The insurance industries view of disability claims

Employee Benefit News, March 2006

Since Jan.1, when legions of baby boomers began morphing into sexagenarians at a rate of about 8,000 a day, employers have expedited their search for ways of managing the unique health demands of an aging workforce. That includes looking for ways to keep their most seasoned, experienced employees healthy, happy and engaged.

With the baby boom generation (ages 42-60) growing older and yet working until a more advanced age, the focus needs to be on developing strategies for managing the health of that population by using best practices and closely monitoring and managing their disability claims, industry experts advise.

“We know older folks have a higher percentage of disabilities and therefore increased health care costs,” says Rosanna Milley, a principal at Mercer Human Resources Consulting. “The cost of a disabled individual – their benefits and income replacement, as well as health care benefits – is five to six times higher than that of an undisabled individual. The question is, what can we do to impact those [expenditures]?”

Early identification

According to figures compiled by UnumProvident, one of the leading disability insurers, the most common impairments contributing to long-term work disruption for individuals 40-60 are, respectively, back disorders and other musculoskeletal injuries (25%); cancer (17%); cardiovascular and circulatory problems (8%); and mental and behavioral disorders (7%).

In an analysis by Buck Consultants, long-term disability claims (more than 180 days) occurred at a rate of 1.66 per 1,000 workers under 40; 3.49 per 1,000 from age 40-49; and 9.6 per 1,000 workers over the age of 50.

One key to effectively combating these conditions in older workers is their early identification and intervention, says Mercer’s Milley. “If we find a high percentage of employees who have musculoskeletal conditions, we say, What are we doing to help these people prevent, reduce and impact the duration of these disabilities,’” she says.

Overall absenteeism is also higher among older workers. Industry figures indicate workers 55-plus average 12 days of incidental absences a year.

The opportunity to generate savings by better management of disabilities can hardly be underestimated. Says Milley, “With more effective alignment with vendor partners, better clinical case management and administration, you can save up to 1% of total payroll.”

The responsibility falls first to whoever is designated as disability manager. As the first line of defense, the disability manager is the first to know when the employee is out of work, and the first to triage to disease and health management programs.

One of the best interventions, Milley says, is to streamline the return-to-work cycle. Employers should develop processes to get employees back to work sooner, but they should do so without diminishing disability benefits. Being able to establish a transitional return-to-work program supported by senior management and consistent with the company’s workers’ compensation policies is a critical aspect of managing disability.

When it comes to identifying health risk factors early, the reigning philosophy involves linking a financial incentive to the use of health risk appraisal. Such incentives may start as low as $50. On the upper end, beer brewing behemoth Coors offers $200 to employees who take a health risk appraisal. (See related article on Cadmus’ mandatory health screening program on page 32. -Ed.)

Let’s talk about it

Effective communication is another key to managing the special health needs of boomers. Direct, clear communication helps employees understand how to maximize available programs. Increasingly, disability administrators are taking on the role of educator.

Health researchers find that up to 60% of all lost productivity costs can be attributed to 10 major health conditions. Some of these – circulatory conditions, cardiac disease, musculoskeletal problems and diabetes – become increasingly prevalent with age.

A key to successfully managing disabilities and absenteeism lies in employers knowing their employee population, says Milley. More employers need to focus on the demographics of their workforce and to identify the illnesses and conditions specific to their workforce that are driving costs.

Milley also counsels employers to look for ways to enhance safety in the workplace. This might include preventive measures to avoid accidents, or it might encompass ergonomic training to teach workers how to perform a certain function properly.

At their service

One prevailing trend is to view disability management as much from a service perspective as a clinical one. The emphasis is on coordinating resources for employees out on disability. Ed Quinlan, national practice leader for absence management at Buck Consultants, offers an example: “If I am an obese individual, and I go out on disability, part of my evaluation is the reminder of those parts of the disease management program that address obesity.”

Taking the service approach, once again communication becomes vital. Particularly important is dialogue with employees while they’re out – to let them know they are not forgotten, to check on their treatment and recovery. In what Quinlan calls a best practice, occupational health nurses at one company telephone employees who are out on disability to make sure they are complying with their treatment plans.

Quinlan notes that, in the disability and absenteeism arena, companies are increasingly outsourcing. In one Buck survey, 53% of those surveyed reported outsourcing absenteeism administration.

