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March 26, 2006 at 03:00 PM
Disability insurers and brokers have an obvious financial interest in persuading employers to strengthen wellness programs and other programs that can improve boomers’ health.
Kenneth Mitchell, a return-to-work specialist at UnumProvident Corp., Chattanooga, Tenn., delivered that message at the annual disability seminar organized by JHA, Portland, Maine, a disability risk management and consulting firm.
The median age of all U.S. employees is 40.4 years, but the median is 43.8 years in public administration, 43.5 years in education and 43 years at transportation and utility companies, according to figures Mitchell obtained from the U.S. Department of Labor.
In a few years, “the dominant group in the work force is going to be over 50,” Mitchell said.
An increase of just one year in the median age of an employer’s employees can increase LTD claim costs 4% to 8%, according to UnumProvident figures.
Mitchell, who is a boomer himself, predicted the effects of the aging of boomers will be uneven.
“When I visit a manufacturer in Ohio or Michigan, I’m one of the guys,” Mitchell reported. “When I visit call centers in the South, I’m gramps.”
Unfortunately for disability insurers, the employers facing the biggest threat from the aging of the boomers–government agencies and schools–are the kinds of employers that already are especially vulnerable to high disability claim rates.
“They don’t manage disability,” Mitchell said. “They pay.”
Shaky retirement income sources and changes in attitudes about working past age 65 also could affect disability claims.
Boomers who want to retire may face pressure to treat disability insurance as an alternative retirement plan: Social Security is facing a demographic squeeze that could lead to a 25% cut in benefits for boomers starting about 2040.
Private defined benefit pension plans already are announcing benefits cuts: The day before Mitchell spoke, a large Midwestern manufacturer said it might be able to pay pension plan participants only about 25% of the benefits originally promised.
Meanwhile, especially if a shortage of skilled labor develops, many healthy, productive boomers who work past age 65 may demand the right to insure their income against disability, Mitchell said.
The good news is that disability insurers can spot likely future claimants years in advance: At all ages, employees who have five or more serious health risk factors, such as alcoholism and high blood pressure, are about six times as likely to file disability claims as employees the same age with two or fewer risk factors, according to a research team affiliated with the University of Michigan Health Management Research Center.
