Good news everyone! A recent news report suggested the U.S. is headed towards record high life expectancy! While commutations of life pensions and permanent total disability are effected by the morbidity rate and not life expectancy, this is very much an indication that updated commutation Tables 2 and 3 would result in much higher present values than the 1989 life tables originally used to these charts.
If you are a workers’ compensation professional in need of a consultation on estimating future life pension, permanent total disability, or death benefits, don’t hesitate to reach out.
Even with the recent Baker v. WCAB decision settling when the increase in state average weekly wage (SAWW) is applied, litigation continues over the precise future SAWW percentage to use in a commutation of life pension benefits. The DEU is currently using an assumed annual SAWW increase of 4.6% “based on a 50 year average.” 1
Before we consider how the DEU calculates future SAWW increases, it is necessary to look back to past SAWW changes. In the last 50 years there have been only two instances where the SAWW has decreased from the prior year. Since Labor Code Sections 4659(c) and 4453(a)(10) only apply increases in the SAWW to life pensions and permanent total disability benefits, there is no effect on the benefit rates for those two years.
When the DEU indicates a historical 50-year average of SAWW increases, they mean exactly that. Thus, instead of averaging the decreases in the SAWW with the increases, the DEU averages only the increases of the historical SAWW data. (I’ll save you the trouble of looking it up – 2004 and 2011 are the only instances in the last 50 years of any reduction in the state average weekly wage). An average of just the SAWW increases over the last 50 years does come to 4.6%.
It took the patient guidance of a very smart friend to help me to understand how this works:
When determining the proper startingrate for a permanent total disability case, you must first turn to Cal. Labor Code § 4453(a)(10). This statute dictates that the limits (as in the statutory minimum and statutory maximum limits) are to be increased by the increase in the state average weekly wage (or SAWW).
However, according to Cal. Labor Code § 4659(c) as interpreted by Duncan v. WCAB (X.S.), the benefit rates themselves are then increased by the increase in the state average weekly wage (or SAWW).
Is it “double dipping” to have both the upper/lower limits and benefit rates increased by the SAWW?
Perhaps, but that’s what the two statutes say and what the Court of Appeals has decided.
Four benefits in California workers’ compensation are affected by changes in the state average weekly wage (or SAWW).1
Temporary total disability benefits
The maximum and minimum benefit rates can be affected by the SAWW.
“Commencing on January 1, 2007, and each January 1 thereafter, the limits specified in this paragraph shall be increased by an amount equal to the percentage increase in the state average weekly wage as compared to the prior year.” Cal. Labor Code § 4453(a)(10).
Life pension benefits
The statutory life pension rates are now increased by the SAWW as directed by the recent Duncan v. WCAB (X.S.) case.
“For injuries occurring on or after January 1, 2003, an employee who becomes entitled to receive a life pension or total permanent disability indemnity as set forth in subdivisions (a) and (b) shall have that payment increased annually commencing on January 1, 2004, and each January 1 thereafter, by an amount equal to the percentage increase in the “state average weekly wage” as compared to the prior year.” Cal. Labor Code § 4659(c).
Permanent total disability benefits
First, the minimum and maximum limits for permanent total disability benefits are increased, then the benefit rates themselves are increased.
“Commencing on January 1, 2007, and each January 1 thereafter, the limits specified in this paragraph shall be increased by an amount equal to the percentage increase in the state average weekly wage as compared to the prior year.” Cal. Labor Code § 4453(a)(10).
“For injuries occurring on or after January 1, 2003, an employee who becomes entitled to receive a life pension or total permanent disability indemnity as set forth in subdivisions (a) and (b) shall have that payment increased annually commencing on January 1, 2004, and each January 1 thereafter, by an amount equal to the percentage increase in the “state average weekly wage” as compared to the prior year.” Cal. Labor Code § 4659(c).
Death benefits
“A death benefit in all cases shall be paid in installments in the same manner and amounts as temporary total disability indemnity would have to be made to the employee, unless the appeals board otherwise orders.” Cal. Labor Code § 4702(b).
