Workers compensation insurance absorbs costs for providing medical care to workers who become injured or ill in the course of employment.
But that does not necessarily cover mental health issues associated with a job.
An employee who injures tendons from repetitive motions at work is covered, but another employee who experiences anxiety and depression in a high-stress job environment may not be. It all depends on the laws of the state where the employee works.
Florida’s workers compensation laws disallow claims for mental health conditions unless they are specifically the result of a work-related physical injury. California, conversely, treats psychological or emotional work-related injuries the same as physical injuries, covered as long as the work is the primary cause. Between those two poles is a hodgepodge of state rules.
Rates of mental health conditions soared during the COVID-19 pandemic—anxiety and depression spiked by 25% in just the first year of the coronavirus, a global study by the World Health Organization (WHO) found. Numerous research reports emphasized that mental and physical health were inextricably connected.
“COVID put into perspective the need to consider the impact of employee mental health and the resources that can make a difference,” says Kembre Roberts, senior vice president of health transformation at Aon.
Gaps in the care and treatment of employees with mental health conditions across the country were put under the microscope: why does an employee toiling 70 hours a week in a highly demanding tech job in Silicon Valley receive workers compensation benefits for anxiety and depression but not someone with a similarly difficult workload and mental health struggles in Florida?
There is tremendous value in focusing on the ‘total person,’ helping someone injured at work receive mental health therapy to connect them back with fellow workers and communities. Socialization is important in both the road to recovery and the return to work.
Tron Emptage, chief clinical officer, Optum
The most commonly reported physical workplace injuries across the country are “trip and fall” accidents and repetitive motion musculoskeletal disorders. Yet, remove the “physical” part and mental stress and anxiety account for 52% of all workplace injury cases, workers compensation and disability provider Atticus reported in 2023. One in 10 workers experience mental health issues attributable to their job, the report maintained.
Although employer-provided healthcare plans typically absorb the cost of treatment for employees suffering a mental health condition, 14% of U.S. private sector employees are not covered by such plans—leaving them at risk of going without any mental health coverage. Shouldn’t the workers compensation system, mandated in all states but Texas, pick up the tab if a worker’s mental health condition is tied specifically to their work?
There is no simple answer. For one thing, the nonprofit National Safety Council estimated that organizations on average spend more than $15,000 per year for each employee with a mental health condition, a figure based on pre-COVID data that may not reflect current costs. Multiply that amount by potentially millions of people with mental health issues and the sum is staggering.
Could the country’s workers compensation system absorb the costs of mental health claims? Swiss Re’s July 2024 State of the U.S. Workers Compensation Insurance Market report extolled workers compensation as a consistently profitable insurance market, “a bright spot in an often tough environment.” While covering work-related mental health conditions would increase employers’ workers compensation costs, there’s a possible trade-off through lower mental healthcare expenses in the corporate health plan. Cost-shifting also might open the door to greater data sharing and integration between employer-provided health plans and workers compensation insurance, providing more consistent care for employees at potentially less cost for employers.
To assess the benefits and challenges of widening workers compensation benefits for mental health conditions nationally, Leader’s Edge interviewed a broad range of experts, including managed care professionals, pharmacy benefit managers, clinical registered nurses, medical doctors, and workers compensation insurers, brokers, and specialty reinsurers. The sources expressed a spectrum of opinions, with some suggesting the workers compensation system should fully address employee mental health and others believing such issues should remain the province of employer-provided healthcare coverage.
No interviewee disputed that depression, anxiety, post-traumatic stress disorder (PTSD), and other mental health conditions adversely affect employee well-being and productivity.
The Mental-Physical Loop
Many studies suggest a connection between workplace injuries and subsequent mental health issues as well as a higher propensity for people with mental health conditions to suffer a workplace injury. The National Institutes of Health (NIH), for example, cited several studies that found that employees injured at work were more likely to experience psychological distress than uninjured workers. Even relatively minor injuries like a broken arm or musculoskeletal damage can cause depression, one study discovered.
The NIH cited several studies conducted between 2009 and 2016 indicating that symptoms of depression develop as early as one month after a workplace injury for one-quarter to nearly one-half of employees hurt on the job. “Studies reveal that the likelihood of injured employees being treated for depression is 45% higher than for employees who are not injured,” says Tammy Bradly, senior director of clinical product marketing at Enlyte, a solutions provider for the P&C industry.
Financial pressures are among other factors highlighting the need for workers compensation to cover mental health care. According to industry sources, when money is tight, employees may view their injury as job-threatening, exacerbating their mental health distress. “If an employee with a work-related injury has toddlers and financial pressures like rent, a mortgage, and higher-cost groceries, it can increase stress, complicating the employee’s recovery process,” says Jean Feldman, senior director of managed care at Sentry Insurance.
