When an employee is off the job due to a serious injury or illness, the impact is more than simply adding up medical bills and income replacement costs. That person's knowledge, experience and training are also lost, temporarily or permanently.
As the baby boom generation grows older, the average age of the overall work force also rises, suggesting that disability costs will increase as well. Since older employees usually have more tenure and higher salaries, their income-replacement costs are higher.
According to the National Association of Life Underwriters, between the ages of 35 and 65, three out of 10 working people will become disabled for 90 days or longer. And before age 65, one in five working people will become disabled for five years or more.
In addition, the Social Security Administration has estimated that disability costs will rise 37 percent in the next decade due to the growing number of workers ages 45 to 64.
Disability is a major business expense. A study by the Washington Business Group on Health (WBGH) found that the total cost of employee disability to employers is as much as 10 percent of company payrolls.
Some of the true costs involved in an extended absence of an employee include:
* Temporary help ($8-20/hour)
* Employment agencies ($1,000 and up)
* Overtime (two to three times the hourly rate)
* Newspaper ads ($100 and up)
* Continued benefit payments in the form of health, retirement, disability payments
Managing disability costs
Employers have traditionally managed workers' compensation, group health and Long Term Disability/Short Term Disability (LTD/STD) programs as independent employee benefits. But competitive pressures -- skilled labor shortages, cost containment and the growing number of disability claims from an aging work force -- are forcing the search for new solutions.
One is Integrated Disability Programs, which can be used to reduce costs, enhance productivity, promote employee health and safety, and simplify benefit management and administration. Two goals of an Integrated Disability Management program are to get a handle on total costs and get an injured employee back to work full-time and in good health.
Integrated Disability Management programs combine disability management and claims administration for occupational and nonoccupational injuries and illnesses to reduce employee absences and encourage a return-to-work mindset. Of the companies that integrate and measure disability management plans, about one-third report an average savings of 25 percent of their total disability tab.
There are several key features of any Integrated Disability Management Program. They include:
* Absence management/early intervention. Speeds awareness of disabilities, certifies disability lengths and initiates disability claim management.
* First notice of loss reporting. Allows employers to log workers' compensation injuries and assures the completion and filing of required state forms.
* PPO network. Provides access to a national preferred provider organization, claim repricing and provider directories.
* Utilization management. Provides control of utilization through use of an inpatient stay and outpatient surgery precertification programs, concurrent review and discharge verification.
* Independent Medical Examinations (IMEs). Confirms treatment plans and recommends treatment options when necessary.
* Medical case management. Uses case managers to reduce the duration of disabilities.
* Vocational rehabilitation. Provides assessment by a case manager of an employee's work history, transferable skills, employment factors and possible vocational choices to set the course of retraining an employee to enable him or her to return to the work force.
* Short Term Disability (STD) claims administration. Tracks and monitors STD claims and may include the creation of STD advice to pay or cut STD claim payments.
* Outcomes reporting. Reports regarding care progress and savings generated due to managed care interventions.
Employers need to know what impact disability and absence have on their productivity and bottom line. Look to your work force, identify those that aren't at work and case manage their disability without regard to its work-relatedness.
Integrated Disability Management programs encourage early intervention, provide opportunities for common case management across both occupational and nonoccupational claims and create an environment in which formal return-to-work programs can be implemented throughout the organization.
Now more than ever, companies need to return valuable, experienced employees to the workplace as soon as possible.
Carlton D. Rood, RN, BSN, CWCP, is branch manager for CorVel Corp., which provides case management, utilization management, medical bill review, group health and integrated disability management programs to employers. Reach him at (800) 275-6463, firstname.lastname@example.org or at www.corvel.com.