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ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS

12 Months Ended

Dec. 31, 2023

ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS

ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS

19.ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS

The following is a reconciliation of the changes in workers' compensation liability (including current and long-term liability balances):


	December 31,
	2023		2022

Beginning balance	$	49,452	$	53,448
Changes in accruals		12,155		7,384
Payments		(14,438)		(12,708)
Interest accretion		2,202		1,147
Valuation loss (gain)		(1,396)		181
Ending balance	$	47,975	$	49,452

The discount rate used to calculate the estimated present value of future obligations for workers' compensation was 4.66% and 4.87% at December 31, 2023 and 2022, respectively.

The valuation gain in 2023 was primarily attributable to a favorable change in claims development partially offset by a decrease in the discount rate used to calculate the estimated present value of the future obligations. The valuation loss in 2022 was primarily attributable to an increase in the discount rate used to calculate the estimated present value of the future obligations being partially offset by unfavorable changes in claims development.

As of December 31, 2023 and 2022, we had $99.4 million and $99.8 million, respectively, in surety bonds and letters of credit outstanding to secure workers' compensation obligations.

We limit our exposure to traumatic injury claims by purchasing a high deductible insurance policy that starts paying benefits after deductibles for the particular claim year have been met. Our workers' compensation liability above is presented on a gross basis and does not include our expected receivables on our insurance policy. Our receivables for traumatic injury claims under this policy as of December 31, 2023 and 2022 were $4.1 million. Our receivables are included in Other long-term assets on our consolidated balance sheets.

The following is a reconciliation of the changes in pneumoconiosis benefit obligations:


	December 31,
	2023		2022

	(in thousands)

Benefit obligations at beginning of year	$	104,287	$	111,316
Service cost		2,698		3,798
Interest cost		4,951		2,991
Actuarial loss (gain)		25,615		(9,840)
Benefits and expenses paid		(5,107)		(3,978)
Benefit obligations at end of year	$	132,444	$	104,287

The following is a reconciliation of the changes in the pneumoconiosis benefit obligation recognized in accumulated other comprehensive loss:


	Year Ended December 31,
	2023		2022		2021

	(in thousands)

Net actuarial gain (loss)	$	(25,615)	$	9,840	$	(161)
Reversal of amortization item:
Net actuarial loss		1,382		1,038		4,172
Total recognized in accumulated other comprehensive loss	$	(24,233)	$	10,878	$	4,011

The discount rate used to calculate the estimated present value of future obligations for pneumoconiosis benefits was 4.81%, 5.0% and 2.73% at December 31, 2023, 2022 and 2021, respectively.


	Year Ended December 31,
	2023		2022		2021

	(in thousands)
Amount recognized in accumulated other comprehensive loss consists of:
Net actuarial loss	$	49,745	$	25,510	$	36,388

The actuarial loss component of the change in benefit obligations in 2023 was primarily attributable to a) unfavorable changes in the discount rate, b) unfavorable demographics in the at-risk population, c) unfavorable black lung claims experience, d) unfavorable assumption changes regarding future average medical benefits, and e) unfavorable assumption changes related to Federal and State benefit levels. The actuarial gain component of the change in benefit obligations in 2022 was primarily attributable to favorable assumption changes in the discount rate and demographics in the at-risk population. These components were offset in part by a) unfavorable black lung claims experience, b) unfavorable assumption changes regarding future average medical benefits and legal expense levels, and c) unfavorable assumption changes related to Federal and State benefit levels.

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


	December 31,
	2023		2022

	(in thousands)

Workers' compensation claims	$	47,975	$	49,452
Pneumoconiosis benefit claims		132,444		104,287
Total obligations		180,419		153,739
Less current portion		(15,913)		(14,099)
Non-current obligations	$	164,506	$	139,640

Both the pneumoconiosis benefit and workers' compensation obligations were unfunded at December 31, 2023 and 2022.

The pneumoconiosis benefit and workers' compensation expense consists of the following components:


	Year Ended December 31,
	2023		2022		2021

	(in thousands)
Black lung benefits:
Service cost	$	2,698	$	3,798	$	4,021
Interest cost (1)		4,951		2,991		2,545
Net amortization (1)		1,382		1,038		4,172
Total pneumoconiosis expense		9,031		7,827		10,738
Workers' compensation expense		15,152		11,675		8,339
Net periodic benefit cost	$	24,183	$	19,502	$	19,077

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(1)	Interest cost and net amortization is included in the Other income line item within our consolidated statements of income.