UnumProvident Study Reports 10 Percent of Employees Responsible for More than Half of Medical Costs

March 6, 2003

UnumProvident released findings of a comprehensive employer research study providing evidence that 10 percent of employees – those who file occupational or non-occupational disability claims – drive 55 percent of employee medical costs and up to 66 percent of all medical, disability and workers’ compensation costs combined.

“The key corporate implication reflected by this research is that a strategic approach to return-to-work planning can impact the duration of disability and make a bottom-line difference,” Ralph Mohney, senior vice president, UnumProvident Corporation, commented. “However, it is up to employers to direct this impact through a combination of effective benefit plans and defined return-to-work programs that support workplace productivity.”

Rising Medical Costs
In recent years, the cost of healthcare in the U.S. has increased dramatically and has significantly outpaced inflation. U.S. healthcare expenditures totaled $73 billion or seven percent of the GDP in 1970. Today, those expenses top $1.3 trillion, or more than 13 percent of the GDP(1).

Many companies are utilizing a host of benefit management techniques to address this cost challenge, including reductions in employee benefit programs, an increase in employee co-pays or the establishment of defined contribution plans. While these strategies offer some incremental value, increasingly employers are turning to comprehensive absence management resources to make a real impact on benefits expenses.

Customer Experience
A large telecommunications company with 16,000 covered employees has partnered with UnumProvident since late 1997 to access the insurer’s absence management resources. The company utilizes UnumProvident services such as early clinical intervention during the short-term phase of a disability claim. Early intervention facilitates the identification of rehabilitation and return-to-work and opportunities early on in a disability claim. The goal of this early intervention is to prevent, where possible, the condition from becoming long-term. Other techniques include applying expert claim management resources to a claim based on the type of injury or illness that is involved, and defining policies that empower employees to return to work incrementally if necessary.

UnumProvident’s study demonstrates that employers who implement a formal return-to-work strategy coupled with an effective disability claims management system reap the largest employee medical costs savings – as much as 40 percent. “Employers are just beginning to recognize the important relationship between employee absence and overall medical costs,” Jim Wenke, absence management national practice leader, Mercer Human Resource Consulting, said. “Focusing appropriate management resources on the small percentage of claimants who drive the majority of medical costs is a critical component to any effective cost management strategy. This allows employers to not only stabilize employee benefit costs, but it also empowers people and creates an environment in which employees can be more productive and secure.”

The Productivity Connection
The telecommunications company results show that the best insurance against unnecessary work disruption is the ability to return an employee to a productive lifestyle in a timely fashion. Each year, more than 750,000 Americans experience injuries or illnesses that keep them out of work for five months or longer (2). This results in direct and indirect costs that can place a severe strain on employers’ financial resources.

Encouragingly, statistics indicate that employees are receptive to an environment that supports workplace productivity. Ninety percent of Americans experiencing disability-related absence say that they would like to rejoin the workplace if the opportunity were made available. (3)

“To make return-to-work programming a success, employers and their insurers must have a fundamental commitment to help employees who are able to return to work after experiencing a disability,” Mohney said. “It’s just good business across the board. If employers have the resources to return disabled employees to work, they instantly have capacity to better plan for employee absence and implement early intervention that can help employees stay at work in the first place.”

“The ultimate benefit is to the employee. There is simply great dignity associated with a person’s ability to work and equally great value in their ability to live a full and independent life,” Mohney added.

(1) July 2002 Employee Benefit Research Institute Brief; (2) Annual Review of Disability Management, 1992, The Washington Group/Health Institute for Rehabilitation and Disability Management; (3) Conning Industry Insight…Disability Insurance, May 2002.

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