However, mental health conditions often are difficult to uncover, says Jennifer Cogbill, senior vice president of GBCARE, Gallagher Bassett’s medical management platform. “Unlike hypertension, there is no objective test, and some employees may be reluctant to share the information because of the stigma associated with mental health.”
The fear of the stigma that can be associated with being depressed or anxious affects “everything from interpersonal interactions to social norms to organizational structures, including access to treatment and reimbursement for costs,” a 2021 McKinsey study of workplace stigma concluded.
“The social determinants of an injured worker’s mental health are the conditions and places where we live, work, and play and they can affect the person’s ability to recover,” Bradly says. “Oftentimes, the problems start before the injury even occurs. Does the person like their job, is the workload overwhelming, do they have good relationships with their boss and co-workers? Things that take place before an injury occurs can set the person up for problems ahead.”
When work injuries cause mental health conditions like anxiety and depression, they become risk factors in an employee’s long-term sickness, absence, and unemployment, undermining company return-to-work objectives, the NIH contended. A 2024 report by Sentry Insurance analyzing more than 45,000 workers compensation claims from 2012 to 2019 affirmed this outcome. Injured workers with identified behavioral health conditions including anxiety or depression, fearfulness of re-injury or job loss, catastrophic thinking (when people jump to the worst possible conclusion), and lack of social support experienced longer return-to-work timelines and slower claims resolutions, increasing the need for early intervention, the report maintained.
If an injured employee has comorbidities such as obesity, diabetes, hypertension, and substance abuse, recovery times lengthen, Sentry’s claims analysis found. While obesity can reduce mobility and flexibility, making it harder to perform certain physical tasks without risk of injury, employees living with obesity may also struggle with mood and anxiety disorders. A psychiatric meta-analysis of 15 scientific studies in the journal JAMA Psychiatry concluded that obesity increases the risk of depression, while noting that depression conversely is predictive of developing obesity. (See Sidebar: Where Obesity, Mental Health, and Ozempic Emerge)
A similar “vice versa” correlation is in play regarding substance abuse comorbidities: physical injuries increase the risk of substance abuse and substance abuse increases the risk of physical injuries. Several studies cited by the NIH found that work-related physical injuries increase the risk of employee substance abuse. For example, a 2023 study by the Institute for Work and Health in Canada found that of the 27.4% of surveyed employees who reported using marijuana in the prior year, 14.1% self-medicated with cannabis to ease symptoms from a work-related injury or illness. Reliance on drugs and alcohol combined “becomes more prevalent when injured employees are home, lonely, and not in a social environment,” according to Aon’s Roberts.
Substance abuse, meanwhile, increases the possibility of work-related injuries. A study by the National Institute on Drug Abuse found that employees who tested positive for marijuana had 55% more industrial accidents, 85% more injuries, and 75% higher absenteeism versus those who tested negative. Yet, workplace tests of workers to discern use of marijuana and other drugs were compromised by a sixfold increase in tampering from 2022 to 2023 alone, according to a report from Quest Diagnostics. (See Sidebar: The Risks of Medicating Mental and Physical Health)
Claims involving injured workers with behavioral health characteristics also are likely to involve opioid use, Sentry’s report stated. The legal use of opioids and other prescribed drugs like methadone, buprenorphine, or naltrexone at the workplace is covered under the Americans with Disabilities Act, so long as employees are taking the drugs as prescribed and are under the supervision of a licensed healthcare professional. In such cases, employers must consider reasonable accommodations for these employees to perform their job safely and effectively. Since jobs entailing construction, driving a vehicle, or working from heights cannot be safely performed while on opioids, the employer must consider other accommodations.
Safety National and other providers of excess workers compensation insurance affirm that they now give as much attention to mental health conditions as physical work-related injuries, due to their interrelated impact on return to work objectives. Focusing care on the total person decreases the duration of the workers compensation benefits, saving employers money on claims, absenteeism, and lost productivity.
“Mental health has become equal to the other types of more specific clinical injuries that we typically focus on,” says Stacy Whalen, senior medical manager at Safety National. “If an injured employee has a history of being on an antidepressant, it’s as if they had arthritis or a heart condition. If it isn’t treated, it can impact their recovery, delaying the return to work.”
Employers tend to put the health plan and workers comp in separate silos. Once the injured employee returns to work, they often have another journey in the health plan. The data from the workers compensation case and the health plan rarely come together, resulting in no continuity of care. We are now seeing some momentum in that direction.
Kembre Roberts, senior vice president of health transformation, Aon
What Qualifies as Work-Related?
