Montana Self Insurers' Association

MSIA Update February 2024

Upcoming Events 

The University of Montana Bureau of Business and Economic Research (BBER) has, for the past 48 years hosted an annual Economic Outlook Seminar (EOS) reviewing the results of Montana’s economy and sharing their perspectives on what may happen in the years ahead. The Seminars provide a broader perspective on public policy decisions and their impacts on our business and overall economy. This year’s Seminar kicked off in Helena on January 23; Seminars are scheduled for eight other cities into March.  

Montana was one of the brightest state economies coming out of the pandemic, with positive, if not boom-like, growth in almost every sector. However, we’re beyond that time and according the the BBER leaders, 2023 saw a return to about average changes in our levels of growth. Our economy remained strong, but in comparison to the unreal 2022 results, the growth levels have moderated significantly – if only because 2022 was such an outlier. The results are relatively easy to see – record revenues reported and collected by the state, leading to a 2023 legislative session that was remarkable in that the discussions were driven more by how the state should return revenue to people, versus public agencies begging for budget consideration. 2024, does not look nearly as good. However that does not mean it looks bad – it is projected to remain relatively average for the state. Again it’s going to feel a whole lot different based on what we’ve experienced the last couple of years. 

  • With the end of the pandemic, Montana ended the temporary suspension of annual review of Medicaid eligibility. Mostly for administrative reasons (not returning paperwork timely, incomplete or incorrect information returned) some 112,000 Montanans were dis-enrolled while 80,000 were re-enrolled. This will have an impact on health care results in Montana (and likely impact WC as well – the 2/13 MSIA Webinar will touch on this – have you signed up?). 
  • The Fed appears to have engineered the ‘soft landing’ we had hoped for in the economy. Most agree we did not see the projected recession at the end of 2023, spending remains strong, and inflation has largely been tamed. There is even some softening of interest rates, though again, in comparison to recent rates, they might feel high (while being relatively moderate based on historical levels). The Fed is expected to cut interest rates by .75 in 2024 – according to the BBER economists. 
  • Housing and housing costs will continue to be an issue. Tourism is rebounding and expected to be back to pre-pandemic levels in 2024. Commodity prices are relatively up – some to record levels, though most, back to about average. Here too, in comparison to recent years’ results, this feels good. 
  • Healthcare was identified as the poster child for labor issues with continued and projected labor shortages and the resulting continued expected increases in labor costs. While healthcare has not contributed significantly to the recent inflation increases, the expectation is that it will be the next inflation leader. Obviously, this can have a significant impact on workers’ compensation costs. 
  • The move to green energy and a green based economy will take more time, though investments into that future have started. NorthWestern Energy already reports that some 60% of their energy is created through carbon-free technologies, while the industry average is at about 40%. Our recent cold-snap (where we REALLY had winter) demonstrated the short-comings of wind and solar based power. The wind did not blow and it was cloudy – forcing NorthWestern to use more immediate response fuels to provide power. However absent natural disasters, no one in the state lost power. 

For more information and registration for the upcoming Economic Outlook Seminar near you go to 2024 Economic Outlook Seminar

20 Issues to Watch – 2024

MSIA member Safety National is a co-sponsor of the annual 20 Issues to Watch Webinar hosted by Mark Walls and Kimberly George. This year’s issues are: 

