Costs and Benefits of Integrated Disability Management

Protecting the Bottom Line and Increasing Productivity

Integrated Disability Management (IDM) is a coordinated, consistent approach to an employer’s disability benefits programs. It includes:

• short-term disability (STD)

• long-term disability (LTD)

• workers’ compensation

• Family Medical Leave Act (FMLA)

In an IDM program, employee absences due to illness or injury, regardless of the reason, use the same claim reporting, claim and medical case management and return-to-work protocols. Using these simplified processes can result in direct program cost savings and improved operational tracking of claims and absences.

Many companies that have thought of trying an IDM program have not actually implemented the programs. About 20 percent run some sort of parallel program with either a single point of contact or a single claims administrator paying and coordinating short and long term disability. Salary continuation is often paid instead of lost wages, then at 12 -16 weeks (depending on the plan) short term disability takes over. There are many type of programs, each slightly different, depending on the companies’ philosophy. For example, will there be wage replacement instead of workers compensation? Do they offer short and/or long term disability benefits?

The objectives of all the programs, however, are to get the employee back to work as quickly and as effectively as possible, to maximize productivity, and to mitigate costs. Three key areas must all work together to achieve success: the potential benefits of IDM; the key components of a successful program and the steps involved in an efficient implementation.

The Potential Benefits of an IDM Program

An effective IDM Program benefits an organization in several ways, including reducedoverall disability claim costs. But how are these figures comprised?

The total costs of an employee disability are the:

• Direct Costs, such as wage replacement, medical expenses, benefits expenses and litigation costs.

• Indirect (Hidden) Costs, including temporary employee replacements, overtime, lost productivity and reduced employee morale.

• Administrative expenses to manage multiple programs, either internally, or through vendors.

• Increased productivity resulting from shorter disability durations and quicker return to work. Studies show that the longer an employee is off work, the less likely the employee is to return.

• Enhanced, consistent claim management processes for both occupational and non-occupational injuries and illnesses.

• Integrated data collection, sharing and reporting across benefit lines and policy years.

• Reduced chancesto submit multiple claims and “double dip” due to single source claim reporting and management. (WCx)

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• Increased employee satisfaction from simplified claims services.

• Medical management of all disability lines. A medical director could potentially have a great impact since the employee is using all benefits available.

• Modified duty and transitional work assignments with internal accounting. While having modified duty has a cost, NOT having one has an even higher cost -100 percent loss of one employee’s productivity plus replacement wages for another employee, plus workers comp, STD or LTD.

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

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