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WORKERS' COMPENSATION INSURANCE AND RESERVES (Note)
 12 Months Ended
Dec. 26, 2021
Workers' Compensation Insurance and Reserves [Abstract]  
WORKERS' COMPENSATION INSURANCE AND RESERVES WORKERS’ COMPENSATION INSURANCE AND RESERVES
We provide workers’ compensation insurance for our associates and permanent employees. The majority of our current workers’ compensation insurance policies cover claims for a particular event above a $2.0 million deductible limit, on a “per occurrence” basis. This results in our being substantially self-insured.
Our workers’ compensation reserve for claims below the deductible limit is discounted to its estimated net present value using discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. The weighted average discount rate was 1.6% and 1.8% at December 26, 2021 and December 27, 2020, respectively. Payments made against self-insured claims are made over a weighted average period of approximately 5.5 years as of December 26, 2021.
The following table presents a reconciliation of the undiscounted workers’ compensation reserve to the discounted workers’ compensation reserve for the periods presented:
(in thousands)December 26,
2021		December 27,
2020
Undiscounted workers’ compensation reserve$273,000 $273,502 
Less discount on workers’ compensation reserve16,806 18,009 
Workers’ compensation reserve, net of discount256,194 255,493 
Less current portion61,596 66,007 
Long-term portion$194,598 $189,486 
Payments made against self-insured claims were $41.9 million, $52.8 million and $63.1 million for the fiscal years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively.
Our workers’ compensation reserve includes estimated expenses related to claims above our self-insured limits (“excess claims”), and we record a corresponding receivable for the insurance coverage on excess claims based on the contractual policy agreements we have with insurance carriers. We discount this reserve and corresponding receivable to its estimated net present value using the discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. The rates used to discount excess claims incurred during the fiscal years ended December 26, 2021 and December 27, 2020 were 1.8% and 1.3%, respectively. The claim payments are made and the corresponding reimbursements from our insurance carriers are received over an estimated weighted average period of approximately 17 years. The discounted workers’ compensation reserve for excess claims were $62.7 million and $54.0 million, as of December 26, 2021 and December 27, 2020, respectively. The discounted receivables from insurance companies, net of valuation allowance, were $61.4 million and $52.9 million as of December 26, 2021 and December 27, 2020, respectively.
The activity related to the insurance receivable allowance for credit losses was as follows:
(in thousands)202120202019
Beginning balance$85 $629 $3,314 
Cumulative-effect adjustment (1)— 72 — 
Charged to expense13 13 120 
Release of allowance— (629)(2,805)
Ending balance$98 $85 $629 
(1)As a result of our adoption of the accounting standard for credit losses, we recognized a cumulative-effect adjustment to our insurance receivable valuation allowance of $0.1 million as of the beginning of the first quarter of 2020. Refer to Note 1: Summary of Significant Accounting Policies for further details.
Management evaluates the adequacy of the workers’ compensation reserves in conjunction with an independent quarterly actuarial assessment. Factors considered in establishing and adjusting these reserves include, among other things:
•changes in medical and time loss (“indemnity”) costs;
•changes in mix between medical only and indemnity claims;
•regulatory and legislative developments impacting benefits and settlement requirements;
•type and location of work performed;
•impact of safety initiatives; and
•positive or adverse development of claims, which considers the potential impact of COVID-19.
The table below presents the estimated future payout of our discounted workers’ compensation claims reserve for the next five years and thereafter as of December 26, 2021:
(in thousands)
2022$61,596 
202332,921 
202419,117 
202512,694 
20269,363 
Thereafter57,819 
Sub-total193,510 
Excess claims (1)62,684 
Total$256,194 
(1)Estimated expenses related to claims above our self-insured limits for which we have a corresponding receivable for the insurance coverage based on contractual policy agreements.
Workers’ compensation cost consists primarily of changes in self-insurance reserves net of changes in discount, monopolistic jurisdictions’ premiums, insurance premiums and other miscellaneous expenses. Workers’ compensation cost of $39.8 million, $49.4 million and $60.2 million was recorded in cost of services on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended December 26, 2021, December 27, 2020 and December 29, 2019, respectively.