Income Protection and rehabilitation working together

Transcription

1 Kyla Malcolm Economics, Policy and Competition Income Protection and rehabilitation working together December 2015

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3 Table of Contents Executive Summary 4 1 Introduction 6 2 Approach Benefits from Income Protection policies Benefits from rehabilitation activities 8 3 Role of rehabilitation Typical claims Rehabilitation approach Rehabilitation in action 15 4 Quantifying the benefits of rehabilitation Direct benefits from rehabilitation Indirect benefits from rehabilitation Decision to instigate rehabilitation Increased take-up 28 5 Conclusion 30 Disclaimer Whilst every effort has been made to ensure the accuracy and completeness of the material in this report, the author gives no warranty in that regard and accepts no liability for any loss or damage incurred through the use of, or reliance upon, this report or the information contained herein. 3

4 Executive Summary Economics, Policy and Competition (EPC) was appointed by Zurich to consider the value of rehabilitation services and activities provided through Group Income Protection policies. When an employee is unable to work due to illness or injury, Group Income Protection policies will provide payments to the employer so that they are able to continue to pay their employee. Previous research by the author found that the presence of Group Income Protection policies leads to savings for the taxpayer of 165 million per year ( 85 million from lower welfare payments and 80 million from higher income tax and National Insurance Contributions). Group Income Protection supports individuals while they are absent from work to the tune of 190 million per year. Rehabilitation support provided through Group Income Protection policies has the potential to help people back to work faster than without access to it, and so reduce the length of absence from work. Through engaging with employers, the involvement of Group Income Protection insurers can help to achieve early notification of claims and to facilitate early treatment. With areas such as mental health and musculoskeletal incapacities, early treatment can help prevent these conditions deteriorating over time and therefore also help to shorten the treatment time and increase the likelihood of a successful return to work. Zurich s Vocational Rehabilitation Consultants (VRCs) play a vital role in engaging with employers and employees to understand the impact of the disability on their capacity to fulfil their job requirements. The VRCs pro-actively identify opportunities to facilitate treatment and design graduated, or phased, return to work plans that support a sustainable return. The report uses anonymised case studies to show real examples of how Zurich has been able to support individuals and their employers to help ensure an effective return to work. This reduction in absence generates direct financial benefits for a range of stakeholders such that rehabilitation: Returns the individual to their original (higher) earnings in work; Reinstates the original (higher) tax revenue and (lower) welfare payments the taxpayer faces from the individual being at work; Restores the individual back to work to the benefit of their employer; and Reduces the duration of the Income Protection payments to the benefit of insurers and their customers through lower premiums. Direct financial benefits from rehabilitation are estimated as worth around 74 million annually given the current take-up of Group Income Protection policies. 4

5 Table 1: Annual direct financial benefits from rehabilitation Direct financial benefits Taxpayers Employees Employers Insurers Total 27 million 5 million 17 million 25 million 74 million Additional quantified indirect benefits for employers are found to be worth around 35 million, reflecting the cost of temporary staff, overtime and lower productivity while the individual is absent from work. This brings the total of quantified financial benefits to around 110 million. 110 million of financial benefits from rehabilitation through Group Income Protection Put another way, for every 1 that insurers spend on rehabilitation activities, of benefit is generated. Only around one-third of this benefit accrues to insurers (the resulting lower overall cost of claims is passed on to customers through lower premiums) with the other two-thirds benefiting taxpayers, employers and individuals. If take-up of Group Income Protection policies in the UK reached a similar level to that seen in the US, the financial benefits would increase to 475 million. Other areas of non-quantified benefits of Group Income Protection and rehabilitation include the benefits to the NHS from treatments being shorter or sourced privately; reduced impact on family members who may take on caring responsibilities with possible consequences for their own health; and continued pension contributions. For mental health and musculoskeletal illnesses in particular, there is also potential for early intervention to have long-term impacts on future absences. Employers pay for Group Income Protection policies but the benefits from them are spread across a range of stakeholders, and therefore it is inevitable that there will be under-purchasing of the product from a social perspective. Take-up of Income Protection policies will also be reduced by behavioural factors such as: misunderstanding, and over-estimating, the value of welfare payments; under-estimating the likelihood of individuals being off work due to ill health; and inertia. Commonly, where there is under-purchasing from a social perspective, the State would be expected to provide incentives to increase the quantity purchased. Government incentives can also signal to both employers and employees that Income Protection is a valuable product and in itself this can encourage take-up. In this case, one of the stakeholders that gains from the presence of Income Protection is the Government itself through making lower welfare payments and receiving higher tax revenues, implying an even greater reason for the Government to act. 5

