Recession increases duration of temporary total disability, study says
The mean duration of TTD indemnity benefits went from approximately 123 days for injuries that occurred in 2006 to a projected 141 days for injuries that occurred in 2009. At the same time, unemployment rose from 4.6 percent to 8.7 percent nationally.
"It's what we were expecting," said John Robertson, NCCI's director and senior actuary. "In fact, it's why we did the update in the first place."
The study data included claims with injury dates from 1996 to the first six months of 2009 for which TTD indemnity benefits have been paid. It adds 18 months of experience beyond NCCI's prior TTD duration study and includes some recession-impacted claims.
Robertson noted that the study found duration varies significantly by state, although most follow the pattern of increasing duration in the most recent one to three years. Florida, for example, had a steep decline in duration from 2003 to 2007, but then an increase in 2008 and 2009. Robertson says the declines in Florida before the recession may reflect legislative reforms to the workers' comp system.
"Something we think had a big effect there is the change to attorney compensation," he said. "There was a reduction in what attorneys can bill for workers' comp cases, and we've seen less claims involving attorneys."
State results are influenced by a variety of factors, according to the study. In looking at the average TTD benefit duration by state for accident year 2006 at 36 months, it shows Rhode Island on the low end and South Carolina on the high end.
"In general terms, there are differences in the state regulations that determine what is allowed for TTD," Robertson said. "Some states at one end of the spectrum don't allow them to be paid for more than one year. Other states allow them to be paid the length of the disability. That can extend over more than five years if there's a feeling the claimant is going to get better."
Robertson speculated that the economies of individual states also accounted for the variations.
"One more factor may be the relative generosity of the benefits," he said. "If they are a little bit lower relative to what a worker was making, that's probably an inducement to return to work."
An improved national economy would likely lead to shorter duration of TTD benefits, Robertson said. However, given that unemployment is still high, they don't expect that in the near term.
"The bottom line is that the recession does seem to have at least correlated to an increase in TTD in just about every state," he said. "We think that's associated largely with a lack of return-to-work opportunities, or at least greatly reduced RTW opportunities in many companies."
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March 10, 2011
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