Billions in Liabilities
February 11, 2025 – California employers are facing an estimated $7.9 billion in liabilities under the Subsequent Injuries Benefits Trust Fund (SIBTF) program, according to a new Rand Corporation report. The analysis warns that rising SIBTF costs could place increasing financial pressure on businesses statewide, particularly those already operating with narrow profit margins. Based on a 12-year review of claims, the study projects total liabilities between $6.4 billion and $10.5 billion. These estimates do not include claims filed since May 2023, which are adding roughly 2,000 to 2,500 new cases annually, signaling that the upward trend in costs is likely to continue.
Escalating Costs and Employer Concerns
The report, commissioned by the Department of Industrial Relations (DIR) and obtained by Workers’ Comp Executive through a Public Records Act request, highlights a dramatic rise in SIBTF payments. Costs surged from $13.6 million in 2010 to $232 million in 2022. The DIR acknowledged the findings, stating that they are studying the report to ensure the program remains sustainable and fair while recognizing its impact on workers’ compensation premiums. Rising SIBTF costs have become a major concern for policymakers and employers alike, prompting calls for closer oversight and potential reforms.
Employers argue that the SIBTF has become a settlement tool, with costs spiraling due to a lack of regulatory oversight. Unlike other parts of the workers’ compensation system, the SIBTF does not have controls on medical-legal evaluations or copy service expenses.
Consequences of Inaction
Rand’s report warns that maintaining the status quo will lead to significant financial consequences. Without intervention, employer assessments will continue to rise to cover liabilities and administrative expenses. Rising SIBTF costs are contributing to these challenges, with the latest assessment including a 13.3% increase from the previous year, requiring $488 million from employers, with $168 million set aside as a reserve.
Potential Reforms and Trade-offs
Possible reforms include tightening eligibility requirements and increasing program oversight. While these changes could lower future costs, they would also raise administrative expenses and limit access for some applicants. The challenge of addressing rising SIBTF costs lies in balancing fiscal responsibility with fair access for injured workers. The report underscores the difficult choices facing policymakers: “Inaction is, in effect, a choice to maintain a status quo, one with growing financial implications for employers in the state.”
For a deeper understanding of how rising SIBTF costs impact claims and employer liabilities, visit the California Department of Industrial Relations for official program details and guidance.
For more information, visit SIBTF.org.
Author: Jonathan Forbes
Directory Developer, SIBTF.org
FAQs: Rising SIBTF costs
What factors are driving rising SIBTF costs in California?
Rising SIBTF costs are influenced by higher claim volume, increased medical treatment expenses, and broader eligibility interpretations by the Workers’ Compensation Appeals Board.
How do rising SIBTF costs affect employers?
Rising SIBTF costs can lead to higher insurance premiums for employers, especially those with a workforce at greater risk for cumulative or subsequent injuries.
Can policy reforms help control rising SIBTF costs?
Yes. Reforms such as stricter eligibility guidelines and improved fraud prevention measures could help reduce rising SIBTF costs, though they may also impact access for legitimate claimants.
Could legislative reforms help control rising SIBTF costs?
Potential reforms—such as tightening eligibility requirements or improving program oversight—could slow cost growth, though they may also limit access for some applicants.
Where can employers learn more about managing rising SIBTF costs?
The California Department of Industrial Relations offers guidance and updates on special injury benefit trust fund requirements. Learn more here to stay informed and compliant.
What is SIBTF?
The Subsequent Injuries Benefits Trust Fund (SIBTF) helps California workers who suffer a new workplace injury and already had a prior disability. It offers supplemental compensation when combined impairments severely limit earning capacity.