Self-insured short-term disability policies quicken recovery, lower costs

Traditional short-term disability insurance policies tend to approach an injured employee’s return to work in a very generic way with little or no regard for the unique challenges of an individual’s recovery.

“If, for example, an employee had knee surgery, an insurer will approve 10 weeks of disability with no considerations for age and job responsibilities,” says Cindy Artino, president at Spooner, Inc.

That’s why some employers are choosing to run a self-insured policy. With this option, rehabilitation can be customized and injured employees can receive medical counseling, both of which help facilitate a faster return to work.

Smart Business spoke with Artino about self-insured short-term disability policies, when they’re a good idea and how to choose a provider.

Why should an employer consider self-insuring its short-term disability policy?

There is a cost benefit to self-insuring a short-term disability policy. Introducing a third-party to manage the policy for an employer often results in the employer paying less in disability costs while having more control and more information about when an injured employee will return to work. That’s a significant benefit for manufacturers, for instance, because of the importance placed on staying on schedule and maintaining production levels.

Companies with 50 or more employees typically realize the most cost savings for insuring short-term disability.

What are the factors that determine whether self-insuring a short-term disability policy is the right move for a company?

Employers should take a look at exactly what they pay in benefits versus what they pay in premiums. It will likely be the case that, over the course of a couple years, a self-insured policy could be a major cost saver for them.

With a self-insured policy, employers are able to create rules for the short-term disability process that best fit their unique work environment and culture. Compared to a fully insured policy, self-insured policies offer much more flexibility.

What are the short comings of a traditional short-term disability policy?

For employers on a fully insured policy, their insurance only protects them from short-term disability cases that are paid for 12 to 26 weeks. Outlier cases that last beyond that window result in paying out far more in benefits. Knowing when an employee can come back to work, as is the case with self-insured policies, often outweighs any additional costs.

How are policy rules established?

Setting up a policy starts with a conversation between the employer and the service provider. The discussion will include the means and schedule of payment, what to do if an eligible employee tests positive for an illegal substance, and how to proceed if a person was injured while committing a crime — driving under the influence, for instance. Employers can establish whatever rules align with their company values.

What should employers look for in a service provider? Is this something an employer can do on its own?

Employers can set up a self-insured short-term disability policy on their own, but most employees don’t want to discuss their personal medical conditions with their employer. Confidentiality can be maintained if an outside party handles this.

When searching for an outsource partner, check first for a track record of running successful policies. Look for one utilizing nurses that specialize in helping employees get back to work. The nurses will be on the phone with employees to check on their progress and help remove any barriers to return to work.

Having a service provider with nurses on-staff helps employees manage their recovery. They can get questions answered about medication and treatment, which can make an employee feel more comfortable about what they’re going through.

Employers should evaluate internally their own policy and decide whether what they’re doing is benefiting their company. If not, they should look at making a change that improves conditions for them and their employees.

Insights Workplace Health & Safety is brought to you by Spooner, Inc.