Tuesday, April 10, 2018

Does workers’ compensation cover the full cost of a funeral for a work-related death?


Every workers’ compensation system provides certain payments in the event of a work-related death of a worker.  The expectation that workers’ compensation insurance will cover the full cost of a funeral and burial of an injured worker, however, is not the reality in all jurisdictions.

Most commonly, the amount to cover funeral and burial expenses is a separate benefit from payments or compensation that might be available to survivors and dependents.  Where there are no survivors or dependents, the funeral or burial amount may be the only workers’ compensation payment made with respect to the work-related death.  Statutory dollar limits or policies that exclude items connected with funeral or burial costs result in many jurisdictions falling far short of coverage of the full cost of a funeral and burial. 

Statutory provisions vary widely

The exact statute wording varies by jurisdiction.  Here is a typical section from the Colorado code:

When, as a proximate result of an injury, death occurs to an injured employee, there shall be paid in one lump sum within thirty days after death a sum not to exceed seven thousand dollars for reasonable funeral and burial expenses. Said sum may be paid to the undertaker, cemetery, or any other person who has paid the funeral and burial costs, if the director so orders. If the employee leaves no dependents, compensation shall be limited to said sum and the compensation, if any, which has accrued to date of death and the medical, surgical, and hospital expenses provided in articles 40 to 47 of this title. If the deceased employee leaves dependents, said sum shall be paid in addition to all other sums of compensation provided for in this article.

Allowed expenses for burial and funeral costs may be paid directly to providers such as funeral homes and memorial societies; they are often paid very quickly; other benefits or compensation for dependents and survivors which may take longer to adjudicate and conclude.

Lump-sum payments may be intended to cover funeral or burial expenses

Some jurisdictions make lump sum payments to the estate upon the work-related death of a worker.  The specified amount may be a significant sum for dependents and survivors at a time of need. In a few cases, as in Kentucky, the lump sum may be the only amount payable because of a work-related death. Kentucky’s statute, for example, makes this statement:


If an employee’s death occurs as a result of the injury, a lump sum payment is made to the employee’s estate, from which burial expenses are to be paid. The amount of the lump sum payment changes annually.

Guidebook to Workers’ Compensation, Commonwealth of Kentucky, Department of Workers’ Claims

The lump-sum value in Kentucky increases annually with inflation.  (2017:  $82,022.93 $US). 

Lump-sum provisions for surviving spouse and dependents are more common in Canada and Australia and are typically paid in addition to funeral and burial expenses.  In some cases, lump sum payments are independent of survivor or dependent benefits.  In Quebec, if a worker dies without dependents, the father and mother (or the estate if both are dead) are entitled to a lump sum of $26,986 each ($CDN 2015).

In Australia, the lump-sum payment amount varies by state.  In New South Wales, for example, the lump sum a lump sum payment (currently $791,850 $Aus) in addition to a weekly payment per dependent child (currently  $141.80 $Aus).  The lump sum is payable to the estate if there are no financial dependents.  The funeral expense reimbursement in NSW is limited to a maximum of $15,000 $Aus and covers typical items including funeral director's professional fees, cost of the funeral service (including cremation or burial), mourning car, cemetery site, flowers, and newspaper notice.  

Components of a typical funeral and burial may not be covered

Components of a typical funeral and burial may be excluded from consideration by workers’ compensation law or policy.  WorkSafe Victoria, for example, explicitly excludes some items from coverage:

WorkSafe [Victoria] will not pay for:…
services or items not considered reasonable - WorkSafe does not generally consider the following items to be part of the reasonable costs of a burial or cremation:
·         vault or crypt
·         elaborate monument/tombstone/memorial chosen for personal or cultural reasons
·         mourning cars, and
·         catering.

Dollar limits on funeral and burial expenses are common…but vary widely

Some jurisdictions are less specific about what services will be paid for and may separate some expenses from the maximum allowed expense.  WorkSafeBC’s policy states:

The employer of the worker is required to bear the cost of transporting the body to the nearest business premises where funeral services are provided, and if burial does not take place there any additional transportation may, up to the sum set out below, be paid by the Board.
·         Funeral And Related Expenses  [January 1, 2018 – December 31, 2018]  $9,268.72
·         Transportation of Body [January 1, 2018 – December 31, 2018]  $1,464.39
No action for an amount larger than that established by the above provisions lies in respect of the funeral, burial, or cremation of the worker or cemetery charges in connection with it.
Rehabilitation Services and Claims Manual Volume II Chapter 8 Section 54.00

Although cultural, religious, social, and economic factors determine the cost of a funeral and burial, one might expect workers’ compensation systems to have similar dollar limits regarding burial and funeral expenses.  However, the funeral and burial maximum expense covered in US, Australian and Canadian workers’ compensation jurisdictions varies widely. 

