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By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®

The frequency of short-term disability claims decreased 17.3 percent between 2008 and 2009, while long-term disability claims frequency plummeted 26 percent, according to the annual Employer Measure of Productivity, Absence and Quality (EMPAQ) study.

After sifting through data from 648 U.S. companies, the EMPAQ researchers concluded that the major driver behind this trend was the recession--employees unable financially or too fearful of their job stability to take off work for illness, injury or elective medical procedures.

Another explanation, however, could be that EMPAQ data are not representative of all employers. Barry Lundquist, president of the Council on Disability Awareness, noted that the EMPAQ results made him "scratch my head."

They were "somewhat inconsistent" with the annual survey that his organization conducts, he said. The CDA's survey looks exclusively at long-term disability claims and found that the frequency trend between 2008 and 2009 was flat.

Disability insurer Unum also saw a flat trend.

"The overall findings of the EMPAQ report that show claims incidence is down from 2008 to 2009 don't necessarily reflect our experience when you take into account only Unum data. In general, our LTD and STD claims incidences have been flat in recent years," Unum spokeswoman Mary Fortune wrote to Risk & Insurance® in an e-mail. But she also stressed that Unum has worked with EMPAQ since the beginning of the benchmarking initiative and still provides data to it and believes in its value.

One explanation for the discrepancy could be that the EMPAQ database is evolving. With new participants being added from one year to the next, the addition of data from one large employer or carrier could cause a shift.

"If the makeup of the survey sample changed in any significant way year to year, that could explain some of the significant decrease in incidence from 2008 to 2009," Lundquist said.

"That's always a challenge, right? It's always a matter of who's in your data," Marlow said, including the possibility that new participants could influence results.

She and her colleagues, though, dug into the data to see if one company's dramatic data might be driving the results. They didn't find any evidence of that, Marlow said. Instead, a consistent drop in disability claims appeared across all employers. Marlow insisted that disability has always been a "strength" of EMPAQ and that the survey receives a good cross-section of data from employers, insurers, consultants and other sources.

Perhaps the size of the employers involved in the surveys shaped the results, Lundquist said. EMPAQ's participants are large; the CDA's are smaller. Large employers, Lundquist reasoned, have embraced absence management wellness programs in recent years, and the effects of those programs might help to explain the decreased claims frequency.

CLAIMS SEVERITY UP

One troubling and uncontested trend out of the EMPAQ research is the increase in severity of long-term disability claims. Costs went up by more than 25 percent (versus a decrease in short-term costs of 15.9 percent).

Marlow's explanation was that the claims driving this expense were older, a majority being 24 months or older.

"Those are people who are generally sicker and more costly," she said.

Lundquist had two other explanations. One is that, in his conversations with employers, return-to-work programs appear to be less effective in the last year or so as disabled workers have fewer jobs to return to. The other is that, with employees putting off sick time because they can't afford to take time off, they eventually reach a point where optional care becomes medically necessary care. By then, their illness or injury is more severe and costly. So he sees more increases when data from 2010 and 2011 come to light.

"There's a sequel to this story," Lundquist said.

January 31, 2011

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