6 1 Introduction Economics, Policy and Competition (EPC) was appointed by Zurich to consider the value of rehabilitation services and activities provided through Group Income Protection policies. When an employee is unable to work due to illness or injury, Group Income Protection policies will provide payments to their employer so that they are able to continue to pay the employee. Previous work by the author has examined the impact of Group Income Protection policies and clear benefits arise from these for taxpayers and individuals. This current report focuses on the impact of rehabilitation which has the potential to reduce the length of the absence from work which benefits employers, individuals, taxpayer and insurers. However, the very fact that multiple parties gain from rehabilitation and Income Protection policies more generally leads to the likelihood that they will be under-purchased. Only around two million people or 8.5% of the working population are covered by Group Income Protection policies. 1 The need to shorten the length of absence, help people back to work and to keep them in work after periods of ill health is clear. As the Black and Frost report has explained, for most people work is good for health and wellbeing. 2 Yet, each year 300,000 people (around 1% of the workforce) leave work and rely on health-related welfare payments, around one million employees have some form of long-term sickness and around one in five of those absent from work for four weeks or more will not return to work. Since the UK also faces an ageing population the challenge of absence due to ill health is only likely to increase, particularly as 42% of those aged and in employment are living with long-term health conditions. 3 The Government has already recognised the importance of change in this area with the Fit for Work scheme available for employees who have been absent from work for more than four weeks. Insurers, through engagement with employers can also make a difference through early notification of absence, arranging early access to treatment and supporting people as they return to work. Using the insurance sector also takes pressure off the public purse as employees rely less on welfare payments during their absence from work. The rest of the report is structured as follows: Chapter 2 explains the approach to assessing the benefits from Group Income Protection policies including briefly reviewing previous work on this topic by the author; Chapter 3 provides detail on Zurich s approach to the rehabilitation process as well as providing case studies where Zurich has worked with individuals and their employers to help to reduce the absence from work; Chapter 4 sets out the quantification of the benefits of rehabilitation covering both the direct benefits from reducing absence from work and indirect benefits reflecting the cost of temporary staff and lower productivity while an individual is absent. This chapter also explains why Group Income Protection policies are likely to be under-purchased; and Chapter 5 concludes. 1 Swiss Re Swiss Re Group Watch and EPC calculations. 2 Health at work an independent review of sickness absence, Black and Frost, November As cited in Investing in a workforce fit for the future, challenges for UK government, The Work Foundation. 6

7 2 Approach This Chapter gives an overview of the approach to quantifying the benefits of Income Protection policies generally (in section 2.1) as well as the specific benefits associated with rehabilitation activities (in section 2.2). 2.1 Benefits from Income Protection policies Income Protection policies, as their name suggests, aim to protect incomes by paying out a proportion of an individual s earnings if they are unable to work as a result of an illness or injury. 4 Group Income Protection policies make the payments to the employer who then continues to pay their employee through their usual payroll process. 5 In making these payments, insurers help to protect individuals financially as well as reducing the burden on the State. Previous work by the author examined the benefits to individuals and to the public purse from having Group Income Protection policies compared to not having them. 6 Figure 1 provides an illustration of the level of financial benefits that the taxpayer receives through the presence of Income Protection policies for one particular household structure. Figure 1: Financial benefits for the taxpayer Couple, 2 children Lower welfare payments Higher tax/nic revenues Annual benefits for taxpayers per individual ( ) 45,000 40,000 35,000 20,000 25,000 20,000 15,000 10,000 5,000 0 IP still replaces UC to an increasing extent, but the average assets of households increase which reduces the original UC entitlement IP replaces UC payments to an increasing extent Child benefit reduces and then falls to zero adding to the savings for tax payers 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000 85,000 90,000 95, ,000 Pre-disability annual gross income ( ) Source: Income protection policies working together to improve take-up, A report for Zurich, Kyla Malcolm, March Note: UC represents Universal Credit; IP represents Income Protection; NIC represents National Insurance Contributions. 4 The terms disability, illness, injury and incapacity are used interchangeably throughout the report to refer to the event or ongoing circumstances that mean that the individual is absent from work for health reasons. 5 Individual Income Protection policies make payments directly to the individual concerned. 6 Income protection policies working together to improve take-up, A report for Zurich, Kyla Malcolm, March The appendix to the previous report, has details of the full assumptions behind the modelling. 7

