Protecting your human capital

Employees drive or impede productivity. They enhance or diminish the bottom line. When even a small percentage of employees are compromised due to short or long term disability, productivity and profits are adversely affected – as are healthcare costs.

When one considers that productivity, profits and healthcare costs can be key factors in the equation for corporate success, it comes as no surprise that preventing disabilities and minimizing the length of disability-related absences has become a top priority for companies nationwide. Adding another layer of concern for human resource professionals, this comes at a time when demographic trends threaten to create rapid growth in the number and severity of disability cases.

Disability and healthcare costs: a close relationship

With rising healthcare costs threatening the profitability of some corporations and the viability of others, it is important to highlight the role of short and long-term disabilities as cost drivers. The fact is that the 10 percent of a working population who submit short-term disability claims drive in excess of 50 percent of the healthcare costs and medical transactions of that population, according to A Year in the Life of A Million American Workers, written by Dr Ronald Leopold, Vice President and National Medical Director, MetLife Disability.

As disturbing as that data may be in and of itself, it is even more disturbing when one considers statistics from Chronic Care in America: A 21st Century Challenge – in 1995, approximately 99 million Americans suffered from chronic medical conditions, with treatment costs estimated at US$470 million. By the year 2020, the number of Americans suffering from chronic medical conditions will have risen to more than 134 million and cost of treatment will have risen to nearly US$700 million. Who will be charged with absorbing these increases? American businesses, large and small.

Demographic trends: implications of an aging workforce

Combine an aging population, a growing number of working retirees and ongoing increases in the retirement age, and you end up with a significantly older workforce than in the past. Simply put, there is a huge pool of healthy, vibrant individuals ready to stay in or re-enter the working world – and this pool will be a source of talent and experience through the year 2030, when the last of the Baby Boomers crosses the traditional 65-year-old threshold into what we once called ‘traditional retirement age’. Beyond 2030, the workforce will continue to age and, by 2050, the median age of Americans (and, we can assume, the American workforce) will be between the ages of 55 and 59.

Understanding the needs and capabilities of mature workers will be a key driver in business success in the coming decades. That said, it is important to recognize the current proportion of disability claims by the age segments of employees who submit claims. It is also important to look ahead at what the American population will look like in the future.

The cost/benefit of a healthier workforce

A firm understanding of how an aging workforce can impact an employer’s bottom line is key to finding solutions that will keep those workers healthy and productive. What will many employers discover upon completing such analysis? While the costs associated with absence management (reducing both the number and duration of disability-related absences) are significant, they may be significantly lower than the costs associated with lost productivity and long-term healthcare. Upon committing to a proactive approach to absence management, employers can lay the foundation for their programs by making database prognostications as to the specific disability-related challenges that lie ahead.

MetLife’s disability almanac, A Year in the Life of a Million American Workers, can be a useful reference when embarking on this endeavor. Employers can use this information to target potential problem areas or to benchmark their disability experience against a vast claims database of four million covered lives. To request a free copy of A Year in the Life of a Million American Workers, visit whymetlife.com/disabilityalmanac.