Workers' compensation trends continue stability, long-term downward trajectories

Workers' compensation claim rates and benefits paid in Minnesota continue to be stable or follow 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 2024 Minnesota Workers’ Compensation System Report presents trend data from 2002 to the present regarding several aspects of Minnesota’s workers' compensation system. For the past three 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 (FTE) workers, the total number of paid claims dropped by 45%, indemnity claims by 3% and medical-only claims by 56% from 2002 to 2022.

  • COVID-19:  Due to the influx of COVID-19 indemnity claims, there was a 44% increase in the indemnity claim rate from 2019 to 2022. This reversed the long-term downward trend in indemnity claim rate (the decline from 2002 to 2019 was 33%).

• Relative to total payroll, indemnity benefits were down 41% between 2002 and 2022, while medical benefits were down 52%.

• The total cost of Minnesota's workers' compensation system relative to payroll follows a multi-year cycle. A comparison of similar points in the cycle indicates a long-term decrease that extrapolates to 46% over a 20-year period.

• In 2022, on a current-payment basis, the three largest components of total workers' compensation system cost were medical benefits (33%), insurer expenses (31%) and indemnity benefits other than vocational rehabilitation (30%).

• Compared to 2002, the average amount of time an injured worker received total disability benefits was 9% longer in 2022 for non-COVID-19 claims. The average duration of temporary partial disability (TPD) fell 25% by 2022 for non-COVID-19 claims.

  • COVID-19:  Total disability duration decreased 30% from 2019 to 2022 due to the significantly shorter duration of COVID-19 claims, while TPD duration increased 4% during the same period.

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

• Total disability benefits (temporary total disability benefits and permanent total disability benefits combined) per paid indemnity claim were largely stable from 2002 to 2019, but decreased 6% from 2019 through 2022 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 2022.

• TPD benefits per paid indemnity claim fell 36% from 2002 to 2022 for non-COVID-19 claims.

  • COVID-19:  When COVID-19 claims were included, there was a 31% decrease in TPD benefits per paid indemnity claim from 2019 to 2022.

• Permanent partial disability (PPD) benefits per paid indemnity claim fell 65% from 2002 to 2022 for non-COVID-19 claims.

• Participation in vocational rehabilitation rose from 21% of paid indemnity claims for injury-year 2002 to 24% for 2019, but decreased to 22% among non-COVID-19 indemnity claims for injuries in 2022.

  • COVID-19:  There was a 11% decrease in the estimated number of workers who will receive vocational rehabilitation services for their injuries and illnesses in 2022 compared with the number in 2019.

  • COVID-19:  The 2022 vocational rehabilitation participation rate is 15% when COVID-19 indemnity claims are included.

• There were very few disputes associated with COVID-19 claims – the dispute filing rate was 0.2% for COVID-19 claims in 2023 and 15.0% for non-COVID-19 claims.

• In 2023, 84% of scheduled mediations were completed while 27% of scheduled medical conferences and 26% of scheduled rehabilitation conferences were completed.

The complete report is available at dli.mn.gov/business/workers-compensation/work-comp-minnesota-workers-compensation-system-report.