By Jesse Martell
The National Institute of Disability Management and Research (NIDMAR) has developed calculators to measure the financial impact of Return to Work / Disability Management initiatives.
These calculators allow individuals, employers and social security agencies to estimate the short and long-term costs following the onset of a disabling condition with the goal of improving return to work outcomes. In other words, an employer can use hard data to see the current picture but can also use the calculator to determine the return on investment (ROI) for any number of scenarios.
The following scenarios detail how the calculators work:
Employee calculator scenario
In this disability-related employment loss scenario, the person had a loss of employment income at age 40, a current age of 43 and a retirement age of 65. An annual income used in this scenario was $40,000 and, as a result of 25 years of lost income, the total annual income lost was $1,000,000. The employment benefit (including social security, insurance, etc.) annual value over the same period was $875,000. The total anticipated income loss for this individual was $1,875,000.
The total anticipated pension income to be received by this individual is $190,478. Thus, their total expected loss of income is $1,684,522.
Employer program impact calculator scenario
The employer in this scenario had an average yearly WCB expense over the last three years of $34,167; the average days lost due to disability were 5.67. The RTW total program cost was $5,000. After the implementation of the program, the yearly expenses are $28,000, the ratio (program impact/total program costs) is 0.23 and the change in days lost due to disability is 1.67. The impact of implementing the program is $1,167.
This initiative is designed to document and verify not only the financial impact of disability-related employment loss but also to define the potential benefits derived – for all parties – from effective interventions designed to maintain continuity of the employment relationship for affected workers.
This tool is beneficial for both employers and employees as the guidelines are applicable, regardless of whether the reason for the sick leave absence is occupational or non-occupational. What is consistent is where the continued, productive employment of workers is lost, regardless of the system or circumstances; the financial, social and personal costs are significant – especially for the worker.
Depending on the jurisdiction, the costs can also be considerable for employers. This calculator allows employers to clearly measure the financial impact of their return to work/disability management initiatives in addition to providing a better understanding of their long-term disability frequencies. It therefore stands to reason that maintaining the continued employment relationship for a worker who has acquired a disabling impairment and is at risk of losing his/her employer attachment can yield substantial economic, social and societal benefits for workers, employers and society as a whole.
Jesse Martell is a professor of human resources at Durham College and director of professional development for the Durham Chapter of the Human Resources Professionals Association.