Every organization, in every business, has a vested interest in the health and safety of its workforce. Employers of ten, to the tens of thousands face similar basic challenges in human productivity and enhancement.
A coordinated approach to employee benefits delivery can go far in reducing costs, enhancing the value of those benefits to workers, and improving employee relations. Regardless of the organization's objectives, effective disability management programs are a win-win for both employers and employees. A growing trend of integrated disability management (IDM) is developing, but basic guidelines need to be followed to be successful.
IDM involves coordination of programs for workers compensation, short- and long-term disability (STD/LTD), sick pay, wage and salary continuation, and other disability-related benefits. There is significant variation among IDM programs because coverages are often defined and insured differently by organizations. At its most common level, IDM entails a single management policy governing return-towork and reasonable job accommodation for temporarily disabled employees.
In a meaningful IDM program, the following organizational benefits can be realized:
Single-source reporting of absence by employees (regardless of cause);
Consistent application of medical management strategies and vocational rehabilitation;
Support for adherence to ADA requirements;
A vigorous and active stance against fraud and system abuse;
Less adversarial relationships with employees;
Reductions in payment for lost time from work.
Types of Benefits
In utilizing IDM you first have to understand the differences between benefits. Workers compensation benefits are statutory and differ significantly from non-occupational STD/LTD coverages, which allow considerable flexibility in plan design. STD generally bridges employer-provided benefits between sick pay and LTD. In its purest form, IDM does not distinguish between occupational and non-occupational coverages, nor by the duration of disability. The concept of "reasonable accommodation," as codified by the Americans with Disabilities Act (ADA), means that disabled employees should be afforded the opportunity to work, providing the essential functions of the job in question can be performed with some kind of accommodation.
The only legitimate reason for refusal to make such work available is that the necessary accommodation(s) would place an "undue hardship" on the employing organization. A hardship definition is primarily a function of the size and scope of employer operations. For these reasons, permissible job accommodation durations vary by employer; organizations with diversified operations and hundreds of employees will generally face a stricter definition of undue hardship than those with a few employees.
IDM Garners Results
Any significant proposed change in business process and practice requires a meaningful cost-benefit analysis. IDM can impact a number of functional areas within an organization, including operations, human resources, employee benefits, risk management, and insurance.
A strong economy with high employment has helped to demonstrate the importance of keeping skilled and dependable workers at work. Replacement costs are estimated at 4 to 10 times the direct costs of a regular employee out of work with a disability. Practicing IDM can help reduce that cost significantly.
Last year the Washington Business Group on Health indicated that its members that have designed and installed IDM programs, such as General Motors, Owens-Corning, and Steelcase, realized a 14.1 percent savings on direct disability costs and 2.9 percent reduction in net payroll.
Smaller companies see similar benefits in employee retention, enlightened human resource management, and reduced insurance costs. Although smaller employers tend to insure employee benefit risks, most are experience rated over time. …