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Workers Compensation Expense

12 Months Ended

Dec. 31, 2023

16. Workers’ Compensation Expense

The Company is liable under the Federal Mine Safety and Health Act of 1969, as subsequently amended, to provide for pneumoconiosis (occupational disease) benefits to eligible employees, former employees and dependents. The Company currently provides for federal claims principally through a self-insurance program. The Company is also liable under various state workers’ compensation statutes for occupational disease benefits. The occupational disease benefit obligation represents the present value of the actuarially computed present and future liabilities for such benefits over the employees’ applicable years of service.

In October 2019, the Company filed an application with the Office of Workers’ Compensation Programs (“OWCP”) within the Department of Labor for reauthorization to self-insure federal black lung benefits. In February 2020, the Company received a reply from the OWCP confirming its status to remain self-insured contingent upon posting additional collateral of $71.1 million within 30 days of receipt of the letter. The Company is currently appealing the ruling from the OWCP and has received an extension to self-insure during the appeal process.

On January 18, 2023, the OWCP proposed revisions to regulations under the Black Lung Benefits Act governing authorization of self-insurers. The revisions seek to codify the practice of basing a self-insured operator’s security requirement on an actuarial assessment of its total present and future black lung liability. A material change to the regulations is the requirements that all self-insured operators must post security equal to 120% of their projected black lung liabilities.

The proposed regulations were posted to the Federal Register on January 19, 2023 with written comments to be accepted within 60 days of this date. A subsequent extended comment period expired on April 19, 2023; however, the final regulations have not yet been published.

If the above regulation is codified into law, the Company will be required to post additional collateral to maintain its self-insured status. The Company is evaluating alternatives to self-insurance, including the purchase of commercial insurance to cover these claims. Additionally, the Company is assessing the availability of surety bond capacity within the markets, additional sources of liquidity, and other items to satisfy the proposed regulations.

In addition, the Company is liable for workers’ compensation benefits for traumatic injuries which are calculated using actuarially-based loss rates, loss development factors and discounted based on a risk-free rate of 4.55%. Traumatic workers’ compensation claims are insured with varying retentions/deductibles, or through state-sponsored workers’ compensation programs.

Workers’ compensation expense consists of the following components:


	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2023		2022		2021

Self-insured occupational disease benefits:
Service cost	$	3,974	$	5,991	$	7,796
Interest cost⁽¹⁾		6,041		4,610		4,439
Net amortization⁽¹⁾		(965)		628		2,363
Total occupational disease	$	9,050	$	11,229	$	14,598
Traumatic injury claims and assessments		277		(3,783)		3,925
Total workers’ compensation expense	$	9,327	$	7,446	$	18,523

(1)

In accordance with the adoption of ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” these costs are recorded within Nonoperating expenses in the Consolidated Income Statements on the line item “Non-service related pension and postretirement benefit credits (costs).”

The table below reconciles changes in the occupational disease liability for the respective period.


	Year Ended		Year Ended
	December 31,		December 31,
(In thousands)	2023		2022
Beginning of period	$	120,008	$	167,585
Service cost		3,974		5,991
Interest cost		6,041		4,610
Actuarial loss (gain)		10,721		(48,859)
Benefit and administrative payments		(11,526)		(9,319)
	$	129,218	$	120,008

The following table provides the assumptions used to determine the projected occupational disease obligation:


	Year Ended December 31, 2023	Year Ended December 31, 2022
(Percentages)
Discount rate	5.01	5.21

The lower discount rate increased obligations by $3.2 million.

Summarized below is information about the amounts recognized in the accompanying Consolidated Balance Sheets for workers’ compensation benefits:


	Year Ended		Year Ended
	December 31,		December 31,
	2023		2022
(In thousands)
Occupational disease costs	$	129,218	$	120,008
Traumatic and other workers’ compensation claims		44,156		53,332
Total obligations		173,374		173,340
Less amount included in accrued expenses		18,724		17,584
Noncurrent obligations	$	154,650	$	155,756

As of December 31, 2023, the Company had $124.2 million in surety bonds, letters of credit and cash outstanding to secure workers’ compensation obligations.

As of December 31, 2023, the Company’s recorded liabilities include $6.9 million of obligations that are reimbursable under various insurance policies purchased by the Company. These insurance receivables are recorded in the balance sheet line items “Other receivables” and “Other noncurrent assets” for $0.4 million and $6.5 million, respectively.

The following represents expected future payments:



Year	(In thousands)
2024	$	12,837
2025		13,634
2026		13,750
2027		14,186
2028		14,564
Next 5 years		79,731
	$	148,702