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Back on the job: return-to-work programs reduce the cost and stress of employee disability.


Group disability insurance continues to be a core employee benefit at many companies.

A recent Limra study reports that 74% of companies with more than 500 employees offer long-term DI. So do 59% of companies with 100 to 500 employees. The statistics are similar for short-term DI: 70% and 64%, respectively.

Employers often focus on the benefit expenses of DI, but the true financial impact of employee absences includes both direct and indirect costs. Direct costs include the wages or benefits paid to employees while they are not working. Indirect costs include lost productivity and/or expenses related to hiring and training replacement workers.

A recent Mercer study showed that the direct costs of incidental unplanned absences equaled 2% of base payroll; the total costs, including the indirect costs of replacement labor, were three times higher: 6% of payroll.

The costs of both incidental and extended absences--short-term disabilities and unpaid Family Medical Leave Act leaves--amounted to 2.6% of base payroll in direct costs, but more than 9% in total costs.

In addition to the difficulties associated with the disability itself, extended absence often creates hardships for the employee as well, because DI typically does not replace 100% of lost wages. That reduced income can strain the employee's' finances, so workers have a vested interest in returning to full employment as soon as is feasible.

However, some employees may need retraining or an accommodation to help them stay at or return to work productively.

A structured return-to-work program can provide a mechanism for getting disabled employees back

on the job, either in the same or a modified capacity.

Benefits to Employers

Once an employee is back to work in some capacity, replacement costs such as those associated with overtime, hiring temps or training employees are reduced or eliminated.

Prudential's Fifth Annual Study of Employee Benefits said employers that implement return-to-work strategies see positive results. Of the firms surveyed that provided accommodations to assist employees in returning to work, 66% said the strategy has been successful at achieving the desired cost savings, and 38% said it had been "highly successful."

Contrary to a popular belief, RTW programs don't benefit only employees on disability or medical leave. Successful RTW programs also contain stay-at-work components that help employees remain on the job with medical conditions that are not severe enough to cause them to miss work.

Benefits to Employees

It's not just about cost savings, though. RTW programs give disabled employees the opportunity to retain job skills and bring their incomes closer to pre-disability levels. An RTW program that is supported by the company demonstrates to employees that they are seen as valued members of the team and not just as business assets.

Employees also benefit by returning to work in a way that focuses on what they can do rather than can't do, with the structure to support that transition. Getting back to work more quickly in some capacity increases the morale not only of the affected worker but also of co-workers. The employee feels valued and the co-workers benefit from a less stressful environment as their workloads return to normal.

Return-to-work programs acknowledge that an employee may have limitations but focuses on that person's capabilities, not disabilities. With that in mind, an individual plan is developed for getting the employee back to work.

These programs reintegrate an employee into the workplace through various accommodations in a way that creates a positive result for him or her while increasing productivity for the employer. Accommodations may include acquiring or modifying equipment; adjusting work schedules; offering work from home or telecommuting options; or temporarily reassigning the worker to another position.

As an example of a successful RTW outcome, a safety coordinator at a power plant suffered a 95% hearing loss that could have ended his career. The local business trait was concerned that his inability to hear compromised his safety and the safety of others because he was unable to hear alarms or to understand meeting communication. A vocational specialist found an assistive device that addressed these concerns, and the employee was able to continue working.

An RTW program can enhance compliance with the Americans with Disabilities Act as well. The ADA requires that employers accommodate disabled workers in the workplace, which is a key consideration in any RTW program. ADA "reasonable accommodations" can be very similar to many RTW strategies.

Of those plan sponsors surveyed by Prudential's annual benefits study, 45% said they are currently providing accommodations. These accommodations can be easier and less expensive to implement than often assumed, and savings from an RTW program can offset the expense of implementation.

Plus, an organization may already have rehabilitation provisions in its disability contract or work site accommodation benefits that it can use. Data collected by the Department of Labor's Job Accommodation Network reveals that more than half of ADA accommodations cost employers nothing. In light of the potential penalties for noncompliance with ADA, RTW expenditures can be very reasonable.

Creating an RTW program should be viewed as an evolution, not a revolution. The goal is to move an organization along a continuum to fully integrate RTW into the organization--from senior leadership to human resources and benefits administration, and ultimately to supervisors and their employees.

But RTW is not a quick-fix solution or a short-term program. It requires an ongoing commitment to employees' well-being and productivity. To realize an RTW program's full cost savings and productivity potential, ongoing monitoring and program evaluation are essential.

Admittedly, implementing an RTW program does put added responsibilities onto managers in the short run. From a longer-term perspective, though, successful RTW programs shorten absence durations. That means less managerial time spent backfilling critical roles, less overtime and improved morale because fewer people are covering two jobs. Most managers would prefer to have RTW procedures to follow when an unexpected absence occurs, so that they can be proactive and spend less time wondering what happens next.

Key Points

* The Situation: Group disability insurance continues to be a mainstay of most employers' benefits packages.

* The Back Story: Many carriers provide return-to-work programs that lessen disability hardships on injured workers, co-workers and employers.

* Watch For: More employers to adopt RTW programs as ways to save costs and improve morale over the long term.

RELATED ARTICLE: Leveraging return-to-work data

A key component of an effective return-to-work program is the ability to track, validate and report absences. That means companies must have the right analytics in place to fully understand and realize RTW's benefits. Timely, accurate data and analytics help employers to recognize opportunities and take proactive, preventive measures that will positively impact their bottom line.

Consequently, companies should:

* Track: Supervisors need to know who is absent on a given day, why the employee is out and when is the estimated return date.

* Validate: Confirmation that an employee returned to work as planned or if the absence will continue helps managers know what to expect.

* Report: Absence data allows an employer to identify where RTW efforts are being made and if they are successful.

Collecting data on absences is the first step; integrating it into management's decision-making is the second critical step. Successful employers use their RTW-based data to measure, evaluate and target absence trends by:

* Measuring: Is the RTW program generating an acceptable return on investment? Reports showing direct and indirect cost-savings over time are essential for measuring the program's ongoing success. Employers and their administrators can work together to quantify the result of activities performed and indirect savings associated with their RTW programs.

* Evaluating: What programs and accommodations are working? Which need to be modified to make improvements? For example, metrics that link program usage at one location to a decrease in lost-work days may encourage an employer to implement that program at another site. On the other hand, low usage trends in a particular department can help pinpoint where RTW cultural acceptance is low and further training is necessary.

* Targeting: Employers can't address trends they don't know exist. Better access to absence data can empower employers to take preventative measures that will have a meaningful impact on workforce productivity.

Consider an employer whose data shows that a specific location has a high incidence of absences due to diabetes. That information could prompt the employer to evaluate the proactive nutritional offerings in the cafeteria or offer on-site weight-loss programs for at-risk employees.

Contributor Jim Porter is vice president of Disability Product Management for Prudential Group Insurance. He can be reached at jim.porter@
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Title Annotation:Agent/Broker
Author:Porter, Jim
Publication:Best's Review
Date:May 1, 2012
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