Industry Research

High ROI on Publicly Funded Stay at Work Programs

Governments as well as employers stand to benefit significantly by investing in programs that keep employees at work after an illness or injury.
By: | April 7, 2016 • 4 min read
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Publicly funded stay-at-work/return-to-work programs could help employers that may face reduced productivity from injured workers returning before they are at 100 percent of functionality, suggests a new report.

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State and/or federally funded SAW/RTW programs could also save the governments themselves unnecessary expenses for injured workers who are laid off or cannot return to their jobs. While the authors focus on employees not covered by workers’ comp programs, the case can also be made for covered workers who do not receive the help they should.

“Despite the clear benefits to workers and taxpayers, no federal agency is in charge of preventing job loss after injury or illness.”

“Millions of hard-working Americans leave the labor force every year, at least temporarily, because of injury or illness. Without steady earnings, these workers and their families often end up in public programs such as Social Security Disability Insurance, Supplemental Security Income, Medicare, and Medicaid. The resulting costs to state and federal governments are steep,” the report begins.

“But the public sector could help to reduce those costs by adopting strategies to help people stay at or return to work, rather than fall through the cracks of a fragmented system.”

The brief, The Case for Public Investment in Stay-at-Work/Return-to-Work Programs, was developed for the SAW/RTW Policy Collaborative, housed in the Department of Labor’s Office of Disability Employment Policy. The document is part of the collaborative’s efforts to promote positive SAW/RTW programs.

“Despite the clear benefits to workers and taxpayers, no federal agency is in charge of preventing job loss after injury or illness. And state workforce and vocational rehabilitation agencies have not traditionally focused on workers who are at risk of losing their jobs because of injury or illness,” the brief states.

“State-regulated workers’ compensation systems provide cash and medical benefits to workers who experience work-related injury or illness. But they do not help the millions of employees whose medical conditions are not work related, and they often fail to help even those who are covered.”

The Costs

The authors looked at the costs and benefits of an early intervention SAW/RTW program at the state level. They compared the costs to state and federal governments, the injured worker, and employers for a worker returning after an injury in a state with a hypothetical SAW/RTW program to one with no such program.

“Under our baseline assumptions, the state government would save about $83,000 in net benefits for each worker who is retained rather than replaced, following the onset of long-term disability,” the report says. “About $71,000 (or 85 percent) of the net benefits to the state would come from higher tax revenues under the SAW/RTW scenario than under the no-SAW/RTW scenario. The rest would predominantly be a result of avoiding the costs of Medicaid and unemployment compensation.”

Such a program would save the federal government even more — an estimated $292,000 in net benefits until the worker’s retirement. Much of those costs would result from avoiding public assistance expenses with the rest from higher tax revenues. The injured worker under the scenario would gain about $422,000 in net benefits from keeping his job and the associated compensation.

“The state government would save about $83,000 in net benefits for each worker who is retained rather than replaced, following the onset of long-term disability.”

Retaining an injured worker would admittedly be an expense for the employer. While the costs of recruiting, hiring, and training a new employee would be eliminated, the anticipated loss of productivity for an injured worker at less than full capacity equates to an estimated $185,000 — mainly from the assumed 16.3 percent reduction in productivity. However, those costs could be lowered.

“States may need to make larger investments, including subsidizing the wages of those with greatly reduced productivity, to sharply increase the number of workers who stay in the labor force,” the report says. “But states may not be willing to make these investments unless the federal government or workers (possibly via a payroll tax) help pay for them.”

Government Tools

States already have a variety of ways in which to help foster SAW/RTW efforts. “The workers’ comp system can make regulatory, process or service changes to improve the SAW/RTW services for workers with job related conditions,” according to the collaborative. “Some states have reemployment subsidies until the workers return to 100 percent functional capacity.”

State governments can include aggressive SAW/RTW strategies in their Workforce Innovation and Opportunity Act plan. The act, implemented last summer, requires states to strategically align their workforce development programs.

Workforce agencies can help employees and employers identify and access SAW/RTW services, support development of, and state agency cooperation with, employment resource networks that facilitate SAW/RTW support, and leverage capabilities developed under the state’s Disability Employment Initiative.

Several states have tools in their short-term disability programs that allow wage subsidies or partial benefits for RTW. And state personnel agencies can help state workers by improving their access to evidence-based SAW/RTW services and improving incentives for workers and their managers to use SAW/RTW services effectively.

