Reaping the Rewards of Benefits Integration
Discussions at this week’s Disability Management Employer Coalition conference held in New Orleans included measures for keeping employees healthy, injury free, and on the job.
Conference participants also reviewed risk reduction, ease of administration, and cost saving advantages obtained by integrating absence management and disability benefit programs such as workers’ compensation, the Family and Medical Leave Act, and short-term disability offerings.
Proponents say integration makes sense because of overlaps among the range of programs under which workers can be absent and the cost to organizations regardless of the reasons for missed work days.
They also point to potential compliance risks when the administration of programs is segregated and improperly aligned.
“There is hardly any situation where there is just one perfect claim going on,” said Karen English, a partner at Spring Consulting Group. “If someone is [out] on workers’ comp, they are probably on FMLA [and] STD. Then we have all our concurrent leaves going on. So keeping workers’ comp to the side can actually be viewed as a risk to your organization.”
Failing to integrate can lead to lost opportunities, such as the ability to appropriately minimize the amount of time employees spend away from the job by concurrently running FMLA leave with a workers’ compensation absence.
“Just as an example, if you have a workers’ comp claim and that person is out eight weeks for a surgery, if you don’t run it concurrently, you are allowing that employee to come back from that workers’ comp claim and then go out for 12 additional weeks of FMLA time,” said Trina Mouton, manager of disability management and wellness at CenterPoint Energy.
“So it is really advisable to run those concurrently,” Mouton continued. CenterPoint experiences a 2-to-1 return on investment from its efforts, she added.
Employers speaking at the conference cited their gains from integrating programs, although their results are also influenced by several efforts including implementing return-to-work programs.
“We compare ourselves to the hospital industry in terms of [employee restricted-duty days] and lost time,” said Jane Ryan, return to work recovery and claims services at Mayo Clinic. “Our lost time rates are actually lower than the national industry [average] and I think that speaks to the ability we have to keep people at work or return to work early.”
“There is not one silver bullet or only one way to integrate benefits delivery. Every company is so different.” — Karen English, partner, Spring Consulting Group
The paths that employers take to integration and the programs they integrate vary considerably depending on each company’s needs, speakers said.
“There is not one silver bullet or only one way” to integrate benefits delivery, English said. “Every company is so different.”
English will join DMEC’s CEO, Terri Rhodes, in a discussion on how to integrate workers’ comp, disability, and leave programs on Dec. 1, at the National Workers’ Compensation and Disability Conference® & Expo that will also take place in New Orleans.
At the DMEC conference held this week, meanwhile, other discussion topics focused on specific illnesses and corresponding wellness efforts for keeping employees healthy and productive.
Diabetes, for example, impacts employers’ profitability by driving medical costs that are 2.3 times greater than for people without the illness as well as by increasing employee absences and work disruptions.
“There is no question that diabetes affects the bottom line,” said Matthew Ceurvels, director of disability products at Sun Life Financial. “Productivity can be impacted by presenteeism, when an employee is working sub-optimally, by ad-hoc absences, and by long-term absences when employees go out on a disability claim.”
More employer disease management programs focus on diabetes than on other common illnesses like asthma or heart disease, Ceurvels said.
Diabetes care, for example, is a key component of a wellness program CNIC Health Solutions Inc. offers its workers, said Linda Benedict, human resources manager for the third party administrator of employee benefit plans.
CNIC Health Solutions’ employee wellness program’s overall offerings include a recreation center, free access to a CrossFit trainer, encouragement to engage in desk exercises, and online health assessments tied to biometric screenings that provide employees with private information about their individual risk factors.
As part of its health plan, the company also provides free monitoring and testing supplies for diabetes sufferers along with a third-party tracking service for the diabetes testing results.
“We also offer a discount on what the employee pays for their portion of health insurance premiums,” Benedict said. “That is one of the biggest components of our wellness program.”
The discount works as an incentive, providing employees with a 25 percent health care premium reduction, first for participating in the biometric screening, and then as they maintain a certain screening result level.
That led to a 23 percent improvement in employee health risk over one year, as measured by the biometric screenings.
The wellness efforts have improved employee engagement and morale, lowered workers’ comp losses and reduced absenteeism, she said.
“One key metric for us is that in the last year and a half, we have not had one FMLA leave,” Benedict said. “It has really limited FMLA leave for our employees because they are more engaged. They are taking care and looking at their metrics, and sharing them with their physicians. It is really starting to pay off.”
High ROI on Publicly Funded Stay at Work Programs
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.
