Incidental Absence: A Few Days Here And There Add Up To Big Losses
A medically related absence of one to five working days duration, known as incidental absence, is not typically thought of as a disability for a very simple reason: A “claim” does not occur until the absence goes into the short term disability, salary continuation, workers compensation or long term disability rolls.
Yet, incidental absence rivals all recognized types of disability in terms of lost work days. It is significantly more disruptive than all other recognized disabilities combined.
As awareness of the magnitude of incidental absence on business increases, ways to measure, diagnose and resolve IA are emerging. First, lets look at a case study to quantify the problem.
Consider a light manufacturer with 16,000 employees. Workers comp cases account for 9% of its absence events and 7% of its lost days. Short term and long term disability combined account for fewer than 12% of absence events and 60% of lost days. But incidental absence accounts for 79% of absence events and 33% of lost days.
At a fully loaded cost per employee per year for this employer of $50,000, these lost days equal $16.8 million in direct costs.
The unscheduled nature of incidental absence is highly disruptive to business operations, with direct effects on operational throughput, quality, customer satisfaction and, ultimately, profitability. For many businesses, the indirect costs of incidental absence likely exceed the direct costs by an exponential factor.
Recent surveys indicate that the direct and indirect cost of disability, including incidental absence, equals 14% of payroll. Just by focusing on incidental absence management, it is possible to reduce this figure by as much as 3%.
Recent efforts to address disability costs mostly have been confined to traditional “claim”-based absences. These efforts include stay-at-work and return-to-work programs; managed disability contracts; enhanced, medical-based case management; integrated disability management; and disease management offerings. As helpful as these programs might be, they dont address incidental absence.
To control incidental absence, an employer has to take a systematic approach to measuring the incidental absence rate, comparing its incidental absence picture to that of similar employers, analyzing the causes, designing and implementing solutions, and measuring the impact of the attempted solutions.
Carrying out these steps is easier said than done, but some employers that do so can drive down incidental absence by up to 40%.
Lawrence M. ORourke is executive vice president of LewisCo. Inc., Deerfield, Ill. He can be reached at firstname.lastname@example.org.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 19, 2003. Copyright 2003 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.