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Worlds Colliding: The Relationship Between Employee Benefits and Workers’ Compensation
By Diana Schmidt, Property & Casualty Consultant & Principal and Chris Utz, Employee Benefits Consultant

When it comes to managing a company’s total cost of risk, there are some key areas that overlap and impact the cost of both the Employee Benefits and Workers’ Compensation programs. Oftentimes these two insurance programs are analyzed and managed independently of each other. However, identifying and effectively managing crossover topics like comorbidities, opioids, and mental health can drive down long-term costs for both programs.

Let’s look at comorbidities, or chronic conditions. A few of the top chronic conditions that impact both workers’ compensation and health claims are:
  • Obesity
  • Hypertension
  • Smoking
  • Diabetes
  • Cholesterol

The existence of chronic conditions can wreak havoc on both the cost of your medical claims and workers’ compensation claims. As the number of comorbidities increases, the impact on the plans continues to skyrocket.  The cost difference between an individual with 1 comorbidity and 5 comorbidities could be up to 15x more to your medical plan.  The impact of comorbidities on the cost of workers’ compensation claims is just as staggering. A study by Travelers Insurance revealed that 50% of all workers have at least one chronic health condition and the cost of treating this injured worker was double the cost of treating the same injured worker without a chronic condition.1 The study further revealed that 25% of employees have more than one chronic health condition which can increase the cost of treatment by 5x.2  The key to controlling costs related to chronic conditions is first identifying if you have a problem, as well as the root cause of the problem. Potential solution: Implement wellness programs that include disease management and lifestyle management. These programs help employees cope with chronic conditions and focus on preventing illness by encouraging healthy behaviors such as eating better, exercising, and quitting smoking.

Now let’s look at opioids. The opioid crisis continues to be a public health emergency in the U.S., with 128 Americans dying from opioid-related overdoses every day.3 The costs associated with chronic pain and opioid addiction are taking an increasing financial toll on businesses. Medical costs associated with pain care and economic costs related to disability days, lost wages, and decreased productivity cost an estimated $560 to $635 billion each year.4 Blending health and safety programs to address personal and occupational activities can enhance overall worker wellbeing and prevent work-related injuries and illnesses. Developing post-injury management strategies that take a positive approach to employee injuries can be impactful when managing the costs of medical and work comp claims.

The last crossover topic is mental health. Mental health continues to be a growing concern in the workplace. Depression has grown in all three categories (Employee/Spouse/Children) with the most significant growth being among dependents. Once members have a diagnosis, they will always retain that diagnosis. It’s important to determine if an employee or their dependents are continuing their care. There has also been a significant increase in mental health Teledoc visits during COVID-19, so identifying the problem and providing the right resources can lead to a more engaged and mentally healthy workforce. An employee’s mental health can also impact workers’ compensation claims. Keeping employees engaged and focused on their environment is critical to keeping all employees safe and preventing injuries from occurring.

Proactively managing crossover areas like comorbidities, opioids and mental health can positively impact the cost of your employee benefits and workers’ compensation programs. Understanding how these areas impact your employee population and strategizing on resources and programs such as disease management, return-to-work, or employee assistance programs (EAP), can assist in mitigating these exposures and reduce your total cost of risk. These programs can also help foster an engaged, healthy, and productive workforce.


Sources
 
  1. Travelers: Helping Employers Manage a Safer Workforce
  2. Travelers: Helping Employers Manage a Safer Workforce
  3. National Institute on Drug Abuse, Opioid Overdose Crisis
  4. The economic costs of pain in the United States

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