Using published data from IAIABC/WCRI survey of State Workers’ Compensation Laws: 2016, AWCBC Dependency Benefits and Fatalities, SafeWork Australia publication Comparison of workers’ compensation arrangements in Australia and New Zealand (2017) and individual workers’ compensation jurisdiction websites with rates between 2014 to 2016, a quick survey illustrates this variation. 

  • In the US, the median burial benefit is specified as having a maximum of $7500 but the range is quite broad:  South Carolina has a maximum only $2500; Rhode Island pays up to $20,000 ($US).
  • In Canada, Nova Scotia has the lowest funeral benefit maximum at only $5000 while the adjacent province of New Brunswick has a maximum benefit of $16,246.  Interestingly, Ontario has a minimum funeral benefit of $2948.10 but no statutory maximum.  Reasonable costs will be reimbursed. ($Can)
  • In Australia and New Zealand, the range is a little narrower.  ComCare, the federal workers’ compensation system, is in the mid-range at $11,459.25 while New South Wales and Northern Territories are at or about $15,000 (Aus$).
  • New Zealand has a $6021 (NZ$) maximum

It is not clear in policy documents I could review why jurisdictions with low maximum amounts for funeral/burial expenses are so restrictive.  Nor is it clear why a particular value has been chosen as a maximum in states with higher maximums.  Many amounts are fixed in legislation while others are adjusted by automatic formula.  The Northwest Territories and Nunavut is to link the maximum funeral expense to 13% of the yearly maximum insurable earnings (currently $90,600 so, 13% would be $11,778 ($Can)).

Unduly restrictive burial or funeral costs can add stress to grieving survivors and family. Funeral and burial expenses exceeding an arbitrarily low limit will have to be paid from some other source, often out of the benefits family members might otherwise need for their own support. 

Costs of a “normal” funeral and burial

The United Nations agency, the International Labor Organization (ILO), provides guidance on what member states should mandate in the event of a work-related death. Convention: 

In addition [to the cash benefit to widow, widower, dependent], a funeral benefit shall be provided at a prescribed rate which shall not be less than the normal cost of a funeral

Section 2 of Article 18 of the C121 - Employment Injury Benefits Convention, 1964 [Schedule I amended in 1980] (No. 121) [Convention concerning Benefits in the Case of Employment Injury (Entry into force: 28 Jul 1967)]

[Note: Canada, the US and Australia are not signatories to this convention.]

What is the “normal cost of a funeral” ?  According to the National Funeral Directors Association website ( http://www.nfda.org/news/statistics ), the 2014 “National Median Cost of an Adult Funeral with Viewing and Burial” including vault was $8,508 (US).  This amount includes the typical things you would expect:  transfers, embalming, casket, viewing, hearse, printed memorial package, etc. 

What’s not included in the direct cost survey are some common expenses normally associated with funeral and burials in the western, predominantly Judeo-Christian tradition.  Church services (including costs for organist, choir), religious officiant (priest, rabbi, minister) for grave-side internment, reception with catering for grievers, and grave marker. Also not include are indirect costs which may include travel and accommodation for non-dependent family members and relatives.  There may be additional fees depending for items such as certified copies of the death certificate and other documentation often provided by the funeral home.

The median cost used in this analysis, therefore, understates the full cost associated with a normal funeral.  It is, by definition, a midpoint in a distribution of costs for a particular set of services and products covered by the survey. 

Half of US WC systems have dollar limits less than the median cost of a funeral and burial

Using $8,500 as the NFDA median cost reference point for normal funeral costs in 2014, I used data from the IAIABC/WCRI 2016 survey of Workers’ Compensation Laws to determine which US states failed to meet or exceeded this standard.  Twenty-seven US state workers’ compensation authorities reported maximum funeral benefits that fell below the $8,500 threshold, often by a significant amount; 18 states had maximum burial benefits of $8500 to $10,000.  Only 4 states had maximums greater than $10,000.   These later two groups exceed the ILO standard of “not less than the normal cost of a funeral.”






Kentucky is excluded from this analysis because its workers’ compensation statute does not have a stated maximum.  As noted earlier, Kentucky’s statute related to funeral expenses is KRS 342.750 (6) provides for a “death benefit” from which it is intended funeral, burial and other expenses would be paid.  The 2014 value for that benefit was $75,541.95 ($US).

