Workplace Injury Costs
When workplace injuries occur, it’s easy to see the immediate and direct costs, but there are a multitude of ongoing and indirect costs that should also be taken into account. Indirect costs can be three to 10 times higher than direct costs, depending on the business and the various circumstances following the accident. Preventing workplace injuries not only keeps your employees safe, it also prevents these potentially significant costs.
Direct Costs
For a self-insured employer, direct injury costs include:
- Claim Cost – 80%
- Administrative Cost -10%
- Excess Premium -8%
- Other – 2%
These direct costs can be broken down into the following categories:
Medical
- Hospital
- Physicians
- Pharmacy
- Physical Therapy
Indemnity Payments
- Disability Compensation
- Dependent Benefits
- Death Benefits
- Settlements
- Legal Expenses
- Investigations
Program Costs
- Excess Premium
- Claims Administration Expenses
- Other (Surety, Assessments, Taxes, etc.)
Indirect Costs
In addition to these direct costs, there are many indirect costs that should also be considered. Indirect injury costs include, but are not limited to:
- Lost of Productivity or Service Standards
- Additional Supervision Time and Administrative Costs
- Temporary Labor and Overtime Costs
- OSHA Fines
- Building and/or Vehicle Damage
- Equipment Damage
- Product/Material Damage
- Emergency Supplies
- Interim Equipment Rentals
- Accident Investigation Costs
- Accommodations/Modifications Made for Injured or Potentially Disabled Worker
- Recruiting, Hiring and Training Replacement Workers
- Loss of Business and Goodwill
These indirect costs may vary from case to case, making the total cost of a workplace injury difficult to fully assess.
Emotional Costs
Another significant indirect cost of workplace injuries is the emotional toll that perceived safety risks can have on employees. Employees want to work at a place of business that is safe and well managed, and where management cares about their safety. Employers can reinforce the confidence in the safety of their workplace by creating programs that integrate with the normal course of business, recognizing employees for working safely, and maintaining a positive message of safety as a priority.
The potential for high costs is yet another reason to be vigilant on the issue of workplace safety. Check out our blog for more tips, guidelines and resources for increasing workplace safety.
Author
NARFA
Recent Posts
Here are 3 Ways to Use Your HSA To Get Care During Mental Health Month
Mental health is just as important as physical health, and it's important to seek help if you're struggling. But mental health care can be expensive, [...]
Compliance Alert: Form I-9 Flexibilities Ending; Check Documents by August 30
As we let you know last October, the end date for the COVID-related I-9 verification flexibility was (and still is) scheduled for July 31, 2023. [...]
May is Mental Health Month: EAPs Are A Great Resource
Employee Assistance Programs (EAPs) are confidential, short-term counseling and referral services offered by employers to their employees and their families. EAPs can provide assistance with [...]