2016 Outlook: Disability and Absence Management
The disability and absence management landscape continues to experience rapid change. The driving forces are legal and regulatory and a shift in social attitudes about work-life balance. It can be a challenge to keep up; however, there is also great opportunity for disability and absence management professionals to expand their skills and increase their value.
Here are five trends to watch for in 2016:
Paid Leave: A True National Issue
If paid family and sick leave were issues in 2015, they will be the issues of 2016. More large employers will follow the likes of Netflix, Facebook, Microsoft, Adobe, Apple, Amazon, and other leading companies to implement or expand their own leave policies.
And there will be even more efforts to pass paid leave laws in cities and states, including Washington, D.C. and Maryland. Perhaps as important, the democratic presidential nominee will seek to build on FMLA and make paid federal leave a significant campaign issue.
This means more complex process management, heightened compliance demands, and increased public attention to organizations that come under legal or other scrutiny. 2016 is the year in which large numbers of disability and absence management professionals become leave law experts.
ADA Administration Drives Increased Partnering
As with FMLA, more employees than ever are aware of their rights under the ADA. As a result, growing numbers of employers will look to their current short-term disability (STD), long-term disability (LTD) insurance and FMLA partners to help them manage the ADA process.
There are tools and resources, including automated software systems, to help employers manage the accommodation requests and processes associated with ADA. These tools are increasingly cost effective. We will continue to see an increase in partnering to manage growing employee awareness and the accompanying compliance demands.
Workforce Well-Being Moves Front and Center
The Affordable Care Act has given a large and sustained push to preventing illness. This directly impacts the absence and/or disability that accompanies those illnesses.
From gym memberships as a nice employee benefit to workforce well-being, it has moved to a key tool in controlling health care costs. Disability and absence management professionals are being called on to play a larger role in designing and implementing these programs. That will accelerate in 2016.
In addition, an even larger part of workplace well-being will be an emphasis on behavioral health. More disability and absence management professionals, as well as health practitioners, understand the connection between the mind and body in absence, disability, and overall health.
Depression and other mental health issues are increasingly recognized as topics of major concern when it comes to employee well-being. Attention given to these areas brings lower health-related costs, including those related productivity.
Expanded Professional Opportunities
As leave and health care change, absence and disability professionals are confronted with significant new demands. They need to be aware of laws and regulations and new approaches to minimizing health care costs.
In progressive companies, this translates into organization-wide cooperation that enables disability professionals to collaborate with different departments.
This presents professionals with tremendous opportunities to expand their networks, skills, and credentials. 2016 will see at least one new professional designation.
With it and the continued accumulation of new skills, disability and absence management professionals will add more value to their organizations. The result will be a new level of professional and personal rewards.
Increase in Strategic Enforcement From the EEOC
The EEOC’s interest has shifted from individual violations to more systemic workplace discrimination and this includes pregnancy discrimination. Systemic investigations and cases are effective at addressing workplace discrimination issues on a broad scale in an industry, profession, company, or even a specific geographic area.
The EEOC issued guidance making clear that failing to accommodate pregnant employees may expose employers to Americans with Disabilities Act claims based on temporary disabilities caused by pregnancy.
So what does this mean for you in 2016? Employers will need to ensure they are paying attention to policies, practices, and processes for employees taking leave.
Leave has become a political and social issue. It, along with all forms of absence and disability, have caught the attention of many in the “C suite”. That means we will all hear more about these topics in 2016.
Demographics, Regulations Pose Challenge for Absence Management
2015 DMEC panel discussion on Amazon’s leave policy. Photo courtesy of DMEC.
Discussions at last week’s meeting of the Disability Management Employer Coalition in San Francisco focused on the impact of shifting workforce demographics amid current challenges and potential innovative solutions to disability management.
With people continuing to work later in life, four different generations now make up the American workforce, and each has different priorities when it comes to employer benefits and how they are delivered.
This, combined with changes in the regulatory and health care landscape, presents unique challenges for employers and absence management providers. Below are some of the major themes discussed at the annual conference:
The pace of regulatory change remains a constant hurdle for employers. Absences in accordance with the Family and Medical Leave Act, in particular, have left employers vulnerable to compliance risk.
Prior to June’s Supreme Court decision to legalize same-sex marriage nationwide, employers had to cope with a definition of “spouse” that fluctuated among the growing number of states that had legalized gay marriage.
Initially, couples that lived in states where same-sex marriages were recognized were viewed as spouses under FMLA. Now, there are no location restrictions on the definition of “spouse.”
That is just one example of how quickly regulations can change, challenging employers to keep their policies up-to-date and ensure there is no infringement of employees’ rights.
