Poor Economy Has Little Effect on Disability, Workers’ Comp Benefits Programs

Employers appear to have been spared the ill effects of a weakened economy on their disability and workers’ compensation benefits programs, a new survey has found.

A survey of as many as 13,000 employers by the Integrated Benefits Institute revealed “no dramatic changes” in the incidence of short- and long-term disability claims from 2008 to 2010. Though median costs associated with disability and workers’ compensation claims rose slightly, the median duration of a disability or workers’ compensation claim has remained largely flat since the beginning of the recession three years ago.

Researchers for the San Francisco-based IBI said the survey’s results, released this week, undermined what previously would have been considered reasonable assumptions of the recession’s effects on employers’ claims experience.

“We might expect that tough economic times would lead to falling claims rates as employees seek to maintain jobs,” researchers wrote in their report. “At the same time, we could envision that in a downsized workforce, employees experience more physical and mental job pressures leading to serious health conditions and worse claims experience.”

Short-term disability claims increased 12 percent between 2008 and 2009, but receded in 2010, yielding an overall rise of just 6 percent during the three-year period. Changes to the median duration of those claims were even more modest, increasing 2 percent per closed claim between 2008 and 2010. Claim costs also increased, but by just 7 percent during the three years.

IBI researchers said more dramatic shifts might have been prevented by higher average wages among claimants (due in part to layoffs), changes in plans designed to attract and retain key employees or an altered mix of medical conditions.

Long-term disability claims remained relatively flat, increasing less than 2 percent from 2008 to 2010, however the median cost of closed claims rose by 26 percent while median open-claim costs jumped up 29 percent in the same three-year period.

New and closed workers’ compensation claims also fell from 2008 to 2010, which researchers said could indicate fewer workers willing to claim benefits, or that “employees remain in the workers’ compensation system longer during difficult economic times.”

However, that has not translated into more lost work time, the survey found. The median number of days lost per workers’ compensation claim remained flat, at 33, in all three years the companies were surveyed.

The cost of medical payments from those claims rose 17 percent, while indemnity payments rose 10 percent.

In their summary of the results, researchers cautioned that employers could see significant increases in incidence, duration and costs associated with workers’ compensation and disability claims if they discontinue health care coverage after the implementation of the health care reform laws.

Those programs, they said, provide valuable assistance in managing workforce health, and that costs associated with disability and workers’ compensation claims must be viewed in tandem with those tied to health care coverage.

“Those that continue to view medical costs in a separate and distinct program silo do so at their peril,” researchers said.  

Filed by Matt Dunning of Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

 

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.