Every workers’ compensation system provides certain payments
in the event of a work-related death of a worker. The expectation that workers’ compensation
insurance will cover the full cost of a funeral and burial of an injured worker,
however, is not the reality in all jurisdictions.
Most commonly, the amount to cover funeral and burial
expenses is a separate benefit from payments or compensation that might be available
to survivors and dependents. Where there
are no survivors or dependents, the funeral or burial amount may be the only workers’
compensation payment made with respect to the work-related death. Statutory dollar limits or policies that
exclude items connected with funeral or burial costs result in many
jurisdictions falling far short of coverage of the full cost of a funeral and
burial.
Statutory provisions
vary widely
The exact statute wording varies by jurisdiction. Here is a typical section from the Colorado
code:
When, as a proximate result of an injury, death occurs to an injured employee, there shall be paid in one lump sum within thirty days after death a sum not to exceed seven thousand dollars for reasonable funeral and burial expenses. Said sum may be paid to the undertaker, cemetery, or any other person who has paid the funeral and burial costs, if the director so orders. If the employee leaves no dependents, compensation shall be limited to said sum and the compensation, if any, which has accrued to date of death and the medical, surgical, and hospital expenses provided in articles 40 to 47 of this title. If the deceased employee leaves dependents, said sum shall be paid in addition to all other sums of compensation provided for in this article.
Allowed expenses for burial and funeral costs may be paid
directly to providers such as funeral homes and memorial societies; they are
often paid very quickly; other benefits or compensation for dependents and
survivors which may take longer to adjudicate and conclude.
Lump-sum payments may
be intended to cover funeral or burial expenses
Some jurisdictions make lump sum payments to the estate upon
the work-related death of a worker. The
specified amount may be a significant sum for dependents and survivors at a
time of need. In a few cases, as in Kentucky, the lump sum may be the only
amount payable because of a work-related death. Kentucky’s statute, for
example, makes this statement:
If an employee’s death occurs as a result of the injury, a lump sum payment is made to the employee’s estate, from which burial expenses are to be paid. The amount of the lump sum payment changes annually.
Guidebook to Workers’ Compensation, Commonwealth of Kentucky, Department of Workers’ Claims
The lump-sum value in Kentucky increases annually with
inflation. (2017: $82,022.93 $US).
Lump-sum provisions for surviving spouse and dependents are
more common in Canada and Australia and are typically paid in addition to
funeral and burial expenses. In some
cases, lump sum payments are independent of survivor or dependent
benefits. In Quebec, if a worker dies
without dependents, the father and mother (or the estate if both are dead) are
entitled to a lump sum of $26,986 each ($CDN 2015).
In Australia, the lump-sum payment amount varies by state. In New South Wales, for example, the lump sum
a lump sum payment (currently $791,850 $Aus) in addition to a weekly payment
per dependent child (currently $141.80
$Aus). The lump sum is payable to the
estate if there are no financial dependents.
The funeral expense reimbursement in NSW is limited to a maximum of
$15,000 $Aus and covers typical items including funeral director's professional
fees, cost of the funeral service (including cremation or burial), mourning
car, cemetery site, flowers, and newspaper notice.
Components of a
typical funeral and burial may not be covered
Components of a typical funeral and burial may be excluded
from consideration by workers’ compensation law or policy. WorkSafe Victoria, for example, explicitly
excludes some items from coverage:
WorkSafe [Victoria] will not pay
for:…
services or items not considered
reasonable - WorkSafe does not generally consider the following items to be
part of the reasonable costs of a burial or cremation:
·
vault or crypt
·
elaborate monument/tombstone/memorial chosen for
personal or cultural reasons
·
mourning cars, and
·
catering.
Dollar limits on
funeral and burial expenses are common…but vary widely
Some jurisdictions are less specific about what services
will be paid for and may separate some expenses from the maximum allowed
expense. WorkSafeBC’s policy states:
The employer of the worker is
required to bear the cost of transporting the body to the nearest business
premises where funeral services are provided, and if burial does not take place
there any additional transportation may, up to the sum set out below, be paid
by the Board.
·
Funeral And Related Expenses [January 1, 2018 – December 31, 2018] $9,268.72
·
Transportation of Body [January 1, 2018 –
December 31, 2018] $1,464.39
…
No action for an amount larger than
that established by the above provisions lies in respect of the funeral,
burial, or cremation of the worker or cemetery charges in connection with it.
