As Workforce Ages, Employers Might Face Higher Disability Costs

Falling on an icy sidewalk while shoveling snow could result in bruises and a day or two off work for people in their 20s. Experts say those same events could result in major injuries and significant sick leave for older workers.

    “The fact of the matter is, older workers have higher incidence [of injuries] and slower recovery,” says Carol Tavella, Devon, Pennsylvania-based senior manager with SMART Business Advisory & Consulting.

    For employers, that means more time until that worker returns to the job, less productivity and, eventually, higher disability costs, experts say.

    In a 2006 study, the U.S. Bureau of Labor Statistics found that the median number of days off work for all workers suffering injuries or illnesses was seven; for workers 55 to 64 years old, the figure jumped to 12 days; for workers 65 and older, the median time off was 15 days.

    For the most part, such absences would fall under short-term disability, which generally picks up where paid sick leave expires and can typically cover workers for three to six months.

    Tom Klett, a Stamford, Connecticut-based senior consultant with Watson Wyatt Worldwide, says that despite concerns from companies regarding absenteeism among older workers, most of these experienced employees will avoid short-term leave whenever possible for fear of losing their job.

    “People want to hold on to their jobs, especially in this economy,” Klett says.

    This, in turn, keeps workers on the job when they haven’t fully recovered from minor injuries and may result in major injuries later on, he says.

    “Here’s where the concerns are manifesting, in longer-term disability,” Klett says.

    As for long-term disability, or disability that lasts anywhere from a year to until an employee reaches retirement age, statistics show spikes in those figures for older workers.

    For example, the Social Security Administration said 67 percent of Social Security Disability Insurance awardees in December 2007 were 50 or older. The government’s SSDI program is available to those who have been deemed disabled for at least a year or who have been diagnosed as permanently disabled. This program, often tapped by disabled workers to supplement their long-term disability income, is notorious for its backlog of applicants and its tough standards. Nevertheless, the demand for SSDI is growing, says Dan Allsup, a director with Allsup Inc., a Belleville, Illinois-based firm that assists disabled workers in collecting benefits.

    Experts say employer-based disability—a benefit to which about 30 percent of workers have access, according to Social Security Administration estimates—is also expected to grow considerably as the workforce ages.

    “I can see how employers are looking at this when dealing with older generations of workers,” Tavella says. “Individuals are staying in the workforce longer.”

    However, not everyone believes an increase in disability claims is an issue about aging. Helen Darling, president of the Washington-based National Business Group on Health, says an increasing number of workers, regardless of age, are becoming more susceptible to injuries because of the health of the current population.

    “This is much more a function of health than age,” says Darling, who cited the example of a healthy 55-year-old worker versus an obese 25-year-old employee. “We cannot assume that older workers are less productive and more prone to injury than younger workers.”

    For employers that are trying to gauge their potential exposures, Paul Botkin, a Dallas-based senior VP at Aon Consulting, points to predictive data analytics. These programs aim to collect data from an employer’s workforce, such as health assessments and risk factors, and use that same data to create programs to keep the company’s workforce strong and healthy.

    “Employers want to predict which population [of employees] … is likely to suffer injuries,” Botkin says. “Employers want to look at the data and see what they can do to encourage employees to be more proactive.”

    While many employers already gather data about their employees, by way of health assessments and questionnaires, and may even have wellness programs, older workers in particular might benefit from gym memberships to keep them fit and strong. Companies could pay all or part of the gym membership cost, he says.

    “What you can do is say to people that there are some things you can do to avoid injuries, like stretching, strength training and physical therapy,” Botkin says. “What you want is an employer to help promote a physically healthy population” regardless of age.

    Watson Wyatt’s Klett says companies see wellness as the ticket to not only maintaining a healthy workforce, but also zeroing in on their own disabled workers.

    “When employers reach the point where [a worker] is out [on long-term disability], companies often do everything they can and give employees all the services they need to get them back,” he says.