  1. Election Watch – The recently released US Department of Labor Independent Contractors proposed rules demonstrates that the federal Executive branch continues to play an important role in our business. The proposed rules are to be effective March 1 and are based on California’s ABC law for determining IC/employee status. During the last legislative session MSIA successfully helped defeat an attempt to enact similar language in Montana. If Congress does not stop the proposed federal rule, we can expect litigation to attack it. As workers’ compensation is state regulated, Gubernatorial and state legislative elections tend to impact our business more than the federal results. There are 11 Governor seats up for election this year with only two states politically rated as ‘toss ups’ regarding the results, NH & NC. 
  2. Economic Outlook – Most economic prognosticators are expecting a bit of a deceleration in the country’s economy in 2024. On the other hand, these are the same people who predicted a recession last year. While inflation remains above the Fed target of 2% it certainly is within a ‘normal’ range and not something driving us crazy. Mortgage rates are expected to settle out somewhere between 6 – 6/5% by the end of the year. The commercial office space market remains soft. (See also above for specific MT economic expectations.) 
  3. Geo-Political Risks – Ukraine, the Middle East and the US/China issues continue to dominate the international headlines. With so much shipping going through the Suez Canal, which is impacted by the middle east conflicts and the drought conditions impacting the Panama Canal, there are expected impacts in the supply chain – again. Look for the biggest impacts of these international conflicts to be in the reinsurance markets.
  4. Employee Benefits – As employers have dealt with trying to attract and retain new workers, they have increased the attractiveness of their employee benefit package, particularly with specialty care services – chronic disease, family planning/child care, wellness coaching, weight loss and more. There has been a 5.4% increase in health care plans – that’s in the plans, not the costs. Obviously costs will follow. 
  5. WC Claim Frequency – for the past 20 years or so, frequency has been declining. The key question, given increases in wages and medical costs is when that will flatten out or change. With the plethora of new hires since the pandemic, we have seen increases in OSHA reported workplace incidents. While that is not a specific proxy for WC frequency, it does reflect a change in direction for those incidents. Will WC follow?
  6. Climate Change – 2023 was the warmest year on record. We have seen more proposals, rules and statutes on heat related safety standards. We have also seen wild fire smoke in the northeast (from Canadian wildfires). While that’s something we in the west routinely deal with, it is odd for the east coast. Reduced rainfall is impacting the Panama Canal water levels, which slows down shipping. Walls and George identified this was not a political issue, it is a practical issue. 
  7. Medical Inflation – Much like claim frequency, medical inflation, particularly recently, has been somewhat controlled and below general inflation for the past few years. We are seeing medical fee schedules, even those tied to Medicare, also include inflation adjustments. Medical is also being driven by more and more reliance on attendant care. As we get older and have the benefit of good medical care in the WC systems, there is more call for attendant care. 
  8. Property Risk – this too is part of the climate change discussion. As our world heats up, and fires become more of a direct threat, indoor air quality, physical structure risks and risk mitigation will have an impact on employees and employment. It is not a big step from that to workers’ compensation issues. 
  9. Liability Verdicts – sometimes this is referred to as Social Inflation. Verdicts and payouts on liability claims are increasing and may be a result of societal perceptions of business and the wealth of others. We are also seeing more third-party litigation funding, where lawsuits are funded by outside interests in exchange for a cut of the award. Montana law changed last year, as a result of an effort lead by the Montana Chamber of Commerce and supported by MSIA to limit those funding mechanisms. 
  10. Leave Landscape – Illinois brags that it is the first state to enact Paid Leave for All Workers. All workers in the state earn 1 hour of paid leave that can we used for any reason for every 40 hours worked and it has cash value upon termination. Look for this kind of statutory change, as well as expansions of reasonable accommodation, ADA and FMLA as well as mental health parity proposals and substance abuse support legislation, particularly as we get closer to the election.
  11. Liability Insurance Tower Challenges – as liability awards increase, watch for coverage above the initial liability coverage levels and efforts to get into and beyond reinsurance coverages. Settlement requests may start to include requests to get into the excess layers of coverage. 
  12. Adverse Reserve Development – CGL and auto awards are up and the Courts are beginning to catch up to the backlog generated by the COVID pandemic. We’re seeing inflation in medical costs again and climate change is driving some property losses higher. WC reserves have been based on controlled medical increases and declining frequency. With longer term care costs driven by wage increases, longer life expectancies and the potential of frequency at least leveling out if not increasing, it is not unreasonable to expect some adverse reserve development after years of reserve releases. The bigger question may be when will rates change direction. On a personal note, I have thought NCCI results could have supported rate increases already (particularly in Montana, where their last filing supported a -0.7% change).
  13. Sustainability & Regulation – ESG, climate change and workforce demographics continue to be themes regulatory bodies will be looking at, in addition to financial solvency.
  14. Human Capital – the search for talent continues to be an issue. There remain more openings than job seekers. Using AI to search and identify potential pools of applicants is more common and using those tools to ‘up-skill’ and ‘re-skill’ is becoming more popular as well. More companies are actively looking at a 4 day work week or ½ day Friday as regular hours and working from home as an option remains as a recruitment tool. Salaries are increasing – 2023 saw and average 4.5% increase and we can expect another 4% increase in 2024. While some say turnover has settled somewhat, archaic systems and duplicative processes continue to drive people away. 
  15. Evolving WC Presumptions – presumptive proposals used to be limited to first responders and cancers. 2023 saw all sorts of proposals expanding well beyond public entities. Formally, expect PTSD to be the next presumption approached, with CT providing mental – mental as an acceptable injury for WC in their state. WA added PTSD presumptions for nurses, not just public employees last year. Expansion of presumptions is the watchword for 2024.
  16. Cyber Preparedness – in a word, we’re not prepared. Business continuity and disaster recovery should now also include cyber readiness. Every outside organization we work with provides the potential for a cyber-attack, as well as our own internal issues. There is talk of a federal backstop, much like terrorism as the exposure could be that large.
  17. Workplace Violence – it is not getting better and is now an issue with any public interface employment. This represents a societal issue and impacts employees’ feelings about safety in the workplace, not just from their employment. 
  18. Employee Wellbeing – we have seen mental health and well-being issues come to the forefront over the past five years. It becomes more and more important that employers provide the opportunities for employees to feel safe and to have confidence that they can go to their employer to seek help.
  19. Exclusive Remedy – this is always important in workers compensation. This past year, we saw two cases, both workplace shootings in VA where preliminary court decisions have let the exclusive remedy be put aside, based on allegations that the employer did not take enough action to prevent a workplace shooting. While experts expect those initial rulings to be over-turned, this is an indication that there is more societal pressure to pierce the exclusive remedy of workers’ compensation.
  20. Implementing AI – AI is clearly here to stay and it is already in our lives, whether we know it or not. Carriers and others are already using it for some claims decisions - the only question is when will it have more of a direct impact in workers’ compensation. 

