Navigating the Risks of Long-Term Disability Costs
By Richard Brown and Dan Eisner, CPA, CA
I
Richard Brown has worked in
the disability insurance
business since 2002, providing
absence and disability
management advice to
businesses, health and welfare
trusts, and government
agencies.
t’s estimated that one in three employees in Canada will make a long-term disability (LTD) claim in their working
life. Yet most people don’t talk about LTD claims on a regular basis, so when an employee experiences an illness or
injury, there is often confusion about how the process works and what the risks are to the organization.
Employers are facing increasing external pressures to develop more effective disability management systems—pressures
such as the duty to accommodate1 employees with disabilities under human rights codes; the health and safety requirements
instituted by the provincial Workers’ Compensation Boards; higher disability benefit insurance rates; legal challenges;
and the national standard for psychological health and safety in the workplace.2
There are also increasing internal pressures, including the difficulty of recruiting and retaining skilled workers, and the
need to improve productivity to stay competitive.
The good news is that by implementing a structured and integrated approach to disability management in the workplace,
employers can either prevent or reduce the length of an extended absence due to disability.
Identifying risks to absenteeism
A good first step is to assess the organization’s health benefit costs and absence and disability costs. In particular, it’s
important to know the absence rate—the number of days per year that are missed due to sickness and health-related
issues. In addition, employers should review drug and employee assistance program usage and disability claims experience
data, which outline diagnoses, durations, and outcomes, and can be useful in pointing out areas that require attention. As
well, they should access any available tools, such as surveys and libraries, offered by their insurance providers, in order
to better understand the general health of their employees.
Dan Eisner is an employee
benefits adviser with ZLC
Financial, working with human
resource and finance
professionals on employee
benefits and broader human
capital strategies.
1
The duty to accommodate employees with disabilities is part of the Canadian Human Rights Act and provincial human
rights codes. These laws are designed to protect individuals from discrimination on the basis of race, religion, sexual
orientation, or disability.
2
Psychological Health and Safety in the Workplace is a voluntary standard that was introduced in 2013 by the Mental
Health Commission of Canada (MHCC), the Canadian Standards Association, and the Bureau de normalisation du
Québec. More information, including a free guide, is available on the MHCC website at mentalhealthcommission.ca.