Rehabilitation Services and Claims Manual Volume II Chapter 8 Section
54.00
Although cultural, religious, social, and economic factors
determine the cost of a funeral and burial, one might expect workers’
compensation systems to have similar dollar limits regarding burial and funeral
expenses. However, the funeral and
burial maximum expense covered in US, Australian and Canadian workers’
compensation jurisdictions varies widely.
Using published data from IAIABC/WCRI survey of State Workers’ Compensation Laws: 2016, AWCBC Dependency Benefits and Fatalities, SafeWork
Australia publication Comparison of workers’ compensation
arrangements in Australia and New Zealand (2017) and individual workers’ compensation jurisdiction websites with
rates between 2014 to 2016, a quick survey illustrates this variation.
- In the US, the median burial benefit is
specified as having a maximum of $7500 but the range is quite broad: South Carolina has a maximum only $2500;
Rhode Island pays up to $20,000 ($US).
- In Canada, Nova Scotia has the lowest funeral
benefit maximum at only $5000 while the adjacent province of New Brunswick has
a maximum benefit of $16,246.
Interestingly, Ontario has a minimum
funeral benefit of $2948.10 but no statutory maximum. Reasonable costs will be reimbursed. ($Can)
- In Australia and New Zealand, the range is a
little narrower. ComCare, the federal
workers’ compensation system, is in the mid-range at $11,459.25 while New South
Wales and Northern Territories are at or about $15,000 (Aus$).
- New Zealand has a $6021 (NZ$) maximum
It is not clear in policy documents I could review why
jurisdictions with low maximum amounts for funeral/burial expenses are so
restrictive. Nor is it clear why a
particular value has been chosen as a maximum in states with higher
maximums. Many amounts are fixed in
legislation while others are adjusted by automatic formula. The Northwest Territories and Nunavut is to
link the maximum funeral expense to 13% of the yearly maximum insurable
earnings (currently $90,600 so, 13% would be $11,778 ($Can)).
Unduly restrictive burial or funeral costs can add stress to
grieving survivors and family. Funeral and burial expenses exceeding an arbitrarily
low limit will have to be paid from some other source, often out of the
benefits family members might otherwise need for their own support.
Costs of a “normal”
funeral and burial
The United Nations agency, the International Labor
Organization (ILO), provides guidance on what member states should mandate in
the event of a work-related death. Convention:
In addition [to the cash benefit to
widow, widower, dependent], a funeral benefit shall be provided at a prescribed
rate which shall not be less than the
normal cost of a funeral…
Section
2 of Article 18 of the C121 - Employment Injury Benefits Convention, 1964
[Schedule I amended in 1980] (No. 121) [Convention concerning Benefits in
the Case of Employment Injury (Entry into force: 28 Jul 1967)]
[Note: Canada, the US and Australia are not signatories to
this convention.]
What is the “normal cost of a funeral” ? According to the National Funeral Directors
Association website ( http://www.nfda.org/news/statistics
), the 2014 “National Median Cost of an Adult Funeral with Viewing and Burial”
including vault was $8,508 (US). This amount
includes the typical things you would expect:
transfers, embalming, casket, viewing, hearse, printed memorial package,
etc.
What’s not included in the direct cost survey are some
common expenses normally associated with funeral and burials in the western, predominantly
Judeo-Christian tradition. Church services
(including costs for organist, choir), religious officiant (priest, rabbi, minister)
for grave-side internment, reception with catering for grievers, and grave
marker. Also not include are indirect costs which may include travel and
accommodation for non-dependent family members and relatives. There may be additional fees depending for
items such as certified copies of the death certificate and other documentation
often provided by the funeral home.
The median cost used in this analysis, therefore, understates
the full cost associated with a normal funeral.
It is, by definition, a midpoint in a distribution of costs for a
particular set of services and products covered by the survey.
Half of US WC systems
have dollar limits less than the median cost of a funeral and burial
Using $8,500 as the NFDA median cost reference point for
normal funeral costs in 2014, I used data from the IAIABC/WCRI 2016 survey of
Workers’ Compensation Laws to determine which US states failed to meet or
exceeded this standard. Twenty-seven US state
workers’ compensation authorities reported maximum funeral benefits that fell
below the $8,500 threshold, often by a significant amount; 18 states had
maximum burial benefits of $8500 to $10,000.
Only 4 states had maximums greater than $10,000. These later two groups exceed the ILO
standard of “not less than the normal cost of a funeral.”
Kentucky is excluded from this analysis because its workers’
compensation statute does not have a stated maximum. As noted earlier, Kentucky’s statute related
to funeral expenses is KRS 342.750 (6) provides for a “death benefit” from
which it is intended funeral, burial and other expenses would be paid. The 2014 value for that benefit was
$75,541.95 ($US).
