Benefits Consulting

To the surprise of many organizations, the combined cost of sick pay and disability benefit programs often exceeds that of medical benefit programs.

"Direct costs" for sick pay, short-term and long-term disability benefits typically range from 4 to 6 percent of payroll. When workers' compensation costs are included, total direct costs can reach 6 to 9 percent of payroll. "Indirect costs," such as lost productivity, recruitment, overtime, retraining and administration are also very substantial and can run as high as 4 to 6 percent. The total cost of disability can be as high as 10 to 15 percent of payroll in some organizations.

Faced with continuous pressure to reduce and control medical plan costs over the past 10 to 15 years, many organizations have not focused on the management of sick pay and disability benefit programs. And, it is only in the past few years, that states have begun to permit managed care features in workers' compensation programs. For most organizations, there is a significant opportunity to reduce costs and manage these programs more effectively.

Sibson Consulting's disability management services include:

• Analysis of absenteeism and disability patterns,
• Evaluation of sick pay, disability benefit and other paid-time-off practices,
• Assistance with the selection of appropriate financing methods for disability and workers' compensation benefits,
• Design of cost-effective disability benefit programs, including those that integrate group disability and workers compensation,
• Assistance with the selection of disability insurers, claim administrators, and/or disability case managers,
• Projections of disability benefit costs,
• Calculation of the value disability benefit liabilities, as required by Statement of Financial Accounting Standards No.112 (SFAS 112).
• Communication of sick pay, disability and paid-time-off benefits and practices,
• Review of absenteeism and disability reporting processes, and
• Development of enhanced approaches to reporting and managing absenteeism.

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