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April 11, 2011
Working Safer or Just Working Longer? DIR Commission Releases Report on Aging Workforce

Here's a bit of good news: Even though one in four workers will be age 55 or older within 20 years, workers' compensation costs resulting from the "graying of the workforce" are expected to increase by no more than 2 percent. So don't go firing or laying off your most experienced personnel just because they're a little heavier, a little creakier, and a little older than the rest. But you do need to be aware of some factors affecting injury risk and recovery time for older workers that may not apply to younger employees.

Older Workers and Injury Risk

Older workers are somewhat less likely to suffer work-related accidents than younger workers, the draft version of a study released in December 2010 by the Center for the Study of Social Insurance at the University of California, Berkeley, found. (The full document is available here.) The study, funded by the Department of Industrial Relations' Commission on Health and Safety and Workers' Compensation, also found:

Workers' injury risk decreases with age. After controlling for other risk factors such as the type of job and hours worked, the researchers found that the injury risk for men declines slowly from the age of 18 until age 64 and declines more steeply after that. Injury risk for women increases until age 54, then drops off.

Women are at higher overall risk. One of the study's more unusual findings was that, compared with men working the same hours in the same job, the overall risk of injury for female workers is 20 to 50 percent higher than the risk to their male counterparts. The difference is most pronounced for women in the 45 to 64 age group and decreases substantially after that.

Men take longer to recover. Both men and women take longer to recover from injuries as they age, but when the researchers controlled for the type of injury (comparing recovery times for similar injuries), they found that men collect disability payments for slightly longer than women do.

The decreased frequency of injury offsets increased recovery time. Older workers have fewer accidents, but they take longer to recover from an injury than younger workers do. Cost-wise, the researchers found that these two factors offset each other, meaning that costs for older workers are not significantly higher than costs for younger workers.

Practice Tip

Older workers who choose to remain in physically demanding jobs are no more likely to be injured than their younger counterparts. It's not necessary to force workers to take less demanding jobs to prevent injuries.

A Problem Area: The Overlap Of Workers' Compensation And Medicare

Something strange happens to the injury data when both male and female workers hit age 65: The expected rate of work-related injury and the reported rate of work-related injury diverge sharply. Looking at reported injuries, it would appear that workers over 65 are suddenly far less likely to be injured on the job.

What is actually happening, the study found, is that once they are eligible for Medicare at age 65, workers significantly under-report their work-related injuries and illnesses; as many as 50 percent of work-related injuries to workers 65 and older may not be reported as such. These workers instead seek treatment through Medicare. In addition, workers who become eligible for Medicare while they are still recovering from a work-related injury sometimes seek care through Medicare that workers' compensation should pay for.

To offset these costs, the Medicare program has demanded that workers' comp programs set aside money (called workers' compensation Medicare set-asides, or WCMSAs) to cover the expected expenses of Medicare-eligible workers injured on the job. When it discovers that it is covering a workers'-compensation-eligible claim, the Medicare program recovers its costs from this fund. WCMSAs increased by more than 525 percent between 2004 and 2008, from $180 million (1 percent of total payouts) to $950 million, and are expected to exceed 10 percent of total payouts for medical costs by 2020.

This overlap and the recovery requirement delay the settlement of workers' compensation claims for older workers and drive up workers' compensation costs for employers in the near term. Legislative solutions to eliminate the coverage overlap and reduce employers' costs are currently being debated in the U.S. Congress.

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