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Return-to-Work Programs Provide Largest Impact

Source: Watson Wyatt Worldwide Press Release

Employers that use several key disability management practices and integrate their efforts across occupational and non-occupational disability programs are successfully reducing or controlling those costs, according to the fourth annual Washington Business Group on Health (WBGH)/Watson Wyatt Worldwide survey on integrated disability management.

Transitional programs that encourage ill or injured employees to return to work gradually appear to be the single most effective disability management strategy. Surveyed employers also reported success with case management, behavioral health interventions and independent medical exams.

The survey results are based on responses from 178 major firms. The respondents employ an average of 13,500 workers and incur $30 million a year in direct disability costs.

According the survey, actual average costs for sick pay, short-term disability (STD), long-term disability (LTD), and workers' compensation (WC) as a percentage of payroll were 6.3 percent, up slightly from 6.1 percent last year. The indirect costs of disability also continued to rise. Total average costs for overtime, replacement employees, and workstation/job accommodations were 8.0 percent of payroll, up from 6.7 percent last year. It is primarily the costs for replacement employees driving this increase, due to the significant labor shortage in the overall economy.

The survey also found that greater integration leads to greater savings, as defined by having a "single source" managing the various functions across LTD, STD, and WC benefits. Forty-three percent of employers have integrated their disability management efforts, compared to 42 percent last year and just 26 percent three years ago.

Among employers that have integrated at least two of the four most effective functions across their WC, STD and LTD programs, 61 percent said WC costs were decreasing, compared to just 46 percent of those employers who had not made similar efforts. Similarly, short-term disability costs are decreasing for 42 percent of employers with complete integration of at least two combined functions, while STD expenses are falling at only 7 percent of those who had not.

The survey also asked employers which issues surrounding disability management they expect to find most vexing in the near future. As in past years, they named maintaining employee confidentiality as their primary concern, followed by fear of government regulation of health plans.

Copies of the survey report, Staying@Work: Focusing on What Works, are available for purchase by calling 1-800-388-9868 or visiting

The Washington Business Group on Health is the only national nonprofit organization devoted exclusively to the analysis of health policy and related worksite issues from the perspective of large employers. WBGH members provide health coverage for more than 39 million U.S. workers, retirees and their families.

Watson Wyatt Worldwide is a leading global consulting firm with more than 5,000 associates in 32 countries.


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