It’s easy for your clients to view disability insurance as a commodity, with all products and carriers considered equal. But this perspective is a mistake that could cost them money — in the form of lost employee productivity.
Many brokers underestimate the impact a comprehensive disability management philosophy, including return-to-work and stay-at-work programs, can have on the total cost of an employee benefits program. These programs help save companies significant dollars by reducing the costs of health-related lost productivity, including losses associated with employee absenteeism and presenteeism.
Your clients may feel that they already are paying enough for their employees’ health needs and may fall back on the fact that their health insurance coverage should be enough to help keep employees healthy.
It’s true that they are paying a lot for health insurance: A recent study from the Bureau of Labor Statistics found that health insurance benefit costs were 8.4% of total compensation for civilian workers and 7.7% of total compensation for private industry employees. State and local government workers had the highest percentage of their total compensation taken up by health insurance benefits, at 11.6%.
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However, what health insurance doesn’t do is focus on helping to ensure employees are healthy and productive at work. This is where a comprehensive disability management strategy facilitated through a disability carrier can help.
Lost productivity adds up
There are two types of productivity losses your clients could be experiencing that add to what they already are paying for health insurance.
Absenteeism is the productivity loss associated with missing work due to health concerns. When employees miss work, it can lead to other costs a business doesn’t exactly account for. For example, overtime for other employees to cover for absent employees accounts for 5.7% of payroll, replacement workers account for 1.6% of payroll and paid sick time accounts for 3.2% of payroll, according to the Society for Human Resource Management.
However, just because employees are at work doesn’t mean they’re being productive.Presenteeism is the practice of coming to work while trying to work through a medical condition.
Presenteeism can manifest itself in a few ways. Maybe an employee takes longer to type up reports because of wrist pain or misses deadlines because he or she is stressed about medical bills and can’t focus on the tasks at hand. These scenarios may seem insignificant, but they can add up: the Integrated Benefits Institute reports that presenteeism-related costs can average 1.9% of an employer’s payroll.
With figures like these, it’s hard not to see how health-related lost productivity has a far-reaching financial effect on a business. Some disability carriers integrate a stay-at-work focus with a return-to-work program to keep your clients’ employees at work and productive or to help get them back to work faster after a disability leave. This equates to increased productivity, which can benefit your clients’ overall bottom line.
Next time you check in with your clients, see if they’re thinking holistically about their employees’ health. A lack of attention to helping clients manage employee absence and disability can leave you vulnerable and potentially put your customer relationships at risk.
Kost is the program director for the Workplace Possibilities program from Standard Insurance Company. He has been with The Standard since 2007 and was instrumental in creating the program that exists today. He implements and coordinates several on-site programs that allow employees to get back to work more quickly and maintain productivity, and he develops and maintains the metrics that monitor companies’ successes.
The Standard is a marketing name for StanCorp Financial Group, Inc. and subsidiaries. Insurance products are offered by Standard Insurance Company of 1100 SW Sixth Avenue, Portland, Ore., in all states except New York, where insurance products are offered by The Standard Life Insurance Company of New York of 360 Hamilton Avenue, Suite 210, White Plains, N.Y. Product features and availability vary by state and company, and are solely the responsibility of each subsidiary. Each company is solely responsible for its own financial condition. Standard Insurance Company is licensed to solicit insurance business in all states except New York. The Standard Life Insurance Company of New York is licensed to solicit insurance business in only the state of New York.
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