Short-term disability claims drop early in pandemic, but is a spike coming?
Claims for respiratory illness conditions nearly doubled early in the pandemic, but that overall claims in April 2020 dropped.
The COVID-19 pandemic has had a mixed impact on disability leave claims by employees, according to a new report. The analysis, by the Integrated Benefits Institute (IBI), finds that claims for respiratory illness conditions nearly doubled early in the pandemic, but that overall claims for short-term disability (STD) in April 2020 dropped, possibly due to layoffs and the decision of employees to postpone seeking medical care.
The report used the IBI disability/leave benchmarking database to compare year-over-year disability claims. The database is the largest of its kind, the company said, containing 6 million claims from 66,000 employer policies.
Related: The COVID-19 pandemic: Guaranteed to complicate long-term disability claims
The report paints a picture of claims that increased significantly as the pandemic first set in, and then decreased as the economy contracted and jobs were lost due to the pandemic.
“The good news is that we’ve seen employment numbers come back somewhat since April, though we’re still not quite where we were before the initial shutdown of the economy in March,” said Brian Gifford, PhD, IBI Director of Research and Analytics. “The bad news is that daily COVID-19 cases are still higher than they were in April. That could be a recipe for a persistently high rate of disability leaves for COVID and respiratory conditions, while pent-up demand for postponed health services progression of untreated chronic health or mental health conditions drive up leave rates for other reasons, too.”
An early jump in COVID-related claims
The report estimated that of the more than 7 million COVID-19 cases among Americans reported by late September of this year, about one in five involved an employee who has access to disability leave benefits.
A sudden increase in disability claims is seen at the beginning of the pandemic, the report noted: “The raw number of new STD claims for respiratory conditions more than doubled from February to March—when COVID-19 and SARS-associated coronavirus first appear in books of business in a meaningful way—before falling again in April,” the report said. “This suggests that many respiratory claims would have been coded as “COVID-19 or SARS-associated coronavirus had the Centers for Disease Control and Prevention issued its coding guidance early. Including COVID-19 and other coronavirus claims would more than quintuple the March 2020 volume of respiratory claims.”
Overall, the report said, employers experienced 1.39 more STD claims per 1,000 lives in March 2020 than in March 2019.
Layoffs and delayed care result in fewer subsequent claims
The increase in March was followed by a decrease in overall claims in April, the report showed. For April 2020, STD claims decreased by 1.69 claims per 1,000 covered lives compared to April 2019. The report found that the drop in claims happened in all categories other than claims involving coronavirus/COVID-19, infectious disease, respiratory conditions, and unclassified claims.
Researchers found decreases in April STD claims for areas such as injury, pregnancy, and FMLA maternity/bonding claims. They said the data suggested the declines are due to mass layoffs as businesses shut down because of the pandemic, resulting in fewer employees’ being eligible for leave benefits. In addition, postponed care, as Americans avoided health care facilities during a time of infection spikes in many states, also contributed to fewer STD claims.
The study estimated that postponed care accounted for about 24% of the decline in STD caseloads for April 2020. During April, of course, many cities and states were seeing a spike in cases, and the possibility of overwhelming the health care system was a major public health concern. For the claims looked at in the study, postponed care delays seem to be related to the diagnosis, the report noted. For example, the researchers estimated that 91% of the year-over year decline in musculoskeletal and genitourinary claims was due to postponed claims, compared with 55% of circulatory claims.
Kelly McDevitt, IBI President, said that as with many health-related measurements, it’s difficult to predict exactly how the COVID pandemic will affect future claims.
“From a research and analytics perspective, it’s still too early to determine the long-term impact that claims for COVID-19 will have on short- and long-term disability and FMLA programs,” McDevitt said. “What is clear right now, is that in order to help mitigate those increases tomorrow, employers must focus on helping employees get safe, affordable access to preventive care, chronic care, and wellness programs today.”
The report concludes by saying that layoffs may reduce claims in the short term for businesses, but that a future increase in claims could come due to pent-up demand for health services that were postponed during the worst of the economic slowdown. “Postponed health services—particularly for musculoskeletal conditions—and the progression of untreated chronic health or mental health conditions… may drive up future incidence rates among employees who remain eligible for benefits,” the report said.
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