Funeral and Burial costs may be the only workers’ compensation expense

In some cases, the benefit paid to offset the funeral or burial expenses may be the only compensation payable under a workers’ compensation claim.  This is commonly the case where death in the course of employment is immediate and there is no spouse or dependents.  In such cases, there will be no medical or hospital expenses and no temporary or permanent disability workers’ compensation costs.  As one jurisdiction explains:

It sometimes happens that a childless, unmarried worker is killed on the job leaving no dependents. In that case, his or her estate receives a burial allowance of up to $6,000 but nothing else.

An Overview of Workers' Compensation in Michigan [(2000: November) Bureau of Workers' Disability Compensation, Michigan Department of Consumer & Industry Services, Lansing, Michigan] 

I contacted Michigan’s Workers’ Compensation Agency regarding the limitations of their statute with the following hypothetical case:

N. is a 50-year-old land surveyor.  She is unmarried with no children or other dependents.  She has no living siblings or parents. While surveying along a river, the bank gives way.  She is observed falling into the rushing river and swept away in the torrent.  Her body is never recovered. Her executor files a workers' compensation claim but is unsure if there is anything payable.  There were no funeral or burial expenses.

Michigan authorities confirm that no workers’ compensation costs would be incurred in such a case.  Even costs associated with a “memorial service” would likely be denied as the statute provides only for, funeral and burial expenses.

Employer Impacts

The emotional and financial impacts of a staff member’s work-related death cannot be ignored.   There may be broader mental health consequences for co-workers and other staff members as well as investigation costs, operational costs to the employer.  Except for the potential costs associated with accepted claims from other workers physically and/or psychologically injured in association with the event, these costs are not covered by workers’ compensation. If there are minimal or no workers’ compensation claim costs associated with the death of a worker, employers may still experience higher premiums. 

In the Michigan example noted above, the death event may place the employer in a high-risk category that results in higher premiums.   In some jurisdictions, the average cost of all fatality claims is applied to the employer’s “claims cost, which may in turn impact experience rating (ER also called Ex Mod) that ultimately impacts premium.

WorkSafeBC’s experience rating policy evens the claim cost to employers for work-related fatal claims:

(3) ER [Experience Rating] adjustments are based solely on claims costs. The costs used are those directly associated with compensation claims. The cost used for fatal claims is the five-year moving Board-wide average rather than the actual cost of each claim.
-WorkSafeBC, Assessment Manual 1-42-1

Underwriting or direct premium costs may not be the only impact.  Many workers’ compensation systems offer rebates or safety “dividends”; a traumatic work-related death may disqualify the employer from receiving this payment.  In Ontario, for example, the employer may be disqualified from receiving its share of a “safety group” rebate or other rebates from WSIB (see WSIB Fatal Claim Premium Adjustment Document No.: 14-02-17)  

Recommendation: Flexibility and compassion

Every work-related death has unique emotional and financial impacts on families, friends, co-workers and employers.  The years of potential life lost to a work-related death are priceless; the workers’ compensation insurance consequence should never be costless.  As noted, cultural, social, and traditional factors can impact cost of an appropriate funeral and burial.  These factors may result in variation over and under the normal or average cost of a funeral and burial.  A worker’s family or estate may have recourse to other sources of reimbursement or payment for a funeral, however, in my view, workers’ compensation should be the first payer for work-related death. 

Policies on reimbursement should not be overly restrictive nor should the overall maximum cost be strictly limited to the median cost used in this analysis or dismissive of the additional service and items that may be required.  A policy guideline that allows for some discretion to exceed a policy maximum and cover the full cost of a funeral and burial in certain circumstances seems appropriate. 

The idea that a worker’s work-relate death can be costless (or near costless) from a workers’ compensation insurance perspective is concerning.  The possible inference that a worker’s life has no or little value is clearly in opposition to common sense. Many workers’ compensation systems have policies clearly recognizing that every worker’s life has value.  Demonstrating that recognition with significant compensation costs whether averaged across all fatalities, paid to the estate or provided for the full cost of a memorial, funeral and/or burial reinforces this principle.

Thankfully, the number of work-related fatalities has fallen over the years.  If arbitrarily low limits on funeral and burial expenses were related to the financial costs of higher fatality rate, then that justification no longer exists.  Every worker who passes away as a result of a work-related injury, illness or disease deserves the dignity of a funeral, memorial and proper burial.  Workers’ compensation systems should provide for that.