Benefits

Medium-term disability could solve significant issues around LTD

By Liz R. Scott, Ph.D.

In 2015, the Wellesey Institute carried out a series of interviews to record the feelings of a sample of employees moving from short-term disability (STD) to long-term disability (LTD) leave. Most participants told the researcher that going onto LTD leave caused them a lot of stress and anxiety. As one interviewee said, “The LTD [process] says that I am not worthy, that I cannot go back to work again.”

There is a problem here. This “disability mindset” can be an enormous challenge for employers and disability case managers. Add to that the fact that disability can also result in a substantial and sustained decline in life satisfaction. With this decline, employees often lose the will to work and convince themselves, reasonably or not, that they are no longer capable of being in the workforce.

If the attitude is that LTD and permanent disability are one and the same, then the potential for returning to work decreases. As one study said, “Disability does not operate in isolation, but has tremendous consequences for well-being, health and everyday living.”

The risk is that, in some cases, the psychological gap between STD and LTD is too great. The change in benefits signals a false permanency. In one survey, 68 per cent of employees said that disability would keep someone out of work for a year or longer, and 31 per cent believed a disabled employee would never return to work.

Disability management and traditional benefit plans

No employer wants to see its employees absent from work. An absent employee, hired as a good fit for their role, will often leave a noticeable gap when their experience and skill are removed from the workplace. The burden of financial cost to the employer also increases in line with the duration of time away. Because of this, many employers today offer STD benefits. To work to their best potential, STD programs usually have hands-on case management. In most workplaces, this means disability case managers use processes actively aimed at engaging the person in a goal-oriented process and returning them back to the workplace. They measure success by reducing the total time the employee is away.

STD management programs focus on proven best practices. These include adjudication, early intervention, treatment, recovery and return-to-work planning. If managed well – and combined with workplace health promotion programs – the cost reduction, time away from work and increase in productivity can be significant.

Disability management programs work on the principle of looking after and engaging the employee. What is good for the employee will ultimately benefit the company.

Employers also have a legal responsibility to return an injured worker to work. In Canada, labour and human rights statutes protect injured workers from dismissal based on disability. Some provinces, such as New Brunswick, Quebec and Ontario, have specific conditions to prevent this happening. In Ontario, all larger employers must make reasonable accommodations to re-employ injured workers. They are obligated to attempt this return to work within two years of a work-related injury. Re-employment should be to their former (or a comparable) job if the worker is medically capable, or to the first suitable job available, if they are not.

Disability management programs work on the principle of looking after and engaging the employee. What is good for the employee will ultimately benefit the company. Research also says that employers that increase or improve disability management and accommodation activities slow the departure of individuals with disabilities from their workforces.

The opportunities in medium-term disability

Traditional benefit plans include a process for the transition from STD to LTD, usually at around 17 or 26 weeks. After the transition, the amount of contact often decreases. The change can also have a detrimental psychological impact on the employee.

The shift in focus, from short- to long-term, should not mean losing viable opportunities to return the employee to work. The person that does not return to work in the STD period may have had a surgery that requires a longer recovery time. They may also have a more severe, but not permanent, illness or injury. It should not mean that the employee is completely removed from the labour market.

An employee with an illness, injury or disability receives a lot of attention during the STD period. A very high percentage of these employees will return to their job within this timeframe, especially if the employer offers modified work opportunities. In a well-managed STD program, the employee experiences high touch communication and guidance. They should also have active help finding the right treatments, support through recovery and receive a return-to-work plan.

Unfortunately, there often isn’t the same level of communication and help once the employee moves to LTD. There can be good reason for this. Many diseases and disabilities, consistent with current medical knowledge, are permanent. These can include very severe injuries (such as paralysis), progressive diseases (such as cancer, multiple sclerosis, ALS, etc.) or serious mental health disorders or brain trauma. Treatment options are often limited and there is little hope of recovery.

If an employer wants to self-insure LTD, they take on a lot of risk and liability. The employer is accountable for the employee until retirement age or death. However, a self-insured approach can reduce the need for large reserves and give the employer the ability to focus on rehabilitation. They can continue to work to return the employee back to the workplace and it can be a good return on investment.

There is a strong case to introduce a medium-term disability (MTD) benefit. MTD is an active and engaged recovery management program that fits between STD and LTD.

