Using FMLA to Manage Disability Costs

An early warning system for companies to manage benefits costs

San Francisco, CA – July 17, 2013 – A panel of experts convened by the Integrated Benefits Institute (IBI) is recommending high impact strategies companies can adopt to better manage the duration and costs of employee leaves under the Family Medical Leave Act (FMLA) and subsequent disability claims.  IBI is a leading health and productivity research organization.

Download the IBI research report: Early Warning: Using FMLA to Understand and Manager Disability Absence

The lost productivity costs to businesses due to employees on extended leave include lost revenue, work disruptions, reliance on overtime and the use of substitute workers. These costs are compounded when an employee’s health issue results in a claim on the company’s short-term disability (STD) policy and increase significantly in the event of a long-term disability (LTD) claim.
“A worker’s request for leave under the FMLA may be a precursor to other, more costly leaves. Rather than view the FMLA as strictly a legal compliance requirement, employers should consider using FMLA as an early warning system to detect potential costly health issues among their employees and their families,” said Thomas Parry, PhD, IBI president.

To better manage costs, experts say employers should connect employees requesting FMLA leave with resources such as employee assistance programs; discuss stay-at-work alternatives; improve training for supervisors about early warning signs and potential interventions; and better educate workers on the types of absences the FMLA does (and does not) cover, and their rights and responsibilities.

These recommendations are contained in a recent IBI research report, Early Warnings: Using FMLA to Understand and Manage Disability Absence. They were developed by a panel of experts from IBI’s employer and supplier membership following analysis of disability data for 161 businesses employing nearly 520,000 people from 2007 to 2011. The data in IBI’s analysis were provided by a leading absence management company.

Connecting short-term disability to long-term disability

Almost one-quarter—24%—of eligible employees took leaves under the FMLA over the five-year period studied and 14% filed STD claims. Employees who used the FMLA due to personal health conditions were twice as likely as other workers to use STD the following year. Employees who took FMLA leave for a family member’s health condition were about 50% more likely to have an STD claim the following year than other employees.

The FMLA was signed into law in 1993 to provide eligible employees with up to 12 weeks of job-protected, unpaid time off from work during any 12-month period for an employee’s or family member’s serious health condition, care of a new child or to assume caretaker duties for a military-deployed family member.

Engaging employees at the earliest revelation of a potential issue represents an opportunity to avoid more-costly disability claims without materially increasing absence management expenses

The FMLA requires workers to inform their employers when they or family members have serious medical conditions and need time off from work. According to the report: “Engaging employees at the earliest revelation of a potential issue represents an opportunity to avoid more-costly disability claims without materially increasing absence management expenses. This should be done regardless of an employee’s eligibility for FMLA leave.”

The advantage of early engagement

“The report clearly demonstrates the advantage of early engagement with employees requesting FMLA leaves. Yet, so few employers do this–even though the majority undertake comprehensive efforts to engage their workforces as a whole in their own health,” said Parry.

The panel of experts convened by IBI recommends the following strategies to better manage costs associated with FMLA leaves:

  • Connect employees with resources

When employers become aware of employees’ challenging personal situations through FMLA requests, they have the opportunity to direct workers to resources that can help minimize the risks of subsequent claims. Employers should take steps to connect employees requesting FMLA leaves with resources such as employee assistance programs, ergonomic interventions and disease management programs.

  • Explore work continuity options

Discussions with employees about job accommodation and stay-at-work options should commence at the earliest opportunity. Job accommodation and stay-at-work programs involve making changes to the duties of affected employees to enable them to continue working at a reduced level.

  • Expand training for supervisors

Employers and their benefits partners should expand FMLA training for supervisors on early warning signs and potential interventions. They should also conduct periodic “roundtables” with supervisors and human resources staff to review ongoing cases and provide appropriate coaching and support for supervisors.

  • Stay in touch with workers

Supervisors should remain in contact with employees during FMLA and STD leaves to keep them engaged and connected to work.

  • Better educate employees about FMLA

Training for employees about their FMLA rights and responsibilities should be improved and consistent. Employees generally receive information about FMLA from their human resource departments, but typically only at the time of requests. This increases the workload of personnel who must verify requests with no chance of approval. Workers should also be educated on the types of leaves FMLA does and does not cover.

  • Synchronize HR duties related to leaves

Employers should coordinate FMLA-related activities of human resources, benefits and occupational health departments so cases can more actively be monitored and managed.

About the Integrated Benefits Institute
The Integrated Benefits Institute (IBI), an independent nonprofit membership organization, is the leading provider of health and productivity research, measurement and benchmarking. Founded in 1995, IBI provides members with data, research and tools to make sound decisions in how they invest in the health of their workforces. Its 800+ members include companies implementing health-related programs to benefit their employees and business, and providers of health and productivity services. Additional information about IBI may be found at www.ibiweb.org.