We are sad to advise all of you it is a very problematic—so please don’t shoot the messenger on this one. We truly feel this has to be taken up in the legislature if the Illinois legislature is lucky enough to get some folks willing to tackle the issue after the November elections. Right now, we hate to tell HR and risk managers hiring the elderly is asking for financial disaster in this state.

Why do we make that claim? Well, we looked at a study from the stat-rats, NCCI titled Age as a Driver of Frequency and Severity that examined how frequency and severity vary by age of worker, focusing on workers between ages 20 and 64. Events since that study was published, especially the plunge in the stock market and the decline in home prices have sparked interest in the implications for workers compensation claims of persons working beyond age 64.

The study indicates for many persons in their late 50s and early 60’s whose life savings have been depleted and whose homes are now worth far less than anticipated, the idea of a “normal” retirement is now more in the realm of wishful thinking than an achievable reality. Workers aged 65 and older comprise a small share of employment and injury and illness cases, which is why the previous study limited its analysis to persons aged 64 and younger, however, the labor force participation rate of older workers (those aged 65 and older) has increased by nearly 50% since the late 1980s, and the rate for workers aged 55 to 64 has also increased from 55% to 65%. Further increases are expected in coming years in light of recent financial and economic disruptions.

This NCCI study examines how workers aged 65 and older differ from all workers in terms of their share of claims; indemnity and medical payments; frequency; and indemnity and medical severity (i.e., cost per claim). It also explores the implications for workers compensation claims management and loss costs. Their key conclusions are:

• Falls/slips/trips are by far the greatest cause of injury among older workers.
• Indemnity severity is less for older workers, largely because of the lower average weekly wage of such workers. There is a distinct (downward) break in indemnity severity between ages 60–64 and 65 and older.
• Medical severity is higher for older workers, although the differential between workers aged 65 and older and nearby age cohorts is small.
• Shares of indemnity and medical payments of older workers have a close relationship to their share of claims.
• Frequency is less for older workers, especially in the more hazardous manufacturing and construction-related industries and occupations.
• In contrast, claim frequency is higher for older workers in the leisure and hospitality industry and food preparation and service occupations as well as in sales and related occupations.

How does all of this affect Illinois WC claims? Well, the current theories of compensability do nothing to motivate employers to hire older workers. First, Illinois continues to adhere to the theory the work only has to be “a” cause and not “the” cause of the injury. Therefore if Uncle Dave or Aunt Sally get a sore [insert body part] at work, it can be very simple to demonstrate the work was a cause of their age-related problem. So, for one simple example, if Uncle Dave is a part-time sales person and is on his feet some of the day but now needs total hip replacement, you can be on the hook for the surgery and 60% LOU of the leg, regardless of the fact Uncle Dave has had documented hip problems for three decades—you may be determined to have aggravated it.

Next, remember the rates have all jumped, making it much more difficult to save costs if an elderly worker is brought back on a part-time basis. For a part-time worker who suffers an injury, their TTD and PPD rates will typically equal their average weekly wage. Most galling, if you are paying a part-time elderly worker $100 a week and they die from an arguably work-related event, the minimum weekly death benefit is $466.13.

The legal issue of accidents being “a” cause versus “the” cause isn’t in the legislation and could be changed by administrators willing to make things better for hiring the elderly. High rates isn’t truly an issue our administrators can change. We suggest all of it should be considered by a new administration, if one should land this fall.

We appreciate your thoughts and comments or post them on our blog.