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ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS

12 Months Ended

Dec. 31, 2024

ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS

ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS

13.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,
	2024		2023

	(in thousands)
Beginning balance	$	47,975	$	49,452
Changes in accruals		13,236		12,155
Payments		(14,473)		(14,438)
Interest accretion		2,037		2,202
Valuation gain		(905)		(1,396)
Ending balance	$	47,870	$	47,975

The discount rate used to calculate the estimated present value of future obligations for workers’ compensation was 5.17% and 4.66% at December 31, 2024 and 2023, respectively.

The valuation gain in 2024 was primarily attributable to a favorable change in claims development and an increase in the discount rate used to calculate the estimated present value of the future obligations. 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.

As of December 31, 2024 and 2023, we had $106.8 million and $99.4 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, 2024 and 2023 were $3.7 million and $4.1 million, respectively. 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,
	2024		2023

	(in thousands)

Benefit obligations at beginning of year	$	132,444	$	104,287
Service cost		3,443		2,698
Interest cost		6,231		4,951
Actuarial loss (gain)		(13,990)		25,615
Benefits and expenses paid		(3,831)		(5,107)
Benefit obligations at end of year	$	124,297	$	132,444

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


	Year Ended December 31,
	2024		2023		2022

	(in thousands)

Net actuarial gain (loss)	$	13,990	$	(25,615)	$	9,840
Reversal of amortization item:
Net actuarial loss		3,356		1,382		1,038
Total recognized in accumulated other comprehensive loss	$	17,346	$	(24,233)	$	10,878

The discount rate used to calculate the estimated present value of future obligations for pneumoconiosis benefits was 5.51%, 4.81% and 5.0% at December 31, 2024, 2023 and 2022, respectively.


	Year Ended December 31,
	2024		2023		2022

	(in thousands)
Amount recognized in accumulated other comprehensive loss consists of:
Net actuarial loss	$	32,399	$	49,745	$	25,510

The actuarial gain component of the change in benefit obligations in 2024 was primarily attributable to a) favorable changes in the discount rate, b) favorable demographics in the at-risk population, and c) favorable assumption changes related to Federal and State benefit levels. These favorable changes were partially offset by unfavorable assumption changes regarding future average medical benefits and adjustment based on new hires or re-hires. 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.

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


	December 31,
	2024		2023

	(in thousands)

Workers’ compensation claims	$	47,870	$	47,975
Pneumoconiosis benefit claims		124,297		132,444
Total obligations		172,167		180,419
Less current portion		(14,838)		(15,913)
Non-current obligations	$	157,329	$	164,506

Both the pneumoconiosis benefit and workers’ compensation obligations were unfunded at December 31, 2024 and 2023.

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


	Year Ended December 31,
	2024		2023		2022

	(in thousands)
Service cost	$	3,443	$	2,698	$	3,798
Interest cost (1)		6,231		4,951		2,991
Net amortization (1)		3,356		1,382		1,038
Total pneumoconiosis expense		13,030		9,031		7,827
Workers' compensation expense		18,155		15,152		11,675
Net periodic benefit cost	$	31,185	$	24,183	$	19,502

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