Among the many responsibilities that fall to an employee benefits manager, one of the most important is absence management. An effective absence management program reduces lost worker productivity and limits the liability for mismanagement of employee absences, ultimately producing a positive impact on a company’s bottom line. Yet, management of this important function is often overlooked or misunderstood.

Brokers and advisors can play an important role in ensuring that employers address this need. By understanding the basics of sound absence management, as well as the resources and third-party expertise available in the marketplace, they can help employers to a proven path for successful absence management.

The need for absence management

In the past few years, numerous changes have impacted how employers track employee leaves. While the Patient Protection and Affordable Care Act has garnered much of the attention, other federal rulings have had an effect on the benefits landscape as well. The Department of Labor released additional regulations for the Family Leave Act, while the EEOC has updated requirements as part of the Americans with Disabilities Act Amendments Act (ADAAA). These changes have forced employers to focus greater attention on their absence tracking and reporting practices.

The cost of mismanaged absences can be steep. For example, a recent lawsuit regarding a mishandled FMLA claim resulted in a court-ordered payment of damages totaling more than a million dollars in lost pay and attorney fees. The risks of lawsuits or fines for non-compliance are simply not worth it, and an effective absence management program can greatly reduce this exposure.

The state of employer absence management programs

The 2015 Guardian Absence Management Activity Index and Study provides a snapshot of employer proficiency with absence management programs. Based on employer activity on 10 elements of a potential absence management program, the majority of employers have programs that are not considered advanced. The data also shows that larger employers are more likely to have advanced programs than smaller companies.

The level of effort employers make to reduce absenteeism is highly correlated to their degree of program advancement. And, not surprisingly, companies with highly advanced programs are more than twice as likely as those with less advanced programs to achieve desired outcomes.

Opportunities for improvement

While many companies have absence management efforts in place, the Guardian study suggests that opportunities for improvement exist, considering that:

58 percent of employers have difficulty interpreting federal and state leave laws
54 percent of employers have challenges ensuring employees are able to perform their essential duties before returning employees to work
42 percent of employers lack staff resources to manage absenteeism

Even as companies are actively trying to improve their productivity and absence management capabilities, the statistics suggest they still struggle to do it well. And these challenges exist for companies of all sizes, ranging from 50-person organizations to companies with 20,000 employees.

A four-step approach

Setting a solid philosophy. A philosophy that emphasizes return-to-work and employee health and wellness programs is the key to getting started. A company’s early decisions are often based on its underlying philosophy.
Taking key foundational steps. Getting buy-in from senior management and following a strategic communications campaign are essential to having the greatest impact on program efforts.
Developing an effective model. Using the same outside resource for short-term disability and FMLA administration, and making health management referrals are key predictors of success.
Carefully measuring success. It’s important to determine how program effectiveness will be assessed. Nearly half (48 percent) of all employers reported employee engagement to be the most critical measure of success.

Outsourcing options for managing absenteeism

While all employers continue to grapple with managing absenteeism, certain tasks have become less burdensome thanks to increased access to expert advice, third-party technology and tools, and more outsourcing options. This reduces some of the regulatory, decision-making and reporting challenges, particularly when applying ADA/ADAAA regulations and coordinating a variety of absence types.

It’s now easier for smaller organizations to outsource their absenteeism needs so they can start or improve an existing absence management program and manage it effectively.

More carriers now provide services to companies with as little as 50 employees that traditionally were only available to larger companies.

Absence management best practices

There are five best practices that are the strongest predictors for achieving six positive outcomes: enhancing productivity; improving employee experience; reducing lost time; decreasing overall absenteeism; increasing return-to-work rates; and reducing direct costs.

A full return-to-work program. A surprising number of companies do not have a written return-to-work policy, yet this is paramount as a foundational step.
Access to usage/claims reports. Detailed reporting for disability and FMLA is needed so there’s knowledge about know why people are out and how quickly they resume work.
Referrals to health management programs. The ability to provide employees with assistance programs (EAP), disease management or wellness programs helps them get back to work more quickly.
A central portal for reporting. Whether it’s for FMLA, STD or PTO, it’s important to have a central place where employees report their absences. A single resource means more reliable data and more accurate reporting.
Using the same STD resource for FMLA and additional benefit programs. It can be challenging for two separate carriers to manage these functions because they’re not integrated from a claims management perspective. It’s preferable for FMLA to be administered by the same department or vendor that administers STD.

Getting started

Absence management is a specialized field that requires a proactive approach. With recent marketplace advances in technology, reporting and expertise, there are numerous options for employers to pursue. Employers who are just getting started can follow a series of prescriptive steps to establish their programs and continually improve them. Brokers, agents and consultants, as part of their fiduciary responsibilities, can help bring attention to the importance of absence management to their clients and refer them to available resources.

Michael Estep is second vice president, group life, disability and supplemental health product development at The Guardian Life Insurance Company of America.

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How to create a successful absence management program

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