Factors That Influence the Amount and Probability of Permanent Partial Disability Benefits

By Philip S. Borba

June 1, 2006 Related Topics: Indemnity Benefits

Permanent partial disability (PPD) benefits are a frequent subject of public policy debate in workers’ compensation systems. In most states, these benefits comprise more than half of income benefits paid. The policy debates about PPD often focus on who should receive these benefits and how much each person should receive.

This study identifies and quantifies the major factors that are associated with the amount of PPD benefits received by a PPD beneficiary. It also investigates what factors increase or decrease the likelihood that an injured worker will receive these benefits. 

Six large states (California, Connecticut, Florida, Georgia, Texas, Wisconsin) are examined in this report. Each has different rules concerning the eligibility for and determination of PPD benefits, providing information about the potential impact of state system features on the payments for and use of PPD benefits.

 Key Findings:

  • On average, a 10 percent increase in statutory weekly PPD benefits increased the average per-claim incurred PPD benefits by 6 percent to 9 percent, depending on the state and specific system features. In Connecticut, a 10 percent increase in the statutory benefit increased average per-claim PPD benefits by almost 9 percent. In the other study states, the impact was smaller – 6 percent to 7.4 percent.
  • A small increase in the number of PPD cases can be expected when the PPD benefits that workers expect to receive increase – for example, when statutory benefits increase. Across the study states, a 10 percent increase in statutory PPD benefits increased the number of PPD beneficiaries by 0.4 percent to 0.8 percent in all states but California, where the increase was 1.4 percent. Because in these states the percentage of cases with PPD payments ranged from 33 percent to 56 percent, the increase was very small.
  • Holding other factors (like wages or the type of injury) constant, the older the worker the higher the PPD benefits. This was especially true in California where the PPD benefit determination process in effect at the time of the study explicitly assigned higher benefits to older workers. However, we found similar but smaller effects in all states.
  • The longer a worker is out of work, the greater the likelihood the worker will seek and obtain PPD benefits. This was especially true for workers who received temporary disability (TD) benefits for more than 3 months.
  • The longer the time from injury to first TD payment, the higher was the PPD probability, especially if the TD benefits did not start until 6 weeks or more after the injury. Compared with cases where TD benefit payments started within 21 days from the date of injury, if the start of TD payments was 60 to 89 days (between 2 and 3 months) postinjury, the PPD probability increased by 6 to 20 percentage points. If the start of TD benefits was more than 90 days postinjury, the PPD probability increased by 14 to 22 percentage points.

Factors That Influence the Amount and Probability of Permanent Partial Disability Benefits. Phil S. Borba and Mike Helvacian. June 2006. WC-06-16.

Copyright: WCRI

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