Too Sick to Work? They Disagree

For Lori Dawson, the calls of concern would come as early as 7 in the morning. People wanted to know if the Mercer Island, Wash., resident, who was battling complications from breast cancer, would consider seeing a new doctor. Was she noticing any changes in her symptoms? Did she feel well enough to exercise? All the questions would have been welcome if the calls were from friends or family. But they were coming from case managers at her insurance company—and they weren’t particularly friendly. “The relationship got very tense,” says Dawson, a pharmaceutical sales rep.

At the time, Dawson was getting disability payments from Cigna, through a policy paid for by her employer. The policy had already reduced her benefits; now the insurer argued that she was able to work, and at one point even stopped her payments for several weeks. A Cigna spokesperson says Dawson’s doctors didn’t initially provide enough details about her condition, and notes that the company resumed paying after Dawson and her attorney appealed the decision. But Dawson, a widow with three children, says she was the one who faced the consequences. “I was pretty much at the end of my rope,” she says.

For decades, disability insurance has been the least visible strand of the social safety net—with many people unaware they even have it. But they may start noticing now, because a growing number of companies are adding it to the list of corporate cutbacks. According to benefits experts, more employers and insurers are not only scaling back their coverage, but also putting workers under the microscope when they try to use it. Disability insurance provides an income to people who become too sick or injured to work, and it has traditionally been a staple of a good workplace benefits package. But with companies struggling to stay afloat, the policies have become much less generous, with some paying less than half as much as they did a few years ago. Workers are also paying more in premiums: According to the insurer Unum Group, 81 percent of employers picked up the entire tab for short-term disability insurance in 2001. Today it’s down to 45 percent, and patient advocates say the rocky economy is likely to leave workers picking up even more of the tab.

The reductions, of course, bear a strong similarity to what’s been happening to employee health plans. But the timing could hardly be worse, since the need for disability coverage is growing as the workforce ages. It also surges when the economy slumps; indeed, claims for Social Security’s disability insurance, which had been relatively flat for several years, jumped 17 percent in 2009, to a record 3 million, and the Council for Disability

Awareness, a trade group for private insurers, says it expects that 2010 will show another upward spike in claims. When those workers try to collect, they’re likely to find themselves under much more scrutiny. Once employees go on disability, critics say, insurers today are more likely to require hour-long chats on the phone, hound patients for medical updates and push them back to work as soon as possible—often clashing with doctors who think the workers need more recovery time. “These claims are now managed, whereas they used to just be monitored. It can be very intrusive,” says Terry Smith, a principal in Mercer’s health and benefits practice.

To be sure, the disability battle is complex. Companies and human-resources experts say disability benefits are soaring to unmanageable levels, putting pressure on companies to do whatever they can to control costs—especially given that disability fraud is quite common. Even advocates for patients agree that for people whose disabilities aren’t completely incapacitating, getting back to work is critical to their mental health and overall well-being. But for people whose health problems are severe but not necessarily permanent, the new micromanagement can come as a shock. Consumers who expect a simple yes or no from the insurance company find the process is more complicated than they had ever imagined—and more taxing, at a time when they are at their most vulnerable. “It really catches people off guard,” says Erin Moaratty, a project officer with the Patient Advocate Foundation. “They think, ‘If I get sick, at least I’ve got this plan.’ That’s not the way it works.”

For years, of course, companies have been examining every dollar spent on health benefits, but it’s only recently that disability coverage received the same scrutiny. The surprise is that it took so long, given that three out of every 10 workers will become disabled for three months or more before age 65. Time lost from work—a category that includes disability, workers’ compensation and sick pay—costs companies $118 billion a year, while lost productivity from the “working unwell” more than doubles that tab, according to the Society for Human Resource Management. Those costs have grown by a steady 4 or 5 percent per year for most of the past decade.

With regard to health care, many companies have dealt with high costs simply by dropping insurance for workers; with disability, things are playing out a little differently. A generation ago, companies largely maintained a hands-off approach to workers on disability. As long as they produced a note from the doctor, employees stayed home until they felt well enough to return to work, collecting a percentage of their income and continuing to get benefits such as health insurance. The package was comfortable enough, many employers complained, that some employees made little effort to return to work. “We just sent them home, and they never came back,” says Tori Weeks, the associate director of benefits at Ohio State University.