A decline in the number of long-term disability claims over the past three years may be the result of some employees prioritizing their financial health over physical and mental wellness, said William Lindsay, senior disability management advisor for Desjardins Insurance’s disability management and prevention team, during Benefits Canada’s 2024 Mental Health Summit in June.
The insurer’s internal data found a consistent year-over-year rise in LTD claims of one to 1.5 per cent from 2016 to 2021, with a brief blip during 2020 due to the coronavirus pandemic’s impact on Canada’s already overburdened health-care system.
Read: Taking the long view on effectively dealing with LTD claims
But, as of the beginning of 2022, the incidence rate has dropped suddenly and drastically. That trend has continued all the way to September 2023, the most recent month that Desjardins had analyzed. By that point in time, the insurer had seen a 13 per cent decrease in disability leaves from its pre-pandemic mark.
Digging into the data, incidence rates have decreased across all LTD diagnoses, though each diagnosis has been influenced by different variables. Cancer-related and cardiovascular absences reached 2019 levels as of September 2023, with a dip during the first two years of the pandemic followed increases in leaves in 2022 that spoke to the state of the public health-care system.
But musculoskeletal leaves, which have decreased 26 per cent from pre-pandemic, tell a different story. Lindsay suggested this trend could be due to changes in working conditions since the pandemic.
Mental-health LTD claims peaked in early 2022 and then dropped steeply, hovering at a decrease of eight per cent since before the pandemic. While the data suggests plan members’ mental health has improved, Desjardins has seen a 17 per cent increase in claims for antidepressants and anti-anxiety medications in the same period.
Read: How are pandemic reverberations affecting disability management programs, workplace accommodations?
These trends should be viewed within a macroeconomic context. By the summer of 2021, inflation had reached its highest level in a decade, and continued to increase, reaching more than eight per cent by June 2022 — sending the price of everything from rent to groceries skyrocketing. In the first three months of 2022, Russia invaded Ukraine — impacting the global market — and the Bank of Canada made the first of six interest rate hikes in an effort to tame runaway inflation.
The massive shift in the economic environment means that some employees can no longer afford to take disability leave, Lindsay said, noting the financial strain is likely worsening existing mental-health challenges.
Not only does this risk making employees’ health challenges worse in the short- and medium-term, the longer that someone delays treatment, the longer their disability leave is likely to be. Given that the length of a disability leave plays a determining role in someone’s chances for a successful return to work, “this artificial drop in LTD doesn’t bode well for employers,” he said
Read: More than a third of disability claims in 2022 due to mental-health reasons: survey
In 2024, musculoskeletal claims will likely continue to decrease or at least stabilize, while absences related to cancer and cardiovascular conditions are expected to remain stable. The artificial drop in mental-health claims will rebound eventually, “and when that happens the entire curve for LTD incidence is going to shoot up,” said Lindsay.
Desjardins is watching the consumer price index and the BOC’s key interest rate to see when the dual pressure on household incomes begins to let up. Both could be leading indicators of when employees may begin prioritizing their health and taking time off work, he said, noting Jimmy Jean, Desjardins’ chief economist, expects to see inflation sitting at just under three per cent by 2025.
Read more coverage of the 2024 Mental Health Summit.