Employers also consistently struggle with FMLA compliance by miscategorizing leave under regular sick time, or by punishing employees for FMLA-protected absence by discontinuing health insurance coverage or failing to restore him or her to their former position when the leave ends. Some simply fail to educate employees about their rights under the FMLA.
Federal investigations are also intensifying, with the Department of Labor increasingly requesting information on leave use and conducting more on-site visits, according to Jeff Nowak, a partner at Franczek Radelet, PC, and author of the blog “FMLA Insights.”
Companies can strengthen FMLA compliance and reduce their exposure by conducting more self-audits of their policies and implementing internal protocols to make sure requests for leave are properly designated.
While the Department of Labor is working on an FMLA guide for employers, companies can strengthen compliance and reduce their exposure by conducting more self-audits of their FMLA policies and implementing internal protocols to make sure requests for leave are properly designated.
One upcoming regulatory changes to watch is an update to the Genetic Information Non-Discrimination Act and Section 501 of the Rehabilitation Act.
New legislation is also pending concerning accommodations for pregnant workers, following clashes between the Equal Employment Opportunity Commission and several companies over the treatment of pregnancy and related conditions as disabilities.
Managing Chronic Conditions
Addressing chronic conditions was a topic touched upon in several sessions. Studies from Liberty Mutual’s Research Institute for Safety show that chronic conditions affect 40 percent of the U.S. workforce.
An aging workforce and high rates of obesity and diabetes will only make chronic conditions more prevalent.
Chronic conditions pose problems because few surefire methods have emerged to manage them. Pre-placement exams can’t predict how a condition will develop over time, and the provision of wellness programs and behavioral therapy has shown no real impact in decreasing absence related to chronic conditions.
Sutter Health was able to cut lost days down by 8,632 in one year using a system that integrated leave management and return-to-work accommodations. The estimated savings impact was $2.75 million.
Training supervisors to facilitate return-to-work and oversee ergonomics improvements was one method that did make a material difference in decreasing lost time days due to chronic issues.
Research from Liberty Mutual showed that a supervisor training program resulted in a 27 percent decrease in lost time.
Providing on-site peer support to arrange care and accommodations for minor complaints also led to a 25 percent decrease in lost time.
Several speakers advocated seeking out methods of care that would address a worker’s injury or condition within the scope of their work environment.
Overall, hastening employees’ return-to-work by focusing more on “whole person care” emerged as a big shift for employers.
Zoning in on a specific injury without considering a worker as a whole ignores the unique interactions between the worker’s personal and occupational health risks, and his or her relationship with the workplace in general.
PG&E presented results from a new health plan built around the concept of treating the whole person, and found that focusing on preventive and primary care over specialty care reduced the number of ER visits and lost work days — saving about $1,918 in medical costs per employee in 2014.
Integrated Disability and Absence Management
While integrating disability and absence management, health and safety initiatives, and return-to-work programs remains a hot topic, most experts concede that widespread integration of those programs remains far off.
The complexity of the different pieces — FMLA, the Americans with Disabilities Act and workers’ comp — make coordination difficult.
Those who succeed at streamlining these resources, though, stand to significantly reduce absences and reap savings.
Sutter Health, a nonprofit health system in Northern California, for example, was able to cut lost days down by 8,632 in one year using a system that integrated leave management and return-to-work accommodations. Over the course of that year, the savings impact was estimated at $2.75 million.
Future DMEC conferences will surely feature more employer success stories and pave the way for best practices for marshaling the data, resources and executive support to create integrated programs.
Searching for Stability in Cyber Space
As headline-grabbing breaches crack systems and tarnish reputations of major retail, healthcare and financial companies, the need for cyber insurance has become increasingly apparent.
Given the constantly changing nature of cyber risk and the market landscape, creating a stable, sustainable cyber insurance business demands a prudent approach, with an eye on the long road.
“We’ve seen carriers jump in and out, wanting to take advantage of a new opportunity, but perhaps underestimating the risk,” said Danielle Librizzi, Senior Vice President, Head of Professional Liability, Berkshire Hathaway Specialty Insurance (BHSI).
“As cyber exposure became more tangible to carriers, in-force coverage was tested and many made radical changes to pricing and availability of coverage. BHSI is committed to entering the cyber market in a thoughtful and sustainable way. We want to be there for our customers as the risks continue to evolve.”
Diverse, Evolving Risks
Cyber exposure – and coverage — have been evolving, posing different risks and underwriting challenges for different industries. The technology, financial services and healthcare industries illustrate the diverse issues that must be considered in order to provide effective, financially sustainable cyber solutions.
The technology sector was the first cyber battleground, and technology E&O forms included some cyber coverage by virtue of the nature of the risk. “There’s inherent cyber coverage for third party liabilities in E&O,” Librizzi said.