Did I just describe two increases to the permanent total disability benefit rate? Huh, so I did.
Tune in tomorrow for more on Duncan v. WCAB, COLA’s, and SAWW increases!
We’ve all seen charts with the State Average Weekly Wage (“SAWW”) increases printed on them.1 But, how useful are these when you’re dealing with an opposing counsel who won’t accept your chart or calculations based on that chart?
It sure would be nice to have all the SAWW information from the Division of Workers’ Compensation all in once place. Well, it just so happens I’ve already done this for you.
Here is a copy of every DWC Newsline from 2003 through 2009 with information on every SAWW increase from 2004 through 2010, all ready to go in one handy-dandy PDF.
[Download not found]
Share and enjoy!
More on Duncan v. WCAB, COLA’s, and SAWW increases tomorrow!
The COLAs found in section 4659, subdivision (c) should be applied to life pensions or total permanent disability compensation as from January 1, 2004.2
Yes, that’s really it. The Duncan decision consists mostly of background and discussion. The actual decision is basically that one line above.
Come back tomorrow for more information about SAWW increases, COLA calculations, and more!
You’re probably just here to download the latest workers’ compensation case about the Cost of Living Adjustment and State Average Weekly Wage increases. 12 I’m not going to hold you in suspense – here’s the download link:
[Download not found]
Obviously, you need to read the entire decision for yourself. Here’s my oversimplification of the case:
Whenever the injured worker is due life pension payments for injuries on or after 1/1/2003, you calculate those benefits, whenever they are due, by increasing them according to the yearly increases in the state average weekly wage starting on 1/1/2004.
Still having trouble understanding the impact of this case? Well, you could try my XYZZXSJO2 calculator to tell you what the life pension rate should be during a given year. (Remember, this just tells you the rate – it is not a commutation calculator. These are still in the works).
Late last week a user asked for a new feature.1 He wanted to be able to perform the Ogilvie DFEC rebuttal calculation and have the results e-mailed to him.2 Well, I built it!3
To e-mail yourself a calculation, perform the calculation as normal. When the website returns your calculation, it will say “E-mail Me!” Just click that button and it will send an e-mail to the address you used to register for this website.
However, here’s the cool part: I’ve installed this new e-mail system into every calculator! 4 No more having to copy and paste! Just click one button and your calculation will show up in your inbox!5
Although I intend this to be a paid-subscription-only feature, I am going to leave it open for all users while I get some feedback. So, what do you think? Please leave a comment or shoot me an e-mail!
Why, what did you do with your Saturday morning? [↩]
I haven’t installed it in some of the EAMS lookup functions [↩]
If you filled in the boxes for Applicant, WCAB #, and File #, it will include this information in your e-mail as well. This is only for your convenience and not a requirement. [↩]
Last month I mentioned that this website had a record number of new visitors. I honestly thought that was an anomalous one day spike in traffic. Instead we’ve had a sustained increase in new visitors and people signing up to use the workers’ compensation calculators for free.
Since February 13, 20091 I’ve enjoyed posting about:
Ever since I relaunched this website I’ve had this idea in the back of my mind that getting to 500 users would be a big deal. There are literally hundreds of workers’ compensation professionals who rely on this website and its calculators to make their lives a little easier. This certainly feels like a big deal to me.
I’ve just finished the COLA / SAWW future life pension rate calculator to determine what the future life pension rates are assuming a COLA / SAWW increase of 4.7% per year. If you’re interested in becoming a beta tester for this COLA / SAWW calculator for life pension increases, please drop me a line and ask for access. 2
Please keep in mind that this is not a life pension with SAWW / COLA increase commutation calculator. The actuarial math involved in performing that calculation is … intense.
As an interesting side note, this week I saw my very first DEU commutation of a life pension with COLA increase. Unlike the typical commutations everyone receives from the DEU, this commutation calculation was devoid of the actual methodology used. I was pretty disappointed to find this out.
No matter! Help beta test the new calculator by dropping me a line. After you’ve given it a whirl, let me know what you think.