Washington State’s Model

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A unique program in Washington State pays employers to help injured workers stay on the job. Stay at Work “is a financial incentive that encourages employers to bring their injured workers quickly and safely back to light duty or transitional work by reimbursing them for some of their costs,” the Washington State Department of Labor and Industries website states.

Employers may be reimbursed for 50 percent of the base wages paid to injured workers, as well as some of the costs of training, tools, or clothing the worker needs to undertake the transitional or light-duty work.

The program “has increased return to work and reduced workers’ compensation costs,” according to the SAW/RTW Policy Collaborative.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]
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Teddy Awards

Teddy Awards 2016: Share Your Success

Apply now for the 2016 Theodore Roosevelt Workers' Compensation and Disability Management Awards.
By: | March 17, 2016 • 3 min read
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Last November in Las Vegas, the 2015 Teddy Award winners faced a packed session at National Workers’ Compensation and Disability Conference® & Expo, with attendees eager to learn more about their successful programs.The session was enthusiastically received.

Afterward, attendees were overheard saying to colleagues, “We should start doing that … let’s discuss it when we get back to the office … .” Clearly, conference organizers were spot-on when naming that session “Steal These Ideas!”

Does your company have ideas worth stealing too? Are you proud of what you have been accomplishing with your workers’ compensation and injury prevention programs? We’d like to learn more about them.

The application is now available online for the 2016 Theodore Roosevelt Workers’ Compensation and Disability Management Awards, aka The Teddys.

The awards are open to both for-profit and nonprofit employers, as well as governmental entities. And while there are quite a few large employers among our list of past winners, small and mid-size entities are encouraged to apply.

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Our judges look for quality rather than quantity, and plenty of past winners have proven that it’s possible to accomplish great things even with limited resources.

Some food for thought as you prepare your application. We are looking for well-rounded programs that take a holistic approach to safety, workers’ comp and disability management. Teddy Award winning companies, no matter their size or industry, have several core characteristics in common.

They do everything possible to protect their most valuable asset: their people. They strive daily to reduce workplace risks and prevent injuries from happening.

When injuries do happen, winning companies waste no time securing expert care for their workers. They also have systems and practices to ensure that they’re getting the best possible outcomes for their medical spend.

Our judges look for quality rather than quantity, and plenty of past winners have proven that it’s possible to accomplish great things even with limited resources.

Teddy winners frequently amaze us with their 110 percent commitment to getting all injured employees back to work, using imaginative strategies that turn the old model of return-to-work on its head.

They also track and measure everything — continuously and aggressively looking for opportunities to improve outcomes while eliminating wasted expense.

Along the way, many of them also develop effective strategies that help manage challenges such as union negotiations, legacy claims, litigation and fraud.

Not least of all, Teddy winners get results. We look at the last five years’ worth of performance data to gauge whether the company’s programs really help achieve the intended goals.

Judges factor in every element potentially affecting that performance, including the intensity of the challenges faced, as well as the age of the program.

Teddy winners go above and beyond best practices, and they have a firm grasp of the big picture. They leverage the talent of internal teams as well as vendor partners to build programs that enable them to drive year-over-year improvement for the long-term.

For inspiration, read about last year’s Teddy Award winners. It could be your organization whose praises we’re singing this year.

The 2016 Teddy Award winners will be profiled in the November 2016 issue of Risk & Insurance®, and will be recognized at the National Workers’ Compensation and Disability Conference® & Expo in New Orleans, held Nov. 30 – Dec. 2, 2016.

For questions about the awards or the application process, please contact Michelle Kerr at [email protected] or 215-784-0910, ext. 6216.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]
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Sponsored: Liberty International Underwriters

Helping Investment Advisers Hurdle New “Customer First” Government Regulation

The latest fiduciary rulings create challenges for financial advisory firms to stay both compliant and profitable.
By: | May 5, 2016 • 4 min read
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This spring, the Department of Labor (DOL) rolled out a set of rule changes likely to raise issues for advisers managing their customers’ retirement investment accounts. In an already challenging compliance environment, the new regulation will push financial advisory firms to adapt their business models to adhere to a higher standard while staying profitable.