Get more detail at 20 Issues to Watch in 2024 - Safety National

MT WC Benefits Remain NOT Taxable

There is some confusion about the changes to tax law made as a result of the enactment of SB 399 in 2021 that affect our taxes in 2024. Some information has been released indicating that WC benefits are taxable under the changes made through that law. That is not correct. WC benefits under Montana law, remain as non-taxable income. Regrettably, the explanation is about as simple as tax law….

According to Jaret Coles, tax specialist for the Legislative Services Division, 

Workers’ Compensation is no longer specifically exempt under Montana law based on the repeal of section 15-30-2110, MCA. Section 15-30-2110(2)(g) (2021), MCA, (repealed January 1, 2024) provided that “(2) Notwithstanding the provisions of the Internal Revenue Code, adjusted gross income does not include the following, which are exempt from taxation under this chapter … (g) all benefits received under the workers' compensation laws…” This repealed language was providing a specific state exemption for workers’ compensation regardless of federal law. However, this does not mean someone will pay taxes on workers’ compensation benefits under the new Montana tax code. As it stands, section 104(a)(1) of the Internal Revenue Code generally provides that federal gross income does not include “amounts received under workmen’s compensation acts as compensation for personal injuries or sickness”.

Our new law is, if it is taxed under federal law, it is taxed in Montana unless there is a specific Montana exemption. WC benefits under federal law are not taxable income. Therefore, they remain as non-taxed income in Montana as well. You can also reference the IRS publication, 2023 Publication 525 (see p. 20).

Could Marijuana be Rescheduled?

MSIA member Health-e-Systems reported in their January 15 Regulatory Recap email that the Department of Health and Human Services has recommended to the DEA that marijuana be rescheduled from a Schedule I to a Schedule III drug (hhs-marijuana-rescheduling). This is the first time I have heard of any substantive federal action on cannabis. 

The Health-e-Systems Regulatory Recap email reported that the 252-page recommendation from HHS was made in August but was kept from the public until an attorney sued under the Freedom of Information Act to get the information. 

Apparently over 30,000 healthcare professionals are authorized to recommend cannabis for at least 15 conditions. These healthcare professionals are in 43 different US jurisdictions and are working with over 6 million registered patients. HHS documentation supported that cannabis was mostly used for the treatment of neuropathic pain. The FDA data review identified some credible scientific support for the use of cannabis in the treatment of pain, anorexia related to some medical conditions, nausea and vomiting. The Health-e-Systems email also identified that the National Institute on Drug Abuse supported the documentation and proposed rescheduling. 