The introduction of a MTD program can provide a path for strong case management up to the two-year change of definition. In most disability cases, for the first two years, the employee may be unable to perform their own job. The change of definition at the two-year mark is a harder barrier to pass. The employee must be considered unable to perform any occupation. It is usually considered to be “total” disability. The intention of a MTD program is to reduce the number of long-term permanent disability cases reaching this mark.

The strength of active medium-term disability management

Intervention in the medium term of a disability could remove many false perceptions. In many cases, it may also have physical and psychological benefits for the employee.  Like STD, there would be the continuing focus on recovery, treatment and return-to-work goals.

An MTD program should be financially attractive for the employer. The employer is able to continue the STD’s strong focus on returning to work. Something as simple as changing the terminology – removing the word “long” – shows the continuing positive focus of the employee and employer towards return to work goals.

As the concept is very recent, the innovations in MTD would initially draw on traditional disability management practices. These include engaged intervention and return-to-work planning. The MTD program would then develop strategies to manage the increased severity of a disability that could not be resolved during the STD period. The ultimate aim is to maximize the intervention time without labelling an individual as totally and permanently disabled.

The medium-term income benefit would:

  • Ensure continuity of income
  • Give employees an incentive to work – e.g., retraining to enhance work related skills and capacities
  • Prevent workers from falling into dependency on social assistance
  • MTD would also guarantee that the employer and case managers have the opportunity to exhaust all reasonable efforts at returning to work.

In an integrated model, a case manager would manage both STD and MTD. This ensures familiarity, knowledge, experience and empathetic care on each claim. Even as the MTD period approaches, the employee should already have a familiar and comfortable relationship with their case manager. The employee should understand that the case manager has their best interest at heart. Together, they will continue to work towards the goal of the earliest possible return to work and function. The employee does not drop out of the system like the traditional switch to LTD.

Medium-term disability and mental health

In the past few decades, mental health problems have increasingly contributed to sickness absence and LTD. Studies show that LTD in general, including those due to mental health conditions, causes a lower socio-economic status, reduced quality of life and higher mortality rates. The unemployed are less likely to be in a healthy state compared to the employed.

Disability as a result of a mental health disorder can also lead to less essential motivational resources and goal-directed behaviour. In other words, someone who has experienced a lot of help and support during the STD process may find it detrimental when the communication falls away as they move onto LTD.

By having a MTD plan in place, the case manager is able to keep the focus on strategies that encourage motivation, goal design and support to ensure the employee always moves toward the ultimate solution of returning to work safely.

The process of medium-term disability

Eligibility into a MTD program is based on the evidence that the employee has a potential to reenter the labour force.

Table 1 shows how MTD would fit into the traditional disability benefit programs:

 

Short-term Disability  Medium-term Disability Long-term Disability 
17 or 26 weeks One to two years, depending on the design Various potential plan designs

 

Once the employee enters the MTD program, the process would focus on:

  • Vocational rehabilitation and employee counselling services for return to work
  • Periodic reviews of work capacity
  • Providing a supportive environment

A supportive environment ensures the employee will still have a strong connection to the workplace throughout the MTD disability period. The emphasis is on health, social and vocational rehabilitation and periodic assessments.

Currently there are many partial and temporary disabilities that have not been resolved during the 17 to 26 weeks of STD but, with the right treatment and support, could be resolved within the following two years.

The most important benefit of MTD is to ensure that these employees do not fall out of the workplace when the communication and connection to work diminishes during what would traditionally be the LTD period.

The cost-effectiveness and success of the program would be measured by how many employees transitioned past the STD period but returned to work prior to a permanent LTD situation.

Conclusion

To bridge the gap between STD and LTD, many of the same strategies used to get results in the STD period can continue to make progress in the MTD period. These include a strong approach to care management, return to work and recovery strategies in workplaces where the employer is supportive of the program.

As one report stated: “A new income benefit addressing medium-term illnesses and disabilities fits well with the vision of a more inclusive society and renewed social policy.”

Innovations in disability management continue to improve the lives of employees and the success of employers. The field is constantly evolving and, with increasing rates of disability and an aging workforce, the time is right for introducing a new solution into disability management programs.


Liz R. Scott, Ph.D., is the principal of Organizational Solutions Inc.