Why Mental Health Is Emerging as a Key Workers Comp Concern

• By: Olivia Overman
• July 7, 2025

Workers compensation policies are traditionally designed to cover physical injuries that occur in the workplace. However, there is a growing recognition of the importance of mental health in the workplace, with many states enacting laws to include post-traumatic stress disorder (PTSD) and other mental health conditions under workers comp benefits, according to the National Institute of Health.

Mental health is emerging as a key safety concern. This is important to employers and the workers comp market because mental health is surging to the most common small business injury at 22%, according to Pie Insurance’s “2025 State of Workplace Safety Report.”

“Injured workers with high-severity injuries are more likely to be diagnosed with mental disorders, in particular, when experiencing chronic pain or a traumatic brain injury,” says Donna Glenn, chief actuary, National Council on Compensation Insurance (NCCI). “The data indicates that, on average, claims that include a mental diagnosis are six times more expensive than those without such diagnoses.”

“This is mainly driven by differences in the distribution of medical conditions as, when we adjust for the mix of medical conditions and surgery, claims with a mental diagnosis are 2.5 times more costly,” Glenn says.

Health, humanitarian or emergency workers often have jobs that carry an elevated risk of exposure to adverse events, which can negatively impact mental health. Following the 9/11 attacks, while many of the firefighters, medics and police officers suffered from physical injuries that day, the injuries they incurred, including PTSD, continued to adversely impact their recovery.

Further, a 2023 study by the Workers Compensation Research Institute (WCRI) found that mental health comorbidities, such as anxiety, depression and sleep dysfunction, had a stronger association with smaller functional recoveries than physical health comorbidities, such as diabetes, hypertension and obesity.

Workers comp has long been one of the most comprehensive methods to protect workers with significant risk due to their job duties. However, “some states only require carriers to cover mental health care when it is triggered by a physical injury—that’s the case in Georgia and Florida,” says Mark Gromek, chief marketing and underwriting officer, Builders Insurance. “Nevertheless, we often provide mental health services for catastrophically injured workers to assist their recovery.”

Yet, the limitations to coverage are being tested by state regulation, with the NCCI monitoring 64 bills related to workers comp and mental injuries in 2024. Of these bills, 52 addressed compensability for workplace-related mental injuries with 51 relating to PTSD.

Additionally, while several states considered legislation to establish workers comp coverage or create a presumption of compensability for PTSD or other psychological injuries, only three states enacted legislation: Alaska, Arizona and Oklahoma, according to the NCCI’s Regulatory & Legislative Trends Report.

“Ideally, the overall focus on mental health should be a good thing that leads to safer work environments,” says Tara Sites, vice president small commercial product, Liberty Mutual. “As a society, we are more open to talking about mental health, employers are openly discussing it and offering wellness programs to their employees.”

In their role as a trusted adviser, independent agents should “partner with a carrier that offers risk management services, inclusive of mental health resources,” Sites says. “Agents should also talk to their clients about the importance of implementing mental health wellness programs.”

Working together, both agents and carriers “should help their commercial clients understand the need for a well-rounded safety program,” says Nancy Germond, Big “I” executive director of risk management and education. “Many carriers offer workers comp and return-to-work resources on their portals—agents can use these resources to help educate their clients about the importance of immediate first report of injuries, the establishment and management of a solid return-to-work program and building a safety culture.”

Olivia Overman is IA content editor.