Employees who have medical and disability coverage and who suffer a short-term disabling illness or injury spend less time away from work on medical leave than those without the integrated program. So concludes insurance firm CIGNA's 2010 Integration Value Study, comparing integrated and nonintegrated disability and medical plans.In any economy, employers pay attention to labor costs. Chief among the cost drivers is lost productivity attributable to disabling illness and injuries. According to the Mercer/Kronos 2010 survey, Total Impact of Employee Absences
, the total costs of unscheduled disability absences in the U.S. adds up to 8.7 percent of payroll—more than half the cost of health care, measured at 13.6 percent of payroll.
“Reining in costs associated with employee absence is an imperative for employers,” said Mark Marsters, senior vice president, Group Operations, for CIGNA. “Integrated disability and medical programs provide more opportunities to encourage and engage employees to improve their health and reduce disability absence, which benefits the employees as well as their employers.”
CIGNA’s study found that employees with an integrated disability and health insurance program:
• Were absent 20 percent less than those who had disability coverage alone.
• When taking short-term disability leave, required on average 13 fewer days of disability time than those who did not have access to an integrated program.
• Experienced an 11 percent better return-to-work rate than those without the integrated plan.
If each day of disability costs an employer $159 in direct and indirect costs (assuming an average benefits loaded average hourly wage of $29.71 and a 60 percent short-term disability benefit), a company with 5,000 employees covered with medical and disability programs could expect 2,500 fewer days of disability, representing nearly $397,500 in direct cost and productivity savings.
Chronic Care, Too
In addition to disability and health coverage, a chronic care program that provides education and coaching support is an important component of an integrated approach. According to a separate study conducted by CIGNA, chronic care participants who experience a disability missed nearly four fewer days than those with chronic conditions who did not participate in the program, and program participants had a higher return-to-work rate.
“Preventing illness or injury doesn’t stop once an individual begins a short- or long-term disability absence. One condition can lead to another,” said Jeffrey Kang, CIGNA's chief medical officer. “Proper coaching and other steps can help prevent an individual’s difficult situation from becoming worse. As the study shows, an integrated medical and disability program creates a more coordinated effort to help individuals return to work and stay healthy and on the job.”
Stephen Miller, CEBS, is an online editor/manager for SHRM.
After a Disability, a Return-to-Work Advocate Helps, SHRM Online Benefits Discipline, February 2011
A Coordinated Approach to Disability Management, SHRM Online Benefits Discipline, April 2010
Gauging—and Improving—Employees’ Short-Term Disability Experience, SHRM Online Benefits Discipline, July 2008
Integrating Health and Productivity Management, SHRM Online Benefits Discipline, May 2008
Return-to-Work/Stay-at-Work Programs: Reduce Lost Time, Boost Productivity, SHRM Online Benefits Discipline, March 2008
SHRM Online Benefits DisciplineSHRM Online Health Care Reform Resource Page