Disability insurance experts with the Guardian Life Insurance Company have developed an index for measuring and predicting the success of companies' absence management programs in conjunction with their short-term and long-term disability. Guardian's Andrew Hutchison, assistant vice president of group life and disability products, and Judy Buczek, manager of group disability products, are taking the opportunity to encourage small and midsize employers who haven't yet implemented absence management to do so.
Lacking a program, Hutchison says, can prove more than wasteful; it can lead to falling short of compliance with federal laws like the Family and Medical Leave Act and Americans with Disabilities Act, not to mention conflicting or overlapping state statutes. Trying to mitigate such compliance risks, he says, can be a full-time job on its own.
"A lot of times, these folks have multiple state locations and trying to coordinate leave of absence when someone is on disability is very complex and requires a lot of expertise," Hutchison says. "You really have to follow these laws very closely because they change all the time."
That's a message that large employers have been receiving loud and clear for some time, generally because they are the ones more likely to have locations across several states. But even businesses with only one worksite can benefit from an absence management program related to FMLA and/or disability leaves.
Seeking outside help
Absence management is not new, but it's really kind of a large-case concept, Buczek says. "Larger employers understand the importance of managing absenteeism, but it's just as important for mid-size and smaller employers. And actually, [smaller companies are] usually the folks who don't have access to the type of tools they need to manage a program. We're really trying to develop tools to help employers recognize the need for an absence management program, and also to help bring some of those programs downstream to smaller employers."
Barry Lundquist, president of the Council for Disability Awareness, says that when people are out of work, it can be proportionally as large a drain on bottom lines as major cost-drivers like health care.
"At least one theory has historically been that if you have a short-term disability plan, and you manage that properly, it will help prevent or manage long-term disabilities," Lundquist says. "That actually hasn't played out, and one of the things that we've learned in our annual claims study is that if there's a short-term disability, there tend to be more long-term disability claims rather than fewer."
Hutchison recommends hiring an outside absence management firm for any company that doesn't have enough HR personnel to dedicate exclusively to the cause. To outsource a coordinated, umbrella approach to reining in absenteeism and long-term disability, he says, may seem like a big expense, but it "really becomes a cost-saving measure, and it takes away a lot of the worry." Small companies, he says, are particularly vulnerable to extended absences.
These days, everyone is asked to do two jobs, Hutchison says. "So having a person out, really, really has an impact on the organization today. Getting people back to work sooner, getting them better sooner, really does impact the bottom line."
Measuring effectiveness
To that end, Buczek says, Guardian is releasing its Absence Management Activity Index this month.
"It's an employer tool that they can use to find out the effectiveness of what they have in place," she says. "We've done some research on our existing plan holders, both large and small, and we've looked at what type of programs they have in place, from wellness to a seamless FMLA program to an STD/LTD program, and we said, 'OK, what programs work the best and what are most effective at managing absences?' It's geared toward making sure that the appropriate tools are put in place."
In a survey of 934 employers ranging in size from as few as 50 to more than 5,000, Guardian awarded 10 full points for completely or partially engaging in 10 different business practices and activities: running full return-to-work programs; the ability to produce or obtain reports that include disability and FMLA usage and claimant data; the ability to produce reports that integrate that data; a disability and/or FMLA process that includes employee referrals to health management programs; centralizing administration of short-term disability, FMLA or both; offering comprehensive wellness programs; offering wellness incentives and discounts; offering a disease management program; using the same STD resource for FMLA and additional benefits programs; and a central phone or Web portal for reporting leave.
The average score of all companies was 3.7 out of 10 points; companies were divided into three categories: not advanced (scores of 0 to less than 3.2770), moderately advanced (3.2770 to less than 5.1454) and highly advanced (5.1454 or more).
Companies were then evaluated for their success along six absence-related outcomes: reduce lost time, reduce direct costs, increase return-to-work rates, decrease overall absenteeism, improve the employee experience and enhance productivity.
Those in the highly advanced category were twice as likely to achieve at least five of the six outcomes (42% vs. 19%) as those who were not advanced. What's more, as Buczek and Hutchison point out, the odds of a given firm being advanced increases with its population size - 47% of those with a 1,000 or more employees rate as highly advanced, compared to only 20% of those with 50 to 249 employees.
The results further support integration of services and, yes, outsourcing. Forty-three percent of those in the highly advanced group use the same resource (internal or external) to administer both STD and FMLA, compared to only 20% of the least advanced group. Some 40% of those who used external carriers or vendors for FMLA and STD, or FMLA alone, reported success in five of the six outcomes in the survey, compared to 28% of those who used only internal resources.
"If you have a pretty robust program," Hutchison says, "an employer is really going to see enhanced productivity, reduced lost time and decreased absenteeism, and the key here is they're going to see people return to work faster and a higher incidence of returning to work."
Lundquist adds, "The Patient Protection and Affordable Care Act is certainly creating uncertainty, and the medical care portion of employee benefits will certainly dominate the discussion going forward, even more than it has in the past." But, he adds, employers would be unwise to try to manage absences from a health-only perspective.
"That's a huge part of the cost equation - people missing work, people being less productive at work," he says.
Dol Amends rules on FMLA 20th
Last month, on the 20th anniversary of the Family and Medical Leave Act, the Department of Labor declined to implement changes to the law related to tracking very small measures of time off, but did finalize congressional amendments that included expanding benefits to veterans and civilian pilots and flight crews.
Long the main complaint from companies related to FMLA has been the difficulty of its administration. Proposed changes would have required the tracking of unscheduled intermittent leave, pricklier even than most.
The Society for Human Resource Management released a statement applauding the Labor Department's decision. SHRM had reached out last year regarding the possible shift, and "DOL said almost 90% of the comments on the rule came from SHRM members."
"Tracking intermittent leave for medical reasons has long been a challenge and confusing for employers," SHRM says. In SHRM research, 73% of HR professionals surveyed reported challenges with tracking intermittent leave.
The changes that were implemented included expanding to families of eligible veterans the same unpaid leave options available to current service members and clarified eligibility for airline personnel; because of the unique way their hours are tabulated, many flight crews had not qualified. Also included was a provision ensuring family members of National Guard or Reserve members can attend unexpected farewell or welcome-home ceremonies.
"Enabling our military families to care for their loved ones without fear of losing their job and to actively participate in deployment, reunification and recovery reflects our deeper understanding of the role family members have in sustaining an all-volunteer force," says acting Labor Secretary Seth D. Harris. "The rule also helps ensure that pilots and flight crews will no longer need to choose between career and caring for a loved one."
