business
Crunching the Numbers
NEW CALCULATORS ESTIMATE DISABILITY COSTS FOR EMPLOYEES AND EMPLOYERS
The National Institute of Disability
Management and Research
(NIDMAR) has developed calculators
to measure the financial
impact of Return to Work / Disability
Management initiatives. These calculators
allow individuals, employers and social security
agencies to estimate the short and
long-term costs following the onset of a
disabling condition with the goal of improving
return to work outcomes. In other
words, an employer can use hard data to
see the current picture but can also use
the calculator to determine the return
on investment (ROI) for any number
of scenarios.
The following scenarios detail how the
calculators work:
EMPLOYEE CALCULATOR
SCENARIO
In this disability-related employment loss
scenario, the person had a loss of employment
income at age 40, a current age
of 43 and a retirement age of 65. An annual
income used in this scenario was
$40,000 and, as a result of 25 years of
lost income, the total annual income lost
was $1,000,000. The employment benefit
(including social security, insurance, etc.)
annual value over the same period was
$875,000. The total anticipated income
loss for this individual was $1,875,000.
The total anticipated pension income to
be received by this individual is $190,478.
Thus, their total expected loss of income is
$1,684,522.
EMPLOYER PROGRAM IMPACT
CALCULATOR SCENARIO
The employer in this scenario had an average
yearly WCB expense over the last
three years of $34,167; the average days
lost due to disability were 5.67. The total
return to work program cost was $5,000.
After the implementation of the program,
the yearly expenses are $28,000, the ratio
(program impact/total program costs)
is 0.23 and the change in days lost due to
disability is 1.67. The impact of implementing
the program is $1,167.
This initiative is designed to document
and verify not only the financial impact
of disability-related employment loss but
also to define the potential benefits derived
– for all parties – from effective
interventions designed to maintain continuity
of the employment relationship for
affected workers.
This tool is beneficial for both employers
and employees as the guidelines
are applicable, regardless of whether the
reason for the sick leave absence is occupational
or non-occupational. What is
consistent is where the continued, productive
employment of workers is lost,
regardless of the system or circumstances;
the financial, social and personal costs are
significant – especially for the worker.
Depending on the jurisdiction, the
costs can also be considerable for employers.
This calculator allows employers
to clearly measure the financial impact of
their return to work/disability management
initiatives in addition to providing
a better understanding of their long-term
disability frequencies. It therefore stands
to reason that maintaining the continued
employment relationship for a worker
who has acquired a disabling impairment
and is at risk of losing his/her employer
attachment can yield substantial economic,
social and societal benefits for workers,
employers and society as a whole. n
Jesse Martell is a professor of human resources
at Durham College and director of professional
development for the Durham Chapter
of the Human Resources Professionals
Association.
By Jesse Martell
Syda Productions/Shutterstock.com
HRPATODAY.CA ❚ JANUARY 2016 ❚ 39
