Linking wellness to disability lowers costs, gets workers back on the job fasterReprints
Some employers are linking wellness and health coaching to their long-term disability plans to reduce premium costs and help employees return to work faster.
The trend is limited to early adopters, said Rich Fuerstenberg, Princeton, N.J.-based national specialty practice leader for Mercer L.L.C.'s group benefits practice. However, he said, more companies are asking about ways to leverage wellness benefits that they've seen in the group health arena.
“We're seeing more and more employers recognize that you can't build a wall between what you're doing on the health management side and what you're doing on the disability side,” Mr. Fuerstenberg said.
Certain employers are linking the amount of disability benefits that an employee can receive to his or her participation in health risk assessments, chronic disease management programs, or consultations with case managers and health advocates, he said.
“We're ... seeing some employers dabbling with (providing employees) 100% short-term disability benefits, but if you're disabled and you don't work with a health coach in addition to your disability manager, maybe that benefit gets cut back to 80%,” Mr. Fuerstenberg said.
Jon Trevisan, Boston-based senior vice president and director of placement at Willis North America Inc.'s national human capital practice, described the addition of wellness components to disability insurance as an “emerging trend.” He also said coordination of wellness strategies can help insurers capture data that can inform their disability insurance underwriting.
Insurers are asking how they can “capitalize on the information that may be available ... by virtue of some of the more robust integrated health management or wellness programs that are out there, and how can (they) take that information and recognize that in determining what the cost for an employer and the employees will be,” Mr. Trevisan said.
Chronic disease management and wellness initiatives are part of a “cutting-edge” movement to integrate disability leave with managing workers comp and health programs — all of which aim to keep employees healthy or get them back to work, said Gary Anderberg, New Hope, Pa.-based senior vice president of claim analytics for Gallagher Bassett Services Inc.
“If an employee has a back strain claim, whether it's occupational or nonoccupational, why wouldn't you take that opportunity to make sure that they're enrolled in your well-back program?” Mr. Anderberg said. “It's kind of odd not to.”
Such integration is happening as the insurance industry waits to see how federal health care reform will affect the disability insurance market. Experts say that the U.S. Patient Protection and Affordable Care Act could have advantages and drawbacks for employer disability coverage.
Elizabeth Incze, director of strategy and product for group insurance at Aetna Inc. in South Portland, Maine, said health care reform could help reduce employers' disability costs.
“The ACA's focus on preventive care, wellness, value-based health plans and the trend toward employees becoming more accountable for their own health could positively impact the disability business,” Ms. Incze said in a statement to Business Insurance. “If the goals of the ACA are realized, the industry should expect fewer disabilities, shorter durations and more stay-at-work opportunities with accommodations.”
However, some employers anticipate bumps in the road as health care reform continues rolling out. Privacy reforms and an influx of previously uninsured patients could delay disability patients' ability to get treated, said Darryl Hammann, executive vice president of disability operations at Sedgwick Claims Management Services Inc. in Eden Prairie, Minn.
“It may be more challenging to get medical information from doctors. We may see claimants who have more trouble getting an appointment with a doctor,” Mr. Hammann said.
Despite uncertainty about the health care reform law, experts said employers seem determined to continue providing disability coverage to their employees.
Willis' Mr. Trevisan and Mercer's Mr. Fuerstenberg said some employers are contributing less toward disability premiums and giving employees the option to pay more for additional coverage.
“I think that a lot of employees, when it's communicated and positioned appropriately, are willing to buy up because they recognize the importance of making sure that they have the financial means to address the impact of a disability,” Mr. Trevisan said.
Still, sources said there is no overall movement to reduce disability offerings.
Aetna's Ms. Incze said the insurer has not seen “a meaningful shift” in employers choosing to move to lower-cost disability insurance plans.
Recent data from Mercer seems to support that. In a survey of more than 300 employers, 81% pay the entire short-term disability premium for salaried employees, and 74% do so for hourly workers.
On average, employer disability plans replace about 64% of employee income during short-term disability leaves, according to Mercer's survey.
For long-term disability, 80% of surveyed employers pay the entire premium for salaried employees, and 78% do so for hourly employees. Employers in the Mercer survey said their basic long-term coverage provides an average of 59% of employee pay, while employees can buy additional coverage that increases their average benefit to 63% of pay.
Employers “feel an obligation to provide some sort of a safety net benefit,” said Mercer's Mr. Fuerstenberg, who said the survey found a slight increase in employer-sponsored disability coverage.