Saturday, November 16, 2019

Poor Health Increases Disability and Workers’ Compensation Costs

Unum released the results of a 10-year study of the top 10 causes of disability. Those causes of both short- and long-term disabilities may surprise you:

  • 2 of the top 5 causes of long-term disability are health-related.
  • 2 of the top 5 causes of short-term disability causes are health-related.
  • Unum attributes age as a leading contributor to joint disorders in both the short- and long-term.

I discussed how critical it is for employers to look at their benefits programs holistically. If you can’t identify correlations across your entire benefits landscape, you can’t properly address the issues impacting member health, benefit program costs, and your bottom line. The Unum report provides additional evidence of the need to integrate your data across all your human capital programs.

In this post, I address how other sources of benefits data, like workers’ compensation, disability, and safety, are impacting employer costs. Without adopting a strategic approach to managing your benefits programs, rising costs will continue to plague you and adversely impact your bottom line.

Top 5 Causes of Disability: Short- and Long-Term

(source: Unum)

Long-Term CausesShort-Term CausesCancerPregnancyBack disordersInjury, excluding backInjuryJoint disordersCardiovascularDigestive disordersJoint disorderCancer

Employee Illnesses and Injuries

Private employers reported approximately 2.9 million nonfatal workplace injuries and illnesses in 2016, according to the US Bureau of Labor Statistics (BLS).

  • 892,270 occupational injuries and illnesses resulted in days away from work (DAFW).
  • The private industry incidence rate for DAFW cases was 91.7 per 10,000 full-time equivalent (FTE) workers.
  • The median days away from work, a key measure of the severity of cases, was 8 days.

2 of the top 5 causes of both short- and long-term disability are health-related.

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An unrelated study by the Integrated Benefits Institute (IBI) of 183 Cigna clients found that:

  • Disability cases averaged 3.4 medical episodes, often involving different medical conditions, and costing $0.80 of each claim dollar.
  • 10% of the disability cases accounted for more than 50% of the total medical and disability costs.

The IBI study paints this bleak financial picture for employers in the coming future:

  • Lost productivity associated with disability absence averaging $22,800 per disability claim
  • Medical costs = $3,600
  • Disability costs = $3,800.

What are the total costs of your workplace injuries and illnesses?

Workers’ Compensation

OSHA reports that businesses spend $170 billion a year on occupational illness and injuries, increasing workers’ compensation, retraining, and absenteeism costs, as well as losses from faulty products. Disabilities, poor health, and an aging population contribute to these costs.

A study by the Colorado School of Public Health analyzed claims and costs across 314 industries and nearly 17,000 employees. While obesity and smoking were found to contribute to some workers’ compensation claims and costs, stress was found to be a consistent predictor across all industries. Stress can be caused by many factors, including financial concerns, hectic work environments, and family difficulties.

OSHA reports that businesses spend $170 billion a year on occupational illness and injuries, increasing workers’ compensation, retraining, and absenteeism costs, as well as losses from faulty products.

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Back and Neck Pain

Back and neck pain, which cost the US $88 Billion a year in 2013, are contributors to both disability and workers’ compensation costs (Institute of Health Metrics and Evaluation). Remarkably, the number of people suffering from back and neck pain remained about the same as in 1996, but the costs addressing these conditions more than doubled since then. According to the study, most treatments don’t work for acute back pain, and “medical investigations only make things worse.” How much are acute back and neck pain costing your company?


Poor health also leads to safety issues. In 2016, UL’s Integrated Health & Safety Institute (ISHI) report benchmarked health conditions and workplace safety rates for all 50 states against the national average. The report estimated the direct and indirect costs associated with bad habits and chronic health conditions, such as obesity, smoking, diabetes, high blood pressure, high cholesterol, strokes, and heart disease, and workplace injuries and fatality rates for a hypothetical 500-employee company. Maryland had the highest estimated healthcare- and workplace safety-related costs, at $5,747,360.

When it comes to your bottom line, the IHSI and other studies referenced in this blog provide proof that your employees’ overall health impacts more than a company’s direct medical costs. What these studies can’t do is identify how your workforce’s health is impacting your company’s workers’ compensation, disability, and safety costs.

To get that level of insight, you need to integrate your members’ data across medical, Rx, disability, workers’ comp, safety, absenteeism, and safety programs. Add more data sources for an even more holistic view. Only then can you identify the issues directly and indirectly impacting your benefits program costs, and design programs and interventions that address those issues.

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