Return to work in progress

Risks to claims experience
Evidence linking the economy and disability claims incidence is inconsistent. Both strong economic conditions and economic downturns can potentially affect disability plan costs. For example, an overheated economy can increase disability incidence as labour shortages lead to workload and other stresses. On the other hand, an economic downturn presents different risks that employers would be wise to pay attention to.

The business risk for employers arises from potential increases in the incidence and duration of short-term disability (STD) and long-term disability (LTD) claims, as well as from lower success rates for the return to work of employees on disability. Employers also need to consider the costs of productivity decreases due to presenteeism and absenteeism.

Workplace mental health is emerging as a significant concern for employers—one that is likely to grow along with increased workplace and personal stress related to economic conditions. A survey of Canadian employers and employees conducted in 2007 by Ipsos Reid for the Great-West Life Centre for Mental Health in the Workplace revealed a significant incidence of depression within management and employee ranks. Twenty-six percent of respondents reported that they had been diagnosed with depression at some point or felt they had experienced depression. Managers estimated that the annual cost of reduced productivity from a depressed employee (presenteeism) was about $7,000, and the cost of absenteeism was almost $10,000. The Canadian Life and Health Insurance Association estimates that 30% to 40% of disability claims paid in Canada are related to mental health issues such as depression and anxiety.

While an economic downturn does not automatically mean an increase in LTD claims, there may be concerns for employers in certain industries or regions. It’s natural for people to seek security and stability in times of uncertainty. Where an industry or employer has a history of layoffs—or where employees feel their jobs may be at risk—LTD income could be perceived as the more stable option. That can be an incentive for some employees to remain on LTD longer and undermine return-to-work efforts.

For some employers, the situation is reversed. It may be difficult for an employer to accept or manage an employee’s return to work with the knowledge that the organization may be downsizing. There may be a reluctance to invest in the accommodations required to support a successful return to work when human and financial resources are tight.

Another economic influence on disability plan costs is investment earnings, especially in an environment where interest rates are dropping. Given the long-term nature of disability claims, investment earnings are an important factor in monthly disability payments. To give an indication of the sensitivity of LTD premiums to investment returns, every 0.5% change in investment return translates into a 2% to 4% impact on LTD premiums. While insurers will likely try to absorb interest rate fluctuations in the short term, over the longer term, these changes can affect premium rates.

Steps and strategies
There are steps that employers can take to help identify and address workplace issues, potentially reducing the impact of absenteeism and disability claims.

1. Assessment and monitoring The first step is to understand what’s happening in your organization. What are the absenteeism rates? Are they higher than normal? Has productivity been decreasing? Does morale seem to be lower than usual (a particular concern in organizations with recent or upcoming layoffs)? Are the changes concentrated in certain areas of the organization, such as those perceived as most at risk for layoffs?

Employers can also examine claims experience to determine whether patterns are emerging or changing. What are the organization’s disability rates? Are the types of STD claims or medical claims changing? Have there been more mental health-related disability or drug claims recently? Is usage of the employee assistance plan (EAP) increasing?

For help in identifying these trends, employers can ask their benefits advisor or provider to perform an organizational health risk assessment. This assessment uses the organization’s own information, such as drug claims data, to help identify common risk factors in that workplace. These assessments can be invaluable in targeting potential solutions specific to the organization’s needs and may provide an action plan for the employer to follow, with the goal of helping to lower or even prevent the identified risks among employees.

Most benefits advisors and insurance providers can offer or arrange in-depth consulting to analyze an organization’s policies, benefits plan and employee demographics, mapping out customized strategies to help ensure that the employer’s wellness, absence and disability plans fit the organization’s needs.

2. Proactive management The best times to act are before a disability occurs or in the early stages of a disability. There are a number of ways that an employer can do this.

Adopt an absence support program – Such a program can help employers to track employee absences and identify opportunities to provide support for employees at risk of a disability. When employers get involved before a claim is submitted, employees can access the support and services they need to address issues in a timely manner, potentially heading off a disability claim. This type of program can position the employer and benefits provider to begin case management earlier once a disability occurs, potentially reducing the length of the disability. Employers can also use absence tracking reports to gain a better understanding of the reasons that employees may be absent from work, helping to identify any organizational issues that may be contributing factors.

Incorporate an EAP into the plan – An EAP can be a valuable resource for employees struggling with personal or job-related emotional issues. Confidential counselling on a variety of subjects—such as financial and legal concerns, and emotional and mental health—supports employees in addressing issues before they lead to more significant problems. While most EAP services do not include diagnosis or treatment of mental illnesses such as depression or anxiety, the EAP’s counselling services can go a long way toward helping employees cope with personal issues that could affect their work.

If there is already an EAP in place, employers should ensure that employees are aware of the service and how it works. Educating employees on the resources and services available to them through their benefits plan is essential, but it need not be costly. Most EAP providers have free materials available to help employers raise awareness among their workers.

Early intervention – Once a case has reached the STD stage, it’s not too early to begin planning for a safe and timely return to work. Rehabilitation programs that provide consultation with medical specialists, outreach to employees on STD and thorough return-to-work planning can reduce the duration of the disability and related costs.

There are a number of early intervention opportunities available for complex cases that seem to be moving in the direction of a lengthy claim. Medical coordination and vocational rehabilitation services both take a problem-solving approach to disability management and can help achieve results that work for both the employer and the employee.

3. Return to work Employers should ensure that their policies and practices aren’t hindering return-to-work efforts. In particular, it’s important to have clear policies in place to support employees transitioning back to work.

There are often opportunities to begin transitioning an employee back to work before the person is able to do the job to the full extent. This can help reduce the duration of the claim and increase the success of the employee’s return to work. Senior management may need to provide strong leadership, reinforcing the need for managers to accommodate staff and support an early return to work. Managers also need support to recognize the potential benefits and get access to the necessary resources to make it happen.

4. Prevention While attention needs to be paid to managing current claims and helping employees to transition back to work, employers should also focus on supporting employees on the job.

Make health and wellness information accessible – Offering employees access to a free interactive online health and wellness resource can be a significant benefit, as can adding simple at-work programs such as lunchtime information sessions or health-screening clinics to address common health issues identified by an organizational health assessment. These may already be part of an employer’s benefits package. If not, providers can help employers to identify qualified resources. As with an EAP, it’s important that these services are promoted to employees.

Learn about mental health issues – There are free information sources that employers can draw on to help understand, assess and build strategies to address mental health issues affecting the workplace. A wide range of resources is available, including the Canadian Mental Health Association, the Mood Disorders Association of Ontario and the Centre for Addiction and Mental Health. The Great-West Life Centre for Mental Health in the Workplace also offers tools and information that are publicly available to all organizations, including strategies for employers when addressing issues related to economic uncertainty with employees.

Support supervisors and managers – Front-line managers can play a key role in contributing to prevention, identifying at-risk employees early and supporting return-to-work plans. Educating managers on how they can contribute can be beneficial, but this needs to be balanced with a clear understanding of roles. Managers should not be expected to be psychologists. However, they can help keep employees engaged and foster positive, open communication before a disability occurs and throughout the process.

Addressing and alleviating the workplace impact of an economic slowdown need not be complex or costly. By being aware of the risks and the warning signs, employers can manage employee wellness and benefits plans in a way that supports employees and the business, for both the short term and the long term.

Mike Schwartz is senior vice-president, group benefits, with Great-West Life.

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