on premiums. Self-insured employers have to pay assessments that currently total about 5.5%.
Employers in many Australian jurisdictions are responsible for the first week or two of wage-loss benefits—a kind of employer deductible—and the first $592 of medical costs.
WorkSafeBC has no waiting periods, no employer deductibles, and no additional assessments over the published rates. Workers still bear the cost of injury, loss of function, perhaps visible scarring or invisible pain. Employers nominally pay the premiums but ultimately workplace injury, illness and disease are borne by all of us in the prices of goods and services we consume, the productivity of our workforce and even our standard of living. We all bear some of the costs… All of us bear the responsibility to make work-related injury, illness, and disease unacceptable.