Outsource it, do it yourself or do nothing?
Being without an employee for a few weeks due to illness or injury can cause hardship for an employer, other employees and, of course, the employee who is off work. As an employer, managing short term disabilities can be beneficial to all involved.
Short Term Disability (STD) happens when an employee is unable to work due to an injury, illness, surgery, stress or any number of health-related reasons. Short means that the employee is expected back in a few weeks, though sometimes these things can turn into Long Term Disability (LTD) leaves.
Employers rarely insure for STD like they do for LTD. They count on the company sick leave plan, EI coverage (for up to 15 weeks) a top-up program and even an employee’s vacation time to cover the employee while away. About 2% of our clients insure STD.
There is no doubt that an employee on STD costs the employer due to lost productivity, lost opportunities, the cost of temporary replacement and any costs the employer chooses to pay out of pocket such as top-up or a plan. The longer the employee is off work, the costlier it becomes.
The challenge is that decisions regarding STD are made by managers, HR managers and Executive Directors who depend upon nothing more than doctor’s notes that usually only outline restrictions and limitations, to base their decisions on. Even if they were privy to more detailed medical information, they don’t have the knowledge to understand the implications. Should recovery from a surgical procedure be three weeks, a month, two months or more? The employer rarely knows whether an employee is off more than is medically necessary. The longer an employee is away, the risk of an LTD claim is greater.
There are services available to manage STD claims; skilled case managers with medical backgrounds who can request, access and understand the medical information surrounding an employee’s absence. They work with employers to understand an employee’s job requirements and can make recommendations as to the medically necessary length of the absence. This approach gets people back to work at the right time thereby saving money, reducing the risk of an LTD claim and maintaining the employee/employer relationship by transferring the responsibility to a third party.
Case management services generally charge in the range of $1,000 for initial set up then anywhere from $450 to $650/claim going forward. They recommend getting involved early if the absence is planned, such as a surgical procedure, or at a point where the absence will or has already has gone beyond a week or so. When a case opens, they will speak with the employee, request more detailed doctor’s assessment and even records (if necessary), they discuss the case with the doctor as well as the employee and the employer to paint a picture of when an employee can be back at work as well as the nature and length of any accommodations that may be required. For more complicated cases, this approach can avoid the use of an Independent Medical Exam, which can cost upwards of $3,000.
It can be false economy to handle STD situations in-house. A trained case worker can get an employee back to work sooner and keep the costs related to an extended absence or workplace accommodation to a minimum. ASSOCIUM Benefits can recommend a disability management consultant if this is something your organization could benefit from please contact us for more information.
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ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits advisors and their employer clients. We provide Brokers and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.