Workers' Compensation Expense

12 Months Ended

Dec. 31, 2019

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 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 1.75%. 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 December 31, 2019		Year Ended December 31, 2018		Year Ended December 31, 2017
(In thousands)
Self-insured occupational disease benefits:
Service cost	$	6,677	$	7,440	$	6,320
Interest cost⁽¹⁾	4,922		4,365		4,651
Net amortization⁽¹⁾	—		—		—
Total occupational disease	$	11,599	$	11,805	$	10,971
Traumatic injury claims and assessments	13,050		5,395		3,208
Total workers’ compensation expense	$	24,649	$	17,200	$	14,179

⁽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 costs.”

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



(In thousands)	Year Ended December 31, 2019			Year Ended December 31, 2018
Beginning of period	$	118,900		$	122,426
Service cost	6,677			7,440
Interest cost	4,922			4,365
Actuarial (gain) loss	35,993			(7,071		)
Benefit and administrative payments	(8,167		)	(8,260		)
	$	158,325		$	118,900

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



	Year Ended December 31, 2019	Year Ended December 31, 2018
(Percentages)
Discount rate	3.31	4.26

Summarized below is information about the amounts recognized in the accompanying consolidated balance sheets for workers’ compensation benefits:



	Year Ended December 31, 2019		Year Ended December 31, 2018
(In thousands)
Occupational disease costs	$	158,325	$	118,900
Traumatic and other workers’ compensation claims	73,393		75,447
Total obligations	231,718		194,347
Less amount included in accrued expenses	16,119		20,044
Noncurrent obligations	$	215,599	$	174,303

As of December 31, 2019, the Company had $121.7 million in surety bonds and letters of credit outstanding to secure workers’ compensation obligations.

As of December 31, 2019, the Company’s recorded liabilities include $13.6 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 $0.5 million and $13.1 million, respectively.