Integrated Disability Management: What's New, What's Next

Most HR managers today know something about Integrated Disability Management (IDM), but many still don't appreciate the powerful impact it can have on employee absence and the bottom line. Part of the challenge is raising employer awareness about the extent of the problem that unscheduled absences represent, and the evolving role IDM can play in providing a solution.

Confronting a costly challenge
According to a worldwide survey, on any given day, 3.9 percent of the U.S. workforce is unexpectedly absent from their jobs. The result is alarming: in 2002, the overall average annual cost of unscheduled employee absences was $789 per employee, up almost 30 percent since 2000. For smaller companies, it can mean a cost impact of as much as $60,000 a year, and for the largest employers, more than $3.6 million annually.

Statistics show, however, that only one-third of U.S. companies actually know what their absence rate is or how their experience compares with others in their industries. One recent survey showed that 61 percent of employers lack the information systems needed to track disability experience and business impact. That means corporate America may not fully realize the heavy costs associated with lost time -- and the effective strategies available to manage them.

IDM is just one of many absence management tools that employers can use to improve attendance and gain control of their employee absence costs. Many benefits providers now offer companies a range of programs that include early claims intervention, rehabilitation services, return-to-work (RTW) program support, work/life benefits, and assistance with regulations relating to the Family and Medical Leave Act (FMLA), among others.

Progressive insurers are also introducing customers to the advantage of implementing an IDM program, which helps many employers reduce lost time and lower disability costs significantly. IDM is flexible enough to meet the specific needs of any company, but in general it is used to coordinate occupational and non-occupational programs and effectively integrate case management of all workplace absences.

By Tim Arnold, Vice President, Return to Work Services, UnumProvident Coproration

This article appeared in the magazine "HR Solutions" (previously "Compensation and Benefit Solutions") published by FieldMedia. Copyright © UnumProvident Corporation, 2003.

Taking an incremental approach
Some companies begin by integrating just their short-term and long-term disability income protection plans and providing integrated claims management. Others also include FMLA leave or workers' compensation, and some employers even add sick pay and other unauthorized time off. Today, wellness and disability prevention programs, along with coordinated RTW services, are sometimes incorporated into IDM, as well.

Employers, however, should be assured that total integration isn't necessary in order to see definitive results. In fact, it's been shown that companies can achieve notable cost savings even when they move toward integration incrementally. Another misconception is that IDM requires a major corporate upheaval or massive reorganization, but employers often see significant savings from simple changs to existing policies and practices. For example, in one study, organizations that implemented integrated case management, involved line supervisors in absence management and designated an internal absence manager had a 74% lower absence rate than those who did not.

No matter how companies choose to structure their IDM program, research shows it can produce the cost savings employers are seeking. UnumProvident's experience, for example, confirms that some large customers have experienced a 30% decrease in their new long term disabillity claims, and a 25% decrease in lost work days by using integration and absence management planning.

In other studies, employers have consistently reported savings of between 0.25% and 1.0% of payroll from integration, as well as experiencing return on investment levels between 5:1 and 15:1. Some studies have even reported disability cost savings of as much as 40% to 50%, although these reductions usually occurred at companies who transitioned from unmanaged to integrated programs.