Welcome New MSIA Member – BICMD

Best In Class MD provides a suite of unique second opinion and case review services for carriers and insurers including advanced surgical utilization reviews, medical record reviews, telehealth consultations, impairment ratings, age of injury reports, physician sourcing for treatment and is now piloting for independent medical exams for orthopedics. The most obvious competitive advantages are the quality and caliber of the physicians providing these reports, the turnaround times, the efficient web-based application and the quality of the clinical support provided by the BICMD team throughout the process.  

BICMD data science team can also perform comprehensive retrospective claims data to analyze historical claims data, assisting in the detection of unnecessary or overly prescribed treatments, which is helpful when refining predictive models, risk assessments, and overall cost predictions. The financial impact is calculated based on CPT code surgical diversion. For more information contact Kirsten Smyth at or 800-650-5907.

Our world is very different than it was just a few short years ago – so much of our world is now driven by medical economics. And at such a small percentage of total health care costs in the US – workers’ compensation is the tail, not the dawg. Medical costs are now the majority of workers’ compensation costs. What happens in Washington DC, what happens to Medicare and Medicaid is important to workers’ compensation. Joe Paduda will talk about the real-world impacts of Medicaid dis-enrollment, Medicaid Disproportionate Share Hospital programs, Merit based Incentive Payment Systems and their impact on health care – and workers’ compensation. Agree or disagree, no one argues that Paduda’s positions are not well researched and documented. He is an entertaining speaker, an excellent prognosticator and well respected throughout the industry – his message is something we all need to be aware of.

Contact MSIA or go to our website MSIA Webinars to reserve your seats today! Advance Registration by February 12 is required. This Webinar has been approved for one CE for MT Workers’ Compensation Claims Examiners licenses. MSIA members have access to unlimited seats to our Webinars. 

Upcoming Events 

New MSIA member BICMD is hosting this webinar on Wednesday, February 21 at 1p MST. Among other experts, the panel includes MSIA member Ametros Sr. Managing Director Paul Sighinolfi, a workers’ comp attorney with Jones Jones,LLC, the Chief Medical Officer at the Hartford and former Risk Management Sr. Director for Wal Mart. It will be hosted by Dr. Ben Nwachukwu, a founder and President of BICMD. Go to Navigating When to Utilize IME vs Expert Med Opinion to learn more and register.

WCRI Annual Conference 

The Workers Compensation Research Institute (WCRI) will hold their Annual Conference in Boston on March 5 & 6. MSIA is a member of WCRI. 

WCRI is one of the leading think tanks on workers compensation and provides objective system results information which are relied on by public policymakers and others to make decisions on how to change, or not change, states’ individual WC systems. The Annual Conference routinely draws leaders from labor, business, insurance, medicine and attorneys of both stripes for a review and discussion of the latest in research and findings. This year’s topics will include: 

  • Comorbidities and the Functional Recovery of Low Back Patients
  • Drivers of Attorney Involvement
  • Impact of Vertical Integration on the Utilization of Care
  • Medical Inflation in WC
  • Heat Exposures

For more information and registration go here: 2024 WCRI Conference Registration 

  • National Council Annual Meeting June 2 – 5 St. Pete Beach, FL 
  • MSIA members Get the National Council Member Rate!

The National Council of Self Insurers will host their 2024 Annual Meeting June 2 – 5 at the Don Cesar on St. Petersburgh Beach, FL. MSIA is on the Board of Directors for the National Council. 

This year’s Conference promises to bring back the substance and opportunities to talk about the latest innovations in workers’ compensation with the people who are making it happen. This year’s speakers are expected to include representatives from Marriott, Publix Markets, American Airlines, Chick-Fil-A, UWC Strategies and Michael Marsh, with Midland Claims Service, MSIA Secretary/Treasurer, among others. The agenda is still being put together, but as of now it looks very, very impressive. 

  • MSIA members, as a result of our membership in the National Council, are eligible for the membership rate for the Conference.

The National Council Conference rooms are selling out fast (already!!). Make your reservation NOW and register here 2024 National Council Annual Meeting. I understand some sponsorship opportunities are still available as well.