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Workers' compensation claim rates, benefits paid continue long-term downward trajectories

September 5, 2023

Workers' compensation claim rates and benefits paid in Minnesota continue their long-term downward trajectories, even with major system impact due to COVID-19 since 2020, a new Department of Labor and Industry (DLI) report shows.

The 2023 Minnesota Workers’ Compensation System Report presents trend data from 2001 to the present regarding several aspects of Minnesota's workers' compensation system. For the past two years, the report has tracked two sets of trends for the workers' compensation system:  one for the whole system, including COVID-19 claims; and another for the system excluding COVID-19 claims, which shows a pattern more similar to prior years.

Significant findings

  • Relative to the number of full-time-equivalent workers, the total number of paid claims dropped by 52%, indemnity claims by 17% and medical-only claims by 62% from 2001 to 2021.

    • COVID-19:  Due to the influx of COVID-19 indemnity claims, there was a 32% increase in the indemnity claim rate from 2019 to 2021.

  • Relative to total payroll, indemnity benefits were down 30%, while medical benefits were down 49%, between 2001 and 2021. These trends are the result of the claim rate falling faster than increases in benefits per claim.

  • The total cost of Minnesota's workers' compensation system relative to payroll follows a multi-year cycle, but a comparison of similar points in the cycle indicates a long-term decrease that extrapolates to 44% during a 20-year period.

  • In 2021, on a current-payment basis, the three largest components of total workers' compensation system cost were medical benefits (33%), indemnity benefits other than vocational rehabilitation (31%) and insurer expenses (30%).

  • Compared to 2001, the average duration of total disability benefits (temporary total disability benefits and permanent total disability benefits combined) was 19% longer in 2021 for non-COVID-19 claims, while the average duration of temporary partial disability (TPD) benefits fell 16% by 2021.

    • COVID-19:  When COVID-19 claims were included, total disability duration decreased 28% from 2019 to 2021 due to the significantly shorter duration of COVID-19 claims, while TPD duration increased 1% during the same period.

After adjusting for average wage growth, the following was found.

  • Total disability benefits per paid indemnity claim were largely stable from 2001 to 2019 but decreased 5% from 2019 through 2021 for non-COVID-19 claims.

    • COVID-19:  When COVID-19 claims were included, total disability benefits per paid indemnity claim fell 24% from 2019 to 2021.

  • TPD benefits per paid indemnity claim fell 40% from 2001 to 2021 for non-COVID-19 claims.

    • COVID-19:  When COVID-19 claims were included, there was a 25% decrease in TPD benefits per paid indemnity claim from 2019 to 2021.

  • Permanent partial disability (PPD) benefits per paid indemnity claim fell 69% from 2001 to 2021 for non-COVID-19 claims.

    • COVID-19:  When COVID-19 claims were included, there was a 38% decrease in PPD benefits per paid indemnity claim from 2019 to 2021.

  • Participation in vocational rehabilitation rose from 20% of paid indemnity claims for injury-year 2001 to 24% for 2019 but decreased to 22% among non-COVID-19 indemnity claims in 2021.

    • COVID-19:  There was a 15% decrease in the estimated number of workers who will receive vocational rehabilitation services for their injuries and illnesses in 2021 compared with the number in 2019.

    • COVID-19:  The 2021 vocational rehabilitation participation rate is 16% when COVID-19 indemnity claims are included.

  • The denial rate for non-COVID-19 claims in 2021 was 24%, which exceeded the 16% rate observed in 2020 and surpassed the highest rate, 17%, recorded in the past 20 years.

    • COVID-19:  The denial rate of filed indemnity claims, with COVID-19 claims included, was 29% for 2021. This was above the rate of 23% for 2020. A large part of the 2021 increase in denial rate was due to the influx of COVID-19 claims that began in 2020; the denial rate for COVID-19 claims was 39% in 2021.

The complete report is available online.

Media contact:  James Honerman at 651-284-5313 or james.honerman@state.mn.us.