Interactions between supervisors and employees out on disability are all-important at these junctures. Supervisors should be trained to communicate not as a policing action, but as a means of maintaining an employee’s sense of connection to the workplace.

“You have to treat people well while they’re out if you want the best results,” Quinlan advises. “It’s not When are you coming back to work?’ but How are things going?’”

“We don’t offer programs especially for older workers,” says Ken Mitchell, vice president for return-to-work development at UnumProvident. “We have disability programs for all our workers. That’s a very important philosophical position.”

UnumProvident promotes the twin concepts of “productive aging” and “healthy aging.” One gives the aging baby boom worker all the tools and resources to continue vital contributions to the workplace; the other strives to ensure they are healthy while doing it.

To this end, health screenings, blood pressure measurements, and cholesterol and diabetes tests should become the rule. Mitchell also notes an interesting spike in more invasive screening activities for early identification of catastrophic conditions, such as colonoscopies to identify colon cancer.

Empowered, not entitled

One trend on the upswing is employers who expect employees to take responsibility for health.

“Paternalistic days of making people do that has probably gone away,” Mitchell observes. “Benefit programs that reinforce healthy lifestyles for all employees, especially older workers, are in.”

“Baby boomers come from a world of entitlement,” says Quinlan. “They are being moved to a world of empowerment.” Quinlan refers to communication and management strategies currently being reshaped to empower employees to take control of their disabilities.

UnumProvident’s Mitchell asserts that workplace flexibility cannot be overemphasized when it comes to interceding on behalf of boomers.

“When we find an employer who has a real rigid position of 100% or nothing – that is, If you can’t do everything on your job, you can’t do anything – that is going to invite longer stays out and earlier medical retirements,” says Mitchell.

UnumProvident encourages employers to implement transitional work programs. If a worker goes out, such programs increase productivity and reduce absenteeism by ensuring they stay out no longer than absolutely necessary for medical reasons.

The Reed Group in Westminster, Colo., manages a proprietary database of five million medical cases, which grant it a privileged perspective on health care trends, including those for disability and absenteeism.

Dr. Presley Reed, Reed Group chairman, notes a vast gender divide in age impact of medical conditions on baby boomers. He cites data indicating a higher degree of lost time due to disability in men than in women. Another factor impacting disability in boomers is the much longer recovery from musculoskeletal disorders in individuals 60 and older.

“Catastrophic medical conditions don’t really kick in until about age 60,” says Reed. He also notes an increase in diagnosis of early onset Alzheimer’s.

In general, there’s no shortage of evidence to corroborate employers’ concerns with what this year’s 60-year milestone bodes for their workforce. But with early and appropriate interventions, a shift in the collective consciousness and the ever-expanding universe of medical science on the side of employer and employee alike, most of those concerns can be alleviated.

“Health management is going to be absolutely critical,” says UnumProvident’s Mitchell. “When the employers connect those two, healthy aging and productive aging, now they have a nice platform and context by which to make some decisions.” – E.B.N.

6 steps to fewer disability claims

UnumProvident, one of the health insurance industry’s largest providers of long-term disability insurance, recommends the following incremental guidelines for managing disabilities in workers 55 and older.

Step 1: Identify and reduce risk factors within the older workforce. The cost of poor health and aging is influenced through timely risk management.

Step 2: Develop and apply corporate policies that invite and reward work site flexibility and accessibility.

Step 3: Reward employees for accepting responsibility for personal well being and protecting work capacity.

Step 4: Provide incentives to use support services (employee assistance programs, for example) to reduce the impact of complex family barriers to staying productive.

Step 5: Measure the impact of productive aging programs and the subsequent return on investment.

Step 6: Create opportunities within the organization promoting connections between work generations that focus on productivity.

Disability Attorneys Dell & Schaefer, established in 1979, have represented thousands of clients with their claims against disability insurance companies. The firm’s disability income division, managed by Gregory Michael Dell, is comprised of eight attorneys who represent claimants nationwide, throughout all stages (i.e. applications, denials, appeals, litigation, & lump-sum policy buyouts) of a claim for individual or group (ERISA) long-term disability benefits. For a free consultation, please call 800-828-7583 or use our contact page.

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