Magazine article The CPA Journal

Reducing the Cost of Disability Benefits

Magazine article The CPA Journal

Reducing the Cost of Disability Benefits

Article excerpt


Buck Consultants, Inc. the employee benefits consulting , devoted its March newsletter For Your Benefit exclusively to the issue of reducing the cost of providing disability benefits to employees. Major factors that Buck sees as driving the costs of employee disability upward are increasing levels of absenteeism (estimated by some employers at 10% to 20% of payroll costs) and some of the regulatory aspects of two recent pieces of Federal legislation--the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA). These laws, according to Buck, "increase employers' administrative responsibilities and establish new rights and benefits for employees involved with disability."

Companies, in becoming more aware of the costs of disability--both out-of-pocket and hidden--are devising programs to control and minimize them. Topping the list would be programs to bring those out because of illness or injury back to the workplace as quickly as possible.

Return-to-Work Programs

In Buck's view, "strong management commitment, expressed through policy, financial support, active management involvement, and a demonstrated concern for the employees, are necessary for a successful return-to-work program. Effective return-to-work initiatives need a business culture that encourages employees who become disabled to return to performing at their full potential as soon as possible."

Early Intervention. Employees out of work due to illness or injury tend to fall into a pattern whereby the longer they are out, the less likely they are to return to work or fully recover. Early intervention, in Buck's view, by a rehabilitation professional can be useful in breaking this pattern. Intervention would include an assessment of the employees' functional capabilities, goals, and attitudes. In order to adequately assess an employee's medical condition, limitations, and state of mind, Buck suggests the employment of various techniques such as functional capacity assessments, vocational testing, job modification, job placement assistance, transferable skills analysis, retraining and labor market surveys.

Personal Interviews. Employers should communicate with disabled employees during the first week of disability, before the employee develops a disability attitude. Disabled employees need to be continually reminded of their value to the company. This reassurance is best achieved through early and frequent contacts by the employer. This will require that the person making contact with the employee be trained in making such communications.

Duration Guidelines. The appropriate length of time for recuperation from various illnesses and disabilities varies among physicians. According to Buck, there a sophisticated online duration guidelines based on medical protocols and outcomes that can be used as tools in disability management. Buck believes these guidelines are useful--not to determine benefits, but rather to establish points for intervention review.

Vocational Rehabilitation. The last step in Buck's suggested program to get the employee back to work involves vocational rehabilitation and medical case-management services. They play a critical role in encouraging an employee to return to gainful employment.

To be successful, a rehabilitation pr gram should-

* identify employees who are good candidates for the program,

* encourage early intervention in employees' disabilities, and

* utilize high quality providers and other resources. …

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