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Trying To Keep The Recession Blues From Creating LTD Red Ink

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Back in the 1980s and early 1990s, increases in disability claims seemed to go hand in hand with increases in unemployment rates. Disability insurers responded by changing plan designs and tightening procedures for handling claims.

Today, disability insurers, benefits administrators and other companies are promoting another defensive measure: Programs for analyzing absenteeism and referring employees who have trouble with showing up for work to counseling and health coaching programs.

Some of the companies announcing new or expanded absence management initiatives in the past 2 years include Aetna Inc., Hartford; Assurant Inc., New York; Buck Consultants, New York, a unit of Affiliated Computer Services Inc., Dallas; Guardian Life Insurance Company of America, New York; and Nationwide Better Health, a unit of Nationwide Mutual Insurance Company, Columbus, Ohio.

Disability insurers “understand that it’s not just about paying the claims,” says Jeff Harner, a vice president at Nationwide Better Health, a health and productivity management unit of Nationwide Mutual Insurance Company, Columbus, Ohio. “It’s about what you try to do to prevent them.”

Private disability insurers pay about $8 billion in long-term disability benefits to claimants each year, according to the Council for Disability Awareness, Portland, Maine, and employers suffer many billions of dollars in additional costs related to illness, short-term disability and long-term disability.

Kronos Inc., Chelmsford, Mass., a human resources company that is marketing productivity analysis systems, found when it commissioned a recent survey of 455 U.S. employers that employee absences of all kinds cost the equivalent of 36% of base payroll, and unplanned absences cost about 9% of base payroll.

“It’s a little bit early to tell” how the recent economic turmoil has affected absenteeism costs or disability costs, Harner says.

Hurricane Ike severely disrupted employers in Galveston, Texas, and other communities for weeks, and it also affected business schedules and attendance in some other communities in the South and Southeast by affecting supplies of gasoline.

Away from the areas hit by storms, economic stress may be improving productivity at some employers, by spurring employees to show up for work and do their best once they are at work, experts say.

But Harner says an analysis of disability claims at a large client employer that implemented layoffs in 2007 showed that mental and nervous claims increased significantly at the locations undergoing layoffs.

Researchers at the American Psychological Association, New York, have reported survey results indicating that U.S. adults felt far more stress in September than in April.

“We think that’s really important,” Harner says.

In addition to causing or aggravating anxiety and depression, severe, prolonged stress and financial problems can affect workers’ overall health, according to Harner.

Researchers at the Henry J. Kaiser Family Foundation, Menlo Park, Calif., say surveys they have commissioned show Americans are cutting back on preventive care. The percentage of survey participants who said they or family members have put off needed medical care increased to 36% in early October, from 29% in April, Kaiser researchers say.

The percentage of participants who said they had skipped a recommended test or treatment because of financial concerns increased to 31%, from 24%.

Disability insurers have been trying for years to keep overall stress from leading to health and disability claims.

Unum Group Corp., Chattanooga, Tenn., for example, has been working with Ceridian Corp., Minneapolis, to market employee assistance programs since 1992.

Today, one change is that consulting firms and software vendors are trying to help employers apply computing power and statistical analysis tools to absence management reports.

Too often, “the cost of absenteeism is … seen as un-measurable, or dismissed as negligible,” says Toni Kellam, an absence management consultant at Kronos.

Absence management tracking tends not to be thorough enough to reveal the full cost of employee absence, Kellam says.

Nationwide Better Health is emphasizing the importance of using absence analytical tools to identify employees who may benefit from referrals to providers who can help treat conditions such as depression or prevent chronic aches and pains from leading to full-blown disability claims.

“We’ve got programs that deal with cardiac disease,” Harner says. “We’ve got programs that deal with back pain.”

Intelligent use of wellness and absence management tracking programs can be a good investment, even in tough times, Harner says.

Typical wellness programs cost just a few dollars per employee per month, and absence management analysis services cost just a few cents per employee per month.