Whether the economy and business is good or bad, employers in all industries pay careful attention to labor costs. As far as labor costs go, lost productivity due to disabling injury or illness is one of the main cost drivers. In fact, the 2010 Total Impact of Employee Absences survey by Mercer/Kronos showed that unscheduled disability absences account for around 8.7% of U.S. payrolls. This percentage is comparatively over half of the 13.6% of payroll that accounts for the cost of health care.

According to the 2010 CIGNA Integration Value Study, which compared both non-integrated and integrated medical and disability plans, employees who suffer a short-term disabling injury or illness and that have disability and medical coverage spent fewer days on medical leave and away from work than those that didn't have an integrated program. Other key points from the CIGNA study included the following about employees that have an integrated health and disability insurance program:

  • This group had a 20% lower absentee rate than employees with only disability coverage.
  • When compared with employees without an integrated plan, this group had an 11% greater return-to-work rate.
  • This group needed an average of 13 fewer days of short-term disability leave than employees without access to an integrated program.

Direct and Indirect Savings through Medical and Disability Programs. Each day of disability for a business with average benefit offerings, an average hourly loaded wage of $29.71, and a 60% short-term disability benefit costs the business approximately $159.00. A business with 5,000 medical and disability-covered employees could see around 2,500 fewer disability days, which would add up to a productivity and direct cost savings of almost $400,000.

Don't Forget the Value of Chronic Care. It's also important for employers to remember that illness and injury prevention doesn't cease after the employee starts a long-term or short-term disability absence, as one medical condition can often lead into or cause another to develop. Multiple studies have shown that a chronic care program is an important aspect of an employer having an integrated approach. For example, a different CIGNA study on chronic care showed that employees participating in chronic care programs were absent four fewer days and had a higher return-to-work rate after a disability than employees not participating in chronic care programs. The benefits of a chronic care program, such as coaching, support, and education, can be instrumental in preventing employees already going through a difficult time from seeing their situation drastically worsen.

In closing, it's clear that reining in employee absentee-related cost is vital to a company's financial bottom line. Research like CIGNA's Integration Value Study shows that integrated programs are key to having a coordinated effort in not only assisting employees to return to work, but also to stay on the job and healthy. The greater opportunity that integrated medical and disability programs offer to employees to lessen disability absence and improve their health is a win-win for employee and employer alike.

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