The new proposal mandates a fiduciary standard that requires advisers to place a client’s best interests before their own when recommending investments, rather than adhering to a more lenient suitability standard. In addition to increasing compliance costs, this standard also ups the liability risk for advisers.

The rule changes will also disrupt the traditional broker-dealer model by pressuring firms to do away with commissions and move instead to fee-based compensation. Fee-based models remove the incentive to recommend high-cost investments to clients when less expensive, comparable options exist.

“Broker-dealers currently follow a sales distribution model, and the concern driving this shift in compensation structure is that IRAs have been suffering because of the commission factor,” said Richard Haran, who oversees the Financial Institutions book of business for Liberty International Underwriters. “Overall, the fiduciary standard is more difficult to comply with than a suitability standard, and the fee-based model could make it harder to do so in an economical way. Broker dealers may have to change the way they do business.”

Complicating Compliance

SponsoredContent_LIUAs a consequence of the new DOL regulation, the Securities and Exchange Commission (SEC) will be forced to respond with its own fiduciary standard which will tighten up their regulations to even the playing field and create consistency for customers seeking investment management.

Because the SEC relies on securities law while the DOL takes guidance from ERISA, there will undoubtedly be nuances between the two new standards, creating compliance confusion for both Registered Investment Advisors  (RIAs)and broker-dealers.

To ensure they adhere to the new structure, “we could see more broker-dealers become RIAs or get dually registered, since advisers already follow a fee-based compensation model,” Haran said. “The result is that there will be likely more RIAs after the regulation passes.”

But RIAs have their own set of challenges awaiting them. The SEC announced it would beef up oversight of investment advisors with more frequent examinations, which historically were few and far between.

“Examiners will focus on individual investments deemed very risky,” said Melanie Rivera, Financial Institutions Underwriter for LIU. “They’ll also be looking more closely at cyber security, as RIAs control private customer information like Social Security numbers and account numbers.”

Demand for Cover

SponsoredContent_LIUIn the face of regulatory uncertainty and increased scrutiny from the SEC, investment managers will need to be sure they have coverage to safeguard them from any oversight or failure to comply exactly with the new standards.

In collaboration with claims experts, underwriters, legal counsel and outside brokers, Liberty International Underwriters revamped older forms for investment adviser professional liability and condensed them into a single form that addresses emerging compliance needs.

The new form for investment management solutions pulls together seven coverages:

  1. Investment Adviser E&O, including a cyber sub-limit
  2. Investment Advisers D&O
  3. Mutual Funds D&O and E&O
  4. Hedge Fund D&O and E&O
  5. Employment Practices Liability
  6. Fiduciary Liability
  7. Service Providers D&O

“A comprehensive solution, like the revamped form provides, will help advisers navigate the new regulatory environment,” Rivera said. “It’s a one-stop shop, allowing clients to bind coverage more efficiently and provide peace of mind.”

Ahead of the Curve

SponsoredContent_LIUThe new form demonstrates how LIU’s best-in class expertise lends itself to the collaborative and innovative approach necessary to anticipate trends and address emerging needs in the marketplace.

“Seeing the pending regulation, we worked internally to assess what the effect would be on our adviser clients, and how we could respond to make the transition as easy as possible,” Haran said. “We believe the new form will not only meet the increased demand for coverage, but actually creates a better product with the introduction of cyber sublimits, which are built into the investment adviser E&O policy.”

The combined form also considers another potential need: cost of correction coverage. Complying with a fiduciary standard could increase the need for this type of cover, which is not currently offered on a consistent basis. LIU’s form will offer cost of correction coverage on a sublimited basis by endorsement.

“We’ve tried to cross product lines and not stay siloed,” Haran said. “Our clients are facing new risks, in a new regulatory environment, and they need a tailored approach. LIU’s history of collaboration and innovation demonstrates that we can provide unique solutions to meet their needs.”

For more information about Liberty International Underwriters’ products for investment managers, visit www.LIU-USA.com.

Liberty International Underwriters is the marketing name for the broker-distributed specialty lines business operations of Liberty Mutual Insurance. Certain coverage may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. This literature is a summary only and does not include all terms, conditions, or exclusions of the coverage described. Please refer to the actual policy issued for complete details of coverage and exclusions.

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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 Liberty International Underwriters. The editorial staff of Risk & Insurance had no role in its preparation.




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LIU is part of the Global Specialty Division of Liberty Mutual Insurance.
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