Funeral and Burial
costs may be the only workers’ compensation expense
In some cases, the benefit paid to offset the funeral or
burial expenses may be the only compensation payable under a workers’
compensation claim. This is commonly the
case where death in the course of employment is immediate and there is no
spouse or dependents. In such cases,
there will be no medical or hospital expenses and no temporary or permanent
disability workers’ compensation costs. As
one jurisdiction explains:
It sometimes happens that a
childless, unmarried worker is killed on the job leaving no dependents. In that
case, his or her estate receives a burial allowance of up to $6,000 but nothing
else.
An Overview of Workers' Compensation in
Michigan [(2000: November) Bureau of Workers' Disability Compensation,
Michigan Department of Consumer & Industry Services, Lansing, Michigan]
I contacted Michigan’s Workers’ Compensation Agency
regarding the limitations of their statute with the following hypothetical
case:
N. is a 50-year-old land
surveyor. She is unmarried with no
children or other dependents. She has no
living siblings or parents. While surveying along a river, the bank gives
way. She is observed falling into the
rushing river and swept away in the torrent.
Her body is never recovered. Her executor files a workers' compensation
claim but is unsure if there is anything payable. There were no funeral or burial expenses.
Michigan authorities confirm that no workers’ compensation
costs would be incurred in such a case.
Even costs associated with a “memorial service” would likely be denied as
the statute provides only for, funeral and burial expenses.
Employer Impacts
The emotional and financial impacts of a staff member’s
work-related death cannot be ignored.
There may be broader mental health consequences for co-workers and other
staff members as well as investigation costs, operational costs to the employer.
Except for the potential costs
associated with accepted claims from other workers physically and/or
psychologically injured in association with the event, these costs are not
covered by workers’ compensation. If there are minimal or no workers’
compensation claim costs associated with the death of a worker, employers may
still experience higher premiums.
In the Michigan example noted above, the death event may
place the employer in a high-risk category that results in higher
premiums. In some jurisdictions, the average cost of all
fatality claims is applied to the employer’s “claims cost, which may in turn
impact experience rating (ER also called Ex Mod) that ultimately impacts
premium.
WorkSafeBC’s experience rating policy evens the claim cost
to employers for work-related fatal claims:
(3) ER [Experience Rating]
adjustments are based solely on claims costs. The costs used are those directly
associated with compensation claims. The cost used for fatal claims is the
five-year moving Board-wide average rather than the actual cost of each claim.
-WorkSafeBC,
Assessment Manual 1-42-1
Underwriting or direct premium costs may not be the only
impact. Many workers’ compensation
systems offer rebates or safety “dividends”; a traumatic work-related death may
disqualify the employer from receiving this payment. In Ontario, for example, the employer may be
disqualified from receiving its share of a “safety group” rebate or other
rebates from WSIB (see WSIB Fatal Claim
Premium Adjustment Document No.: 14-02-17)
Recommendation:
Flexibility and compassion
Every work-related death has unique emotional and financial
impacts on families, friends, co-workers and employers. The years of potential life lost to a
work-related death are priceless; the workers’ compensation insurance
consequence should never be costless. As
noted, cultural, social, and traditional factors can impact cost of an
appropriate funeral and burial. These
factors may result in variation over and under the normal or average cost of a
funeral and burial. A worker’s family or
estate may have recourse to other sources of reimbursement or payment for a
funeral, however, in my view, workers’ compensation should be the first payer
for work-related death.
Policies on reimbursement should not be overly restrictive
nor should the overall maximum cost be strictly limited to the median cost used
in this analysis or dismissive of the additional service and items that may be
required. A policy guideline that allows
for some discretion to exceed a policy maximum and cover the full cost of a
funeral and burial in certain circumstances seems appropriate.
The idea that a worker’s work-relate death can be costless
(or near costless) from a workers’ compensation insurance perspective is concerning. The possible inference that a worker’s life
has no or little value is clearly in opposition to common sense. Many workers’
compensation systems have policies clearly recognizing that every worker’s life
has value. Demonstrating that
recognition with significant compensation costs whether averaged across all
fatalities, paid to the estate or provided for the full cost of a memorial,
funeral and/or burial reinforces this principle.
Thankfully, the number of work-related fatalities has fallen
over the years. If arbitrarily low
limits on funeral and burial expenses were related to the financial costs of
higher fatality rate, then that justification no longer exists. Every worker who passes away as a result of a
work-related injury, illness or disease deserves the dignity of a funeral,
memorial and proper burial. Workers’
compensation systems should provide for that.
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