FMLA provides opportunities to reduce absence leave costs, IBI says
Researchers from the Integrated Benefits Institute analyzed disability data from 161 companies to investigate the links between FMLA, short-term disability, and long-term disability. They and a panel of experts determined that a worker's request for leave under the FMLA may be a precursor to other, more costly leave which may be prevented.
"A request for FMLA leave is one of the few times when employees formally make their health condition or family situation known to an employer before a disability may emerge," according to the research. "This provides an opportunity to help employees coordinate their care and get the needed assistance to prevent a later short-term disability claim or to minimize the impact of lengthier disability incidents."
The FMLA was signed into law in 1993 to help employees care for themselves or family members without fear of losing their jobs. Complying with the act is no small task.
Since the law allows employees job-protected time off with little or no advance warning, employers often must scramble to find substitute workers or do without the contributions of the employee taking the leave. Additionally, employers must verify the need for the leave and keep track of employees' leaves if they take intermittent FMLA -- all of which costs money and time.
"Given the challenges employers have experienced in 20 years of accommodating employees' time off and complying with the law, it is understandable that many may not recognize FMLA's potential for reducing the costs of paid disability absences," the research said. "Nonetheless, without denying the validity of any criticisms of FMLA, employers that focus exclusively on this aspect of FMLA run the risk of missing opportunities to produce tangible improvements to their bottom line."
Findings. The researchers used data from an absence management firm's book of business between 2007 and 2011. Included was FMLA, short-term disability, and long-term disability claims information for about 520,000 employees.
Among full-time workers with at least one year on the job, about 24 percent had an FMLA leave, most for their own conditions. The researchers next looked at the rate of workers who took short-term disability and compared those who had previously taken FMLA with those who had not.
"On average about 3 percent of employees with no FMLA experience in one year had [short-term disability] leave in the next year. The [short-term disability] claim percentage was about twice as large if an employee had a continuous or an intermittent FMLA leave for his or her own health condition," the research said. "Employees with an FMLA leave for a family member's health condition were about 50 percent more likely to have [a short-term disability] claim than employees with no FMLA leave experience in the previous time period."
The researchers said the fact that workers taking FMLA to care for family members were also more likely to take short-term disability later on was significant. "It suggests that the stress of family hardships can take a toll on an employee's physical health to such an extent that the employee may qualify for [a short-term disability] claim down the road."
The patterns of FMLA leave and short-term disability mental health claims were similar to those for physical health claims. However, FMLA family leave was even more predictive of short-term disability mental health claims.
"An employee with an FMLA family leave was about twice as likely to have a subsequent [short-term disability] mental health claim" compared to those who did not request FMLA leave, the research said. "This propensity is greater than what was observed for physical health claims."
Opportunities for employers.
Although few employees actually use short-term disability programs, the cost to employers is high. The researchers said wage replacements and lost productivity from short-term disability absences amount to about 11 percent of all annual health-related absence costs in the country. Employers, they said can use FMLA leave requests to reduce future disability leaves -- at relatively little cost.
"Given that many employers already make health promotion and disease management programs available to their workers, preventing even a few [short-term disability] claims by engaging employees at the earliest opportunity represents a chance to reduce disability costs without materially increasing absence management expenses," the report said. "When an employer becomes aware of a challenging personal situation through an FMLA request, it has the opportunity to direct employees to resources that can help minimize the risks of subsequent claims."
Foreknowledge of health conditions cannot eliminate the risk of disability altogether. But the researchers said the FMLA program can be a vehicle to help employers better manage the duration of short-term disability leave and prevent the need for long-term disability. Employees who request FMLA can be directed to health promotion, disease management, or employee assistance programs.
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March 25, 2013
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