April 25, 2008

Why Wait? New Brunswick Debates the Waiting Period

A labor group in our neighbor to the North, New Brunswick, Canada, is seeking an end to the three day waiting period for workers comp benefits. "We really believe it is unfair," said Michel Boudreau, president of the New Brunswick Federation of Labour.

The federation has pitched the idea of scrapping the three-day waiting period, during which employees receive no benefits, to the independent panel commissioned by the government to review the Workplace Health, Safety and Compensation Commission.

Boudreau said the waiting period, which was first introduced in 1993 to stem financial losses within the system, violates the principles upon which workers compensation in New Brunswick was founded.

Labour, he said, entered into the system with industry and government with the understanding that it would provide for them if they were injured. In exchange for that insurance, workers agreed not to sue employers when they are hurt on the job.

The waiting period is universal among the state workers comp systems, ranging anywhere from three to seven days. There is usually a retroactive period, after which coverage reverts back to day one. In Massachusetts, for example, there is a five day waiting period, retroactive to day one after three weeks.

Why Wait?
Does the waiting period serve any purpose? Or is it an undue hardship for injured workers?

While a case can be made that indemnity benefits should begin immediately after an injury, such a "quick trigger" would likely create more problems than it would solve. It is difficult enough to manage a three day waiting period (the shortest duration available among the states); it would create formidable logistical problems for insurers to begin indemnity immediately following lost time from an injury. It's worth pointing out that many employees can use accrued sick time to fill in the gap between the first day lost due to injury and the beginning of indemnity benefits. A case can be made that the anxiety of not being paid is a positive incentive for an injured worker to return to full or modified duty as quickly as possible. Immediate indemnity removes that sense of urgency.

The waiting period may also serve a psychological function. The transition from wage earning to receipt of indemnity involves a major shift: one moment you are an employee, a worker, and the next you are "disabled." For most people, this shift is inconsequential, but for some, it involves crossing a profound border from which there may be no return. The moment you become eligible for indemnity, you are being paid not to work. If you are ambivalent about your job, or if the future of the job is uncertain, the comfort of indemnity can be very powerful. Some injured workers convince themselves that the injury and the pain are worse than they really are, because there is a financial incentive to do so. This is rarely a conscious choice. Rather, it involves a "perverse incentive": it's financially advantageous not to get better, not to go back to my (unsatisfactory) job.

The Insider recommends that New Brunswick leave the waiting period right where it is, at three days (the generous end of the waiting period spectrum). The gap in payments is not great enough to cause tremendous harm; conversely, the potential hazard of instantaneous benefits would not just increase costs of the system, it could also harm otherwise motivated employees.

Comp is never the best of all possible worlds. It is tempting to tinker with every aspect and every benefit. While I understand where labour is coming from, in this situation the advice of my late mother-in-law might be best: just leave well enough alone.



Of course the waiting period serves a purpose. It benefits the employer and the insurer at the expense of the injured worker. This benefit - regardless of the 'psychobabble' justification - has nothing to do with the needs of the injured worker. It's a form of industrial discipline, coersion and control. The waiting period - and some states in the US make workers wait a full week - provides a disincentive for reporting and receiving treatment for an injury. Few workers these days can afford to miss any part of their paycheck. And given that comp provides only a fraction of the regular earnings - and a decreasing fraction for higher payed workers - this can be a significant loss. Suggesting that it's ok for a worker to use their sick time - which many workers don't have, i.e., construction workers, or which could be used for a non-work related illness - is adding insult to injury. The waiting period is a disincentive for filing a WC claim. And this can prevent an early diagnosis and treatment of a serious problem that may not be disabling, such as a musculoskeletal disorder. It may also lead to the inappropraite use of health benefits/insurance to treat work-related problems. Finally, employers do not need the waiting period to keep workers on the job if they can perform other duties, as long as the treating physician approves. The 'psychological' argument is bull, relative to the waiting period. This issue can and should be addressed in a firm's injury/illness management program. I suggest that the Insider reconsider it's 'perverse' advice to labour.

This is just a small point, but worth mentioning. You say that many workers can use sick leave to bridge the gap in compensation. However, this is not always the case. There is, of course, the obvious example of employees who are not offered sick leave at all. Then there are the employees, like my fiance, who receive (a negligible amount of) sick leave, but must jump through many hoops to be able to use it. In his particular case, he must miss three consecutive days of work before he is even eligible to use the sick leave (which immediately kills the argument that sick leave can be used to bridge the gap).

In addition, since he works in retail his schedule is never set, and it's not very often that your sick time falls within three consecutive days of scheduled work - especially if you have split days off.

Even if he meets all that criteria to use his sick leave, he must also produce a doctor's note - perhaps a small criteria for some, but a costly annoyance with co-pays of $20 a visit, if you can even get scheduled in the first place. Ok, that last part isn't really an issue with workers' comp. It's just a separate frustration.

Just a point of clarification - only the indemnity has the waiting period. Medical is not part of waiting period and is available immediately for work related inuries. No co-pays exist in the system and any attending physician can provide a disability slip. Reporting the injury is the duty of the injured worker to the employer. The carrier's identity that provides the coverage and contact information is posted in the woprkplace and should an employee have a question they should contact the carrier.


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This page contains a single entry by Jon Coppelman published on April 25, 2008 11:58 AM.

Cavalcade of Risk #50 was the previous entry in this blog.

Worker Memorial Day 2008 is the next entry in this blog.

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