With age comes wisdom. That´s the good news for American employers facing an aging workforce. However, accompanying the natural aging process is also an increase in frequency and duration of many types of disabilities. Now, as the baby boomers begin to celebrate their 60th birthday, it is more important than ever that employers understand the changing health and benefits needs of this demographic.
There are many factors that employers should be considering. One is the sheer size of this demographic - a wave of 77 million individuals according to the 2000 U.S. Census Bureau. The second is how their particular business will be impacted. For example, the U.S. Bureau of Labor Statistics anticipates that American employers could face a labor shortage of more than 10 million workers by as early as 2010. However, that trend could be mitigated by several other demographic and economic trends - Americans in general are living longer, and generally healthier, lives so baby boomers may want to work past "standard" retirement age. Because employees are also expected to fund an ever-increasing share of their retirement (and with consumer debt at a record high and savings rates at a 50-year low) other baby boomers will need to work longer than they may have anticipated.
So with baby boomers remaining in the workforce and employers needing to rely on this demographic for sustained productivity, companies will need to create a workplace environment and offer benefits that are attractive to an older population in meeting their physical and work/life balance needs.
Relationship Between Medical & Disability Costs
While older employees typically bring a strong work ethic, skills and experience to the workplace, they also bring higher incidence rates of certain types of disabilities. According to MetLife Disability claims data, the top three long-term disabilities (LTD) employers can expect to see among employees age 55 and older are (1) cancer; (2) arthritis and other joint inflammations; and (3) cardiovascular disorders. Approximately one-third of all LTD claims MetLife receives from employees age 55 and older are for one of these conditions. Knowing this information, an employer can offer workplace accommodations and benefits that will incent older employees to remain in the workplace as well as those that will help maintain the health and productivity of this demographic. For instance, an employer´s investment in targeted workplace wellness and prevention programs - such as nutrition counseling, exercise programs, weight management, blood pressure testing and cancer screenings - can all prove beneficial for both the older employee and for his or her younger colleagues as well.
Because there is a relationship between medical expenditures and disability expenditures, these programs present a real opportunity to employers to invest in their human capital. For example, on average, 10% of a working population will be on disability during the course of year. Those 10% of employees, however, are consuming approximately 50% of that population´s medical expenditures. Employers who invest in targeted wellness and prevention programs may be able to offset future spending to treat chronic medical conditions that not only add to healthcare costs but disability costs.
When one considers how cancer can be controlled through prevention, early detection and treatment, it becomes a prudent business practice for employers to ensure that cancer screening services and high-quality treatment are available and accessible. Without a concerted effort to manage cancer incidence rates, I believe that as the workforce ages, the incidence of cancer is likely to increase two-fold over the next ten years.
Impact of Consumer Driven Benefits
Many accept the fact that an older population typically has greater needs for health care services and spends more health care dollars than a younger population. However, in light of another economic trend taking place - the shift towards consumer driven health plans and other benefits whereby employers are making changes in benefits funding and shifting more of the financial decisions and responsibility to employees - other financial protection benefits take on an even more critical role.
Take for instance, disability income insurance and how it can complement an employer´s move to a health savings account (HSA) or high deductible medical plan. An employee who is out on a disability will be utilizing medical services and thereby drawing on the funds in the HSA if available. For someone with no disability insurance protection to replace lost income, it is understandable that these funds would be exhausted more quickly. Disability income insurance protection - whether employer or employee paid - becomes increasingly important.
In addition to the need for income protection, it is also essential to realize that an employee who is experiencing a serious health condition is also facing some potentially complex medical decisions. In the age of consumerism, more responsibility resides with the employee for navigating these decisions. The vantage point of a disability insurer can be helpful because it is interfacing with employees at the "exact" moment of time when they are in experiencing a condition requiring a significant workplace absent. A short-term disability (STD) insurance carrier can inform employees about company disease management and wellness programs at a time they are likely to be most receptive to the information.
The insights and workplace solutions a disability insurer can provide can help employers with absence and productivity management for employee populations of all ages. However, many employers are likely to see the average age of their employee population increase as the overall American workforce naturally grays. Employers who familiarize themselves with these trends can implement programs today that can help employees now and in the future.
Dr. Leopold is vice president and national medical director of MetLife Disability. He is the author of A Year in the Life of a Million American Workers, a research almanac based on the MetLife disability claims database. A complimentary copy of the almanac can be requested at www.metlifeiseasier.com/disabilityalmanac.
