Arkansas was the last state to run a program like their Death and Permanent Total Disability Trust Fund, which until recently had been used to pay high-cost catastrophic claims once they reached a certain dollar threshold. Once the payer reached that limit on a claim the state fund would kick in to support the injured worker or their beneficiaries. Now the state has shut down that program, citing potential bankruptcy if they had kept the program going.

The fund is supported by a 3 percent tax that employers and insurers pay, and the state figured out that if they kept the fund going it would go bankrupt sometime in the next six to twelve years. They are already operating at an estimated $130 million in debt. Barbara Webb, CEO of the Arkansas Workers’ Compensation Commission, said that lower interest rates coupled with decreasing revenue from the tax meant to support the fund have hurt the fund’s financial resources. They are also seeing an increase in the number of claims the fund supports, and those claims have increasing wage benefits to be paid out which has depleted the fund’s resources as well. The state fund supports workers once their claim costs reach just over $200,000, and they did not want to run out of money and leave workers who depend on the program stranded.

The fund will continue to support existing claims but no new claims will be paid from the fund. It is estimated that existing claims will take between six and thirty years to finish paying out. Instead of relying on the fund, insurers and employers will now take on the cost of these catastrophic claims.