The impact of mental health claims on group benefits: More than meets the eye

By Julie Cousineau, FCIA, FSA, CHRP, Partner, Health, Normandin Beaudry

Episode 64 of the Seeing Beyond Risk podcast discusses the evolving landscape of mental health along with the impact of mental health claims on group benefits plans and proposes many interesting strategies to help organizations mitigate rising costs. But things are not so simple when it comes to mental health and there are many aspects to consider. Here we will delve deeper into some of the issues raised.

Consider short-term disability incidence rates

Generally, we break down short-term mental health disability cases to assess the severity of an employer’s situation based on comparables, as an insurer portfolio. The podcast also indicates that for Canada Life’s portfolio, this distribution was up and at a level of 20% of all short-term disability cases in 2019. This indicator may, however, pose a challenge. It does not consider the increased disability incidence rate: the number of new mental health disability cases based on the number of employees eligible for coverage. The incidence rate, regardless of cause, varies significantly depending on the length of the waiting period.

Take, for example, two plans: A and B. If we use the usual criteria to assess the severity of a situation, Plan B would be more alarming in terms of mental health-related disabilities than Plan A.

Plan APlan B
Waiting period3 days14 days
Incidence rate (any cause)15%8%(1)
Percentage of short-term disability cases related to mental health20%30%

(1) The reason why this rate is lower than for Plan A may be explained by the fact that very short absences, such as flu or minor injuries, are resolved sooner.

However, if we consider the incidence rate, the results are different.

Plan APlan B
Incidence rate of mental health-related disabilities3%2.4%

This comparison shows that employees covered under Plan A are more likely to be absent for a mental health-related disability than those under Plan B.

The advantage of this rate is also to better assess the situation when disabilities for other reasons decrease. This is what we are seeing with the reduction in physical activity and in hospital surgeries due to the pandemic. The percentage of mental health disabilities could then increase, while, in fact, it remains stable.

Mental health is a concern for many employers. Organizations and insurers are encouraged to assess the incidence rate of mental health disabilities to measure the severity of the situation and assess the impact of efforts to prevent them.

Mental health challenges affect us all

As Mr. Tirelli, consultant in organizational health at Canada Life, mentioned in the podcast, organizations must address mental health challenges with the benefits and tools available to employees. With a total rewards approach, there is a need to explore solutions within a larger framework, from the perspective of HR management as a whole.

Employers: Review your management practices

Job satisfaction has been shown to greatly affect mental health. It is therefore recommended to work on sound management practices such as:

  • Giving meaning to work, effort, and results.
  • Expressing recognition.
  • Reinforcing change through feedback.

Actionable changes to promote retention

There is often talk of accommodation to help employees return to work, as discussed in this episode of the podcast. However, organizations are also encouraged to consider accommodations to promote job retention, that is, to prevent disability. In this case, other options will have to be considered with the insurer to avoid penalizing an employee who would ultimately have to be absent due to a disability.

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