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 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.”
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
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.
Electronic Waste Risks Piling Up
The latest electronic devices today may be obsolete by tomorrow. Outdated electronics pose a rapidly growing problem for risk managers. Telecommunications equipment, computers, printers, copiers, mobile devices and other electronics often contain toxic metals such as mercury and lead. Improper disposal of this electronic waste not only harms the environment, it can lead to heavy fines and reputation-damaging publicity.
Federal and state regulators are increasingly concerned about e-waste. Settlements in improper disposal cases have reached into the millions of dollars. Fines aren’t the only risk. Sensitive data inadvertently left on discarded equipment can lead to data breaches.
To avoid potentially serious claims and legal action, risk managers need to understand the risks of e-waste and to develop a strategy for recycling and disposal that complies with local, state and federal regulations.
The Risks Are Rising
E-waste has been piling up at a rate that’s two to three times faster than any other waste stream, according to U.S Environmental Protection Agency estimates. Any product that contains electronic circuitry can eventually become e-waste, and the range of products with embedded electronics grows every day. Because of the toxic materials involved, special care must be taken in disposing of unwanted equipment. Broken devices can leach hazardous materials into the ground and water, creating health risks on the site and neighboring properties.
Despite the environmental dangers, much of our outdated electronics still end up in landfills. Only about 40 percent of consumer electronics were recycled in 2013, according to the EPA. Yet for every million cellphones that are recycled, the EPA estimates that about 35,000 pounds of copper, 772 pounds of silver, 75 pounds of gold and 33 pounds of palladium can be recovered.
While consumers may bring unwanted electronics to local collection sites, corporations must comply with stringent guidelines. The waste must be disposed of properly using vendors with the requisite expertise, certifications and permits. The risk doesn’t end when e-waste is turned over to a disposal vendor. Liabilities for contamination can extend back from the disposal site to the company that discarded the equipment.
Reuse and Recycle
To cut down on e-waste, more companies are seeking to adapt older equipment for reuse. New products feature designs that make it easier to recycle materials and to remove heavy metals for reuse. These strategies conserve valuable resources, reduce the amount of waste and lessen the amount of new equipment that must be purchased.
Effective risk management should focus on minimizing waste, reusing and recycling electronics, managing disposal and complying with regulations at all levels.
For equipment that cannot be reused, companies should work with a disposal vendor that can make sure that their data is protected and that all the applicable environmental regulations are met. Vendors should present evidence of the required permits and certifications. Companies seeking disposal vendors may want to look for two voluntary certifications: the Responsible Recycling (R2) Standard, and the e-Stewards certification.
The U.S. EPA also provides guidance and technical support for firms seeking to implement best practices for e-waste. Under EPA rules for the disposal of items such as batteries, mercury-containing equipment and lamps, e-waste waste typically falls under the category of “universal waste.”
About half the states have enacted their own e-waste laws, and companies that do business in multiple states may have to comply with varying regulations that cover a wider list of materials. Some materials may require handling as hazardous waste according to federal, state and local requirements. U.S. businesses may also be subject to international treaties.
Developing E-Waste Strategies
Companies of all sizes and in all industries should implement e-waste strategies. Effective risk management should focus on minimizing waste, reusing and recycling electronics, managing disposal and complying with regulations at all levels. That’s a complex task that requires understanding which laws and treaties apply to a particular type of waste, keeping proper records and meeting permitting requirements. As part of their insurance program, companies may want to work with an insurer that offers auditing, training and other risk management services tailored for e-waste.
Insurance is an essential part of e-waste risk management. Premises pollution liability policies can provide coverage for environmental risks on a particular site, including remediation when necessary, as well as for exposures arising from transportation of e-waste and disposal at third-party sites. Companies may want to consider policies that provide coverage for their entire business operations, whether on their own premises or at third-party locations. Firms involved in e-waste management may want to consider contractor’s pollution liability coverage for environmental risks at project sites owned by other entities.
The growing challenges of managing e-waste are not only financial but also reputational. Companies that operate in a sustainable manner lower the risks of pollution and associated liabilities, avoid negative publicity stemming from missteps, while building reputations as responsible environmental stewards. Effective electronic waste management strategies help to protect the environment and the company.
This article is an annotated version of the new Chubb advisory, “Electronic Waste: Managing the Environmental and Regulatory Challenges.” To learn more about how to manage and prioritize e-waste risks, download the full advisory on the Chubb website.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Chubb. The editorial staff of Risk & Insurance had no role in its preparation.