States with the highest per employee workers' comp costs

On average, the cost of workers’ comp per employee is around $78 a month nationwide.

In the five states with the highest average costs, workers’ compensation insurance totals out to more than 50 cents per hour. In the states with the lowest average, workers’ comp costs are rough 20 cents or less per hour. (Credit: Rawpixel.com/Shutterstock.com)

Overall, workers’ compensation premiums made up about 1.2% of the total cost of employing the average American, according to AdvisorSmith. The nationwide average cost per employee is $936 annually, or about $78 a month.

As anyone working in the sector knows, rates vary wildly based on region as each state has its own systems and requirements. For instance, businesses in North Dakota see an average yearly per employee cost of $376, the lowest in the nation. Rounding out the five states with the lowest average workers’ comp costs are Arkansas, Indiana, West Virginia and Utah.

On the other end of the spectrum, New Jersey sees the highest average per worker cost ($1,415) followed by New York, Vermont, California and Hawaii. In the five states with the highest average costs, workers’ compensation insurance totals out to more than 50 cents per hour. In the states with the lowest average, workers’ comp costs are roughly 20 cents or less per hour.

(Source: AdvisorSmith)

These findings are based on wage and premiums data from the Bureau of Labor Statistics, AdvisorSmith noted.

In addition, data from National Council on Compensation Insurance (NCCI) and the National Safety Council found that the average workers’ compensation claim comes in at slightly more than $41,000, AdvisorSmith reported. Claims in the sectors were typically split about 45% in indemnity costs, and 55% in medical costs.

The most costly workers’ compensation claims were motor vehicle crashes, burns and falls.

This news comes on the heels of the NCCI reporting the U.S. workers’ comp system is “stronger than ever,” according to council President and CEO Bill Donnell.

“The pandemic was the moment to rise to the challenge, and the workers’ compensation system did so with integrity,” Donnell said in a release. “Our workers’ compensation system is fulfilling its noble mission to help injured workers.”

Concerning workers impacted by COVID-19, the council found that employees in nursing homes, hospitals, clinics and first-responders accounted for 75% of claims. Further, the costliest 1% of COVID-19 claims account for 60% of pandemic-related losses, while most (95%) COVID-related claims had a cost of less than $10,000.

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