The connection between workplace physical injuries and an employee’s mental health suggests the value of providing workers compensation insurance benefits to employees with a mental health condition. But what if an employee develops a mental health condition unrelated to a physical injury, such as witnessing a traumatic event, experiencing workplace violence, a hostile work environment, or continuous exposure to harassment, abuse, or discrimination?
Every employee is entitled to a safe work environment, which includes protection from toxic work cultures. Since most employees today rely on their intellectual skills as opposed to their physical abilities on the job, a culture that accepts that workplace stress can cause mental health conditions that are as debilitating as physical on-the-job injuries will have healthier and more productive employees, several studies compiled by the WHO suggest.
Workplace stress can be caused by long or irregular hours, heavy workloads, conflicts with bosses and colleagues, workplace harassment or discrimination, and low pay, among other factors. Symptoms of work-related stress include depression, anxiety, sleeping difficulties, mood swings, and a loss of motivation, commitment, and confidence.
In 2022, the Workers Compensation Research Institute (WCRI) tallied 36 states that covered mental stress claims unrelated to a physical injury. More recent statistics remain elusive.
According to the Atticus report, states including Alaska, Maine, Arizona, and Wisconsin provide workers compensation benefits only if the mental health condition is due to extraordinary or unusual work-related stress. In Wisconsin, for example, extraordinary or unusual work-related stress “must have resulted from a situation of greater dimensions than the day-to-day emotional strain and tension which all employees must experience.” Connecticut, Maryland, and Minnesota only provide benefits for PTSD. Nebraska provides PTSD benefits, but solely for first responders. New Mexico’s workers compensation laws cover a traumatic event outside one’s usual work experience, while Rhode Island offers coverage to employees if they can demonstrate identifiable physical trauma or stress beyond normal day-to-day strain.
California’s workers compensation laws, on the other hand, address a wide range of mental health conditions beyond anxiety, depression, and PTSD, including exhaustion, concentration problems, irritability, and physical symptoms like headaches and muscle tension related to workplace stress and anxiety. These so-called “psychiatric injuries” must result from an actual workplace incident, such as a bullying boss prone to tirades, to qualify for workers comp coverage. The injuries must be diagnosed by a physician or a psychiatrist as a mental disorder, more than 50% attributable to the actual events of employment, and demonstrated to adversely affect the employee’s ability to perform specific job functions.
Some interviewees believe California’s workers compensation laws may be too liberal. “Workers comp in general in California is much more lenient [than other states],” says Cogbill at Gallagher Bassett. “Psychiatric injury claims in the state are very common, a lot of it driven by attorneys collaborating and sharing success stories.”
Nevertheless, momentum is picking up across states to revise their workers compensation laws. The National Council of Compensation Insurance said 86 bills were introduced in 2023 across the country to expand workers compensation coverage for workplace-related mental disorders, including 71 bills related specifically to PTSD. There was no corresponding number for how many of the bills have been signed into law.
While PTSD claims in the past were limited to first responders like police and firefighters, Connecticut recently expanded workers compensation benefits to all workers diagnosed with PTSD as a direct result of an event that occurs in their course of employment.
Changes in state laws to provide workers compensation more broadly for mental health issues do not suggest that the process to receive coverage will be easy. Mental health injuries are generally more difficult to prove than physical injuries. Even in California, insurers can be expected to scrutinize the employee’s personal life to determine if non-work-related factors contributed to the mental health condition. The onus is on the employee to prove that personal struggles like family or financial troubles, a history of mental illness, or drug use were not the main cause of their condition.
“It’s a high bar for mental health issues to be compensable in most jurisdictions,” says Cogbill. “You have to show a connection to the work [performed]. A police officer that witnesses the murder of a partner that triggers PTSD will be compensable in some states. But an employee who runs long distances regularly, breaks her leg, and can’t run anymore, causing depression, will find it more difficult [to receive coverage].”
Whether or not workers compensation expands to address mental health claims more widely, several sources commented on the need for greater alignment and collaboration between employer-provided health plans and workers compensation insurance. “Employers tend to put the health plan and workers comp in separate silos,” says Roberts. “Once the injured employee returns to work, they often have another journey in the health plan. The data from the workers compensation case and the health plan rarely come together, resulting in no continuity of care. We are now seeing some momentum in that direction.”
As the health and workers compensation insurance silos converge with other employer-provided services such as employee assistance programs, Tron Emptage, chief clinical officer at health services provider Optum, perceives an opportunity for employers to provide staff with more holistic mind and body care. “There is tremendous value in focusing on the ‘total person,’ helping someone injured at work receive mental health therapy to connect them back with fellow workers and communities,” he says. “Socialization is important in both the road to recovery and the return to work.”
