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Life Health > Health Insurance

Integrated Disability Management Can Help Clients Manage Premium Hikes

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Its no secret that health care costs are skyrocketing. This year, the United States has seen the largest health insurance premium increases in over a decade–rates in excess of 20%, far outstripping the overall inflation rate of approximately 1.8%.

A persistently high rate of inflation in the U.S. health insurance industry is a reality and a constant battle for employers. And, health care experts say we can expect this trend to continue unabated into the foreseeable future.

As a result, companies are looking for ways to keep their premiums at bearable levels. That typically means shopping for lower rates, cutting benefits, or asking employees to shoulder more of the financial burden–solutions that are not desirable to employees or insurance carriers.

But, for many employers, one solution–integrated disability management–will be the answer of choice. It offers opportunity to achieve improved outcomes, stable premiums and improved productivity, all at the same time.

What is integrated disability management? Typically, it refers to the management of two or more benefit programs, such as short-term disability, long-term disability, workers compensation, and Family and Medical Leave Act absences. But integration doesnt mean simply providing a single phone number for claimants to call when absence strikes. Rather, it refers to a means of optimizing the administrative flow of information, beginning with Day One reporting and tracking of all absence transactions in a single technology system.

Managing an absence as early as possible sets employee and employer expectations, from the start, for return to work. It also allows many more opportunities to save disability days, whether through vocational rehabilitation, modified duty, partial hours or other techniques.

The advantage? When managed in an integrated fashion, an absence can be followed closely as it moves from short-term disability to long-term disability, providing more chances to shorten duration and return the employee to work. That results in an overall reduction in health care costs and contributes to stable premiums.

But managing absences from the first day is often difficult, given the sometimes lengthy short-term disability elimination periods of many benefit plans.

Integrating Family Medical Leave Act absence management becomes critical to ensuring Day One reporting of absences. (The FMLA provides job protection for eligible employees from the very first day of qualified absences and runs concurrently with other absences, such as short-term disabilities.) Companies that do not integrate FMLA management may be missing out on significant lost-time savings.

Still not convinced? Weve found that effective integrated disability management programs can reduce FMLA days by 50%, short-term disability days by an average of 16% and up to 40%, and long-term disability incidence by 23% after the first year. That translates to a decrease in long-term disability reserves and more stable premiums overall.

Further, weve found that effective integrated programs produce an average return on a companys investment of 23 to one. Everyone wins.

The best results come from a tightly integrated system that intakes and tracks absence information. However, if your clients are not ready to completely integrate their absence management programs, they can still gain some benefits from taking the simple steps shown in the chart.

The forecasts are grim. Health care costs are not expected to stabilize any time soon. But your clients still have a prime opportunity to take control–integration.

provides strategic leadership and guidance for “WorkAbility Division” product and market development at CORE Inc., Portland, Maine. You can e-mail him at [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 8, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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