While coverage is widely available, tech companies pose challenges to underwriters because of their unique position in the cyber “supply chain.” These companies provide software, hardware and cloud services; virtually every organization in the world is dependent on a tech provider of some stripe. If an insurer is covering both the provider and its clients, the aggregate risk should be monitored closely.
Think of a DOS attack on a cloud provider that prevents all of its clients – which could include anyone from a bank to a retailer or transportation company — from accessing stored customer or corporate data or running cloud-based service apps. That single attack could bring business in multiple industries to a grinding halt, potentially causing business interruption and E&O losses.
The tech industry hasn’t seen a large scale event like this yet, but it isn’t waiting around for one to strike before addressing the underlying risk. Controlling and accounting for the aggregate exposure will mold the direction that coverage development takes.
“Our combined form, introduced in October, 2015, is a comprehensive solution that includes first and third party cyber coverage as well as traditional E&O coverage,” Librizzi said.
However, that approach may not be appropriate for other industries. Financial Institutions, for example, may seek a dedicated cyber only policy which does not include traditional E&O coverage.
While banks typically have strong protocols for network security and privacy, they also have a much greater exposure in massive stores of customer data. Financial Institutions are looking to address liability in the form of class action lawsuits or heavy regulatory investigations and fines emanating from cyber, and may not want to compromise their traditional E&O limits.
“Additionally, given the increased reliance on outsourced providers for technology solutions, we have started to see the introduction of sub-limited coverage for dependent business interruption and payment card industry (PCI) fines and assessments as enhancements to coverage,” Librizzi said. “We might see those sub-limits go to full coverage as competition gets heavier.”
Other industries, which may not be as advanced as financial institutions in addressing cyber threats, have suffered more from a lack of robust cyber coverage that can keep up with increasing exposure.
Healthcare, for example, has seen a surge of cyber attacks since hospitals and other health systems went electronic. To a hacker, healthcare providers represent a warehouse of valuable personal identifiable and protected health information.
Email addresses from healthcare systems typically are white-listed and less likely to get caught in a spam filter, giving hackers incentive to obtain access and gain control of a healthcare provider’s network in order to launch phishing attacks.
After some high-profile breaches in 2015, Human Health Services and the Office for Civil Rights came under scrutiny for not doing enough enforcement of HIPPA. Fines imposed by regulators increased dramatically over the past decade, and seem poised to only get higher.
“They’ll be ramping up enforcement of regulations in 2016, and that’s only a peek of what’s on the horizon,” Librizzi said.
The burgeoning of healthcare’s cyber exposure has challenged the insurance industry to better understand the nature of the risk and how best to secure hospital systems. Coverage for this sector remains the most difficult to write effectively.
BHSI understands the need for different customers to have different solutions. Some customers desire a dedicated cyber policy that does not include traditional E&O coverage. BHSI’s Network Security and Privacy stand-alone policy is designed to address the needs to those customers.
“The cyber exposures and coverages needs of healthcare, financial services and technology are on different timelines and will look very different in the future,” Librizzi said.
Even in more mature markets, the conflation of commercial and personal cyber risk will challenge insurers going forward. Most existing cyber products don’t cover property damage and personal injury; as the risks emerge and the Internet of Things becomes more pervasive, the coverage will have to evolve as well.
“We must always be thinking about what is on the horizon from a risk and coverage perspective – our technology driven society demands it,” Librizzi said.
Anticipating challenges and adapting to each industry’s needs has been a cornerstone of BHSI’s approach to cyber. It’s careful and measured approach has also helped the specialty insurer build an arsenal of experts and ancillary services to help clients better grasp and mitigate their exposure.
“We know the importance of really understanding the risk and communicating it clearly to our customers,” Librizzi said. “We don’t bury our coverage in a pile of definitions, and we provide the expertise to help insureds stay ahead of the next big breach.”
To learn more about BHSI’s professional liability products, visit http://www.bhspecialty.com/.
Berkshire Hathaway Specialty Insurance (www.bhspecialty.com) provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, medical stop loss and homeowners insurance. The actual and final terms of coverage for all product lines may vary. It underwrites on the paper of Berkshire Hathaway’s National Indemnity group of insurance companies, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s. Based in Boston, Berkshire Hathaway Specialty Insurance has offices in Atlanta, Boston, Chicago, Fort Lauderdale, Houston, Los Angeles, New York, San Francisco, San Ramon, Stevens Point, Auckland, Brisbane, Hong Kong, Melbourne, Singapore, Sydney and Toronto. For more information, contact [email protected].
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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Berkshire Hathaway Specialty Insurance. The editorial staff of Risk & Insurance had no role in its preparation.