4 ways to prepare for the disability deluge

Within weeks of the coronavirus pandemic taking hold in Canada, plan sponsors, administrators and insurers began bracing for an expected increase in disability claims. Amid the uncertainty in mid-2020, employers anticipated an increase in the volume and duration of claims as well as a surge in mental health related-disability. A recent webinar hosted by the Canadian Pension & Benefits Institute, took a look at how these predictions bore out, five factors driving disability claims during COVID, and three ways plan sponsors and insurers can respond.

Data presented by Dan Liscoppe, Manager, Life and Disability Claims at Johnston Group shows that while most predictions were correct, there were a few surprises. For example, short-term disability (STD) claims were actually down by 21% overall in 2020 while long-term disability (LTD) claims remained stable. As expected, STD durations started creeping up in 2020 by about 7%.

Concerns about disability from mental health issues turned out to be realistic, with STD claims up 6% and duration up significantly to 12%. Liscoppe believes there is a delay in plan members submitting claims, and employers can expect to see significant increases as workplaces reopen later this year, particularly for mental health and addiction concerns. 

Other studies show that both alcohol and cannabis use increased in 2020 at the same time as access to treatment for substance use became more difficult.  For employees who previously struggled with anxiety, depression or isolation, the same dynamic of increased symptoms and less access to treatment continues to play out. “COVID will definitely exacerbate those concerns, and that will likely lead to an increase in mental health disability claims”, Liscoppe observed.

Five factors impact claims.

Beyond the obvious drivers of disability costs, Liscoppe identified a handful of considerations for plan sponsors and insurers as they plan for the rest of 2021 and beyond. For example, economic conditions play a key role, with many employers controlling expenses by reducing their group benefits offering. In addition to limiting treatment, this created a knock-on effect of increasing financial stress among employees, particularly where the workforce had work hours reduced. 

According to the Centre for Addiction and Mental Health, one-third of adults are reporting moderate to severe anxiety, and financial concerns are a top stressor. It’s worth noting that the majority of the Canadian workforce, about 60%, are not able to work from home, meaning many have been feeling the pressure of financial uncertainty for more than a year.

For the 40% of Canadians who can work remotely, the wellness picture is also not rosy. Many employers discovered that managing remote work is a lot harder than anticipated, with about half of employees saying they feel less connected to their company culture and 73% reporting burnout as managers attempt to keep productivity high. This struggle is particularly notable among Canadians with children under 18. Liscoppe points out that for employees with pre-existing mental health concerns, the stress and isolation of remote work is likely to make matters worse, increasing the likelihood of a disability claim.

For plan members dealing with pre-existing or emerging mental and physical health issues, reduced treatment access during the pandemic will take its toll over the long term. “There’s no question reduced access to treatment will have an impact on claims,” Liscoppe said, noting that backlogs for cancelled surgeries are at least 18 months long in Ontario and approaching two years in British Columbia. These delays mean sicker patients once treatment is available and, in the meantime, the added stress of delayed care. 

Reduced care options are not the only thing hampering accommodation and return to work: “What we’re going to see across the board is that the closures and economic impact on employers means it’s tougher for the employer to modify the return to work for an employee because there are fewer positions and an uncertain and ever-changing occupational health and safety (OHS) standard.” With work hours and conditions uncertain, employees on disability are under even more stress, while employers will be hard-pressed to support a gradual return to work plan.

With so much uncertainty and unrelenting stress, many employees are opting to stay on the job rather than risk a disability leave. Before the pandemic, some studies showed that 80% of employees say they have been going to work when they shouldn’t have, and more than half of employers view presenteeism as a serious issue. Liscoppe notes that professionals in occupations that support others, such as healthcare and education are particularly prone to presenteeism during the pandemic, fearing that they are letting people down. It’s also prevalent among workers in low-wage jobs where missing work has a significant income impact, particularly in precarious roles such as hospitality, retail or warehouse work.  The long-term impact of presenteeism during the pandemic is likely to be more claims, longer claim duration and a higher rate of recurrence.

Four ways plan sponsors and insurers can respond.

While the impact to plan sponsors and insurers will be significant, there are steps they can take now to support plan members and rein in costs. 

Liscoppe recommends taking a close look at existing plans and looking for both barriers to wellness and opportunities to widen the scope of coverage. Questions to ask include:

• Are there barriers, such as inadequate limits, that would discourage a plan member from getting preventive support before they go on disability?
• Do restrictions about the types of healthcare providers members can access (e.g. counsellors, psychologists or pharmacists) create inherent barriers to care?
• Can our substance abuse support be enhanced to keep pace with this growing issue?
• What financial wellness programs do we have for employees? Are they robust enough for the current situation, and can all employees access them?
• Are our employee assistance programs (EAP) being used for prevention, early diagnosis, referrals and improved access to care?
• Are people managers trained to offer understanding and support to destigmatize accommodations and return to work, particularly where the disability involves mental health?

Another mental wellness benefit to take a look at is pharmacogenetics, which Liscoppe notes is proving particularly effective for preventing potential side effects and adverse reactions in mental health medications. Using this personalized approach can maximize drug efficacy while reducing costs and disability duration.

Virtual care is also proving to be very beneficial in mental wellness, both in terms of outcomes and access. Studies show that patient outcomes using virtual consultations with therapists and other professionals are similar to outcomes from in-person visits. Virtual care also helps to address access to care with on-demand personalized human connections via voice, chat or video with general practitioners and specialists. In addition to accessing care, plan members are increasingly using virtual consultations to obtain second opinions, and for support once they return to work.  

A final way to prepare for disability claim increases is for plan sponsors, third party administrators and disability providers to work together to assess and address coverage, barriers to care and employee support. Here are some key activities:

• Take a holistic look at your current coverage
• Analyze claims data to understand which disability supports employees are actually using
• Ensure employees are aware of wellness, disability and return to work benefits and supports
• Put tools in place to make it easy for members to submit claims and view balances
• Review return to work strategies to ensure they align with changing ways of working
• Assess whether disability case managers are aware of new supports, such as pharmacogenetics and virtual care, and whether they are recommending them as appropriate

Liscoppe is optimistic about the long term opportunities for employers and plan members to build and support a healthy workforce, but he warns that we are likely to see pricing starting to reflect the immediate concerns about mental health and short- and long-term disability claims. “It’s really exciting to see the insurers develop the resources and support for employees.” 

Learn more about how TELUS can help employers, administrators and insurers build connected, accessible, efficient healthcare for Canadians.

1. Johnston Group data shared during the March 25, 2021 webinar hosted by Canadian Pension & Benefits Institute (CPBI). Presentation available on the CPBI member portal. 

2. Ibid.