8 Overall the annual benefits for taxpayers were found to be 165 million due to the combination of making lower welfare payments and receiving higher tax revenues. A further 190 million of gains accrued to individuals who receive a higher income than in the absence of the Group Income Protection policies. Table 2: Gains from Group Income Protection policies Gains Lower welfare payments Higher income tax and National Insurance Contributions Higher incomes for individuals Total 85 million 80 million 190 million 355 million Source: Income protection policies working together to improve take-up, A report for Zurich, Kyla Malcolm, March Benefits from rehabilitation activities Income Protection payments are made in order to replace part of an individual s earnings while they are absent from work. Rehabilitation activities have the ability to shorten the duration of the absence from work and to help the individual back to work faster than would have been the case without the rehabilitation. As such, any gains associated with rehabilitation activities are additional to those in Table 2. Figure 2 below illustrates the distinction. Figure 2: Illustration of gains from Income Protection policies Welfare payments Employment income Income Protection Tax revenues Benefit from IP rehabilitation for the reduced time out of work Income and tax Benefit from IP while out of work Pre-disability Note: IP refers to Income Protection Post-disability with IP Post-disability without IP 8

9 The calculations in the previous research focused on the benefit of having Group Income Protection policies compared to not having Income Protection policies i.e. the comparison of the middle and right columns in Figure 2. This report focuses on having rehabilitation activities within those Group Income Protection policies which shorten the duration out of work i.e. the comparison of the left and middle columns. Rehabilitation shortens the time that individuals are not working and in doing so it: Returns the individual to their original (higher) earnings in work; Reinstates the original (higher) tax revenue and (lower) welfare payments the taxpayer faces from the individual being at work; Restores the individual back to work to the benefit of their employer; and Reduces the duration of the Income Protection payments to the benefit of insurers and their customers who pay lower premiums. The previous research calculated an initial indication of the value of rehabilitation activities.7 This current research involves refined assumptions based on more detailed work, discussions with Zurich s rehabilitation experts and also examines case studies where rehabilitation has been used. 7 Income protection policies working together to improve take-up, A report for Zurich, Kyla Malcolm, March

10 3 Role of rehabilitation This Chapter examines the role that rehabilitation can play in helping people back to work faster than would otherwise arise. Section 3.1 sets out information on typical claims for Group Income Protection policies. Section 3.2 explains the role of rehabilitation experts within insurance companies. Section 3.3 then considers the three largest areas of claims along with anonymised examples of some of the individuals that Zurich has helped back to work. 3.1 Typical claims According to Swiss Re, around two million individuals are covered by Group Income Protection policies. 8 Figure 3 below provides details on the breakdown of new claims for Figure 3: Type of claims 25% 20% 15% 10% 5% 0% Cancer Mental illness Musculoskeletal Neurological Cerebrovascular Accident Gastrointestinal Other Source: GRiD 2015 Claims Survey. Data relates new claims in Sources of evidence vary slightly in terms of the exact proportion of claims that arise from different types of illness. Zurich s own experience is that mental illness represents a slightly higher proportion of claims than in Figure 3 above, but the top three categories combined make a similar proportion of around 65% of claims. Differences may also arise for Group Income Protection policies compared to individual policies, but even though sources of evidence vary slightly they are fairly consistent in identifying that the three most frequent categories of claim relate to: musculoskeletal conditions; mental health; and cancer. Hence section 3.3 considers these three areas. 8 Source: Swiss Re Group Watch The number of individuals covered in 2014 was 2,078,536. The model and calculations are based on the earlier 2012 figure of 1,963,814 used in the previous research. The increase in the number of lives of 5% between 2012 and 2014 will therefore leads to a slight understatement in the calculations of the benefits of rehabilitation. 10

11 3.2 Rehabilitation approach In this section a variety of features that are common across Zurich s approach to claims and rehabilitation are set out. Early notification Group Income Protection policies commonly start to pay out once an employee has been off work for six months, with insured employers typically paying Occupational Sick Pay (OSP) during that time. 9 Nonetheless, insurers seek notification of potential claims at a much earlier stage than this. In part this reflects a concern for careful monitoring of their exposure to claims, but the potential for early intervention is a key driver for wanting early notification. Zurich s Group Income Protection policies require that an employer notify Zurich about a potential claim after an employee has been absent for four weeks if medical practitioners have indicated that the absence will be lengthy. The Government s Fit for Work scheme allows employees who have been off work for more than four weeks to access occupational health advice and support, although employers and employees can clearly choose whether or not to use the scheme. 10 While Zurich does not always receive absence notification at the four week period (partly due to the changing prognosis for the individual), some absences are notified earlier than this. For example, in 2014, around 25% of notifications to Zurich happened within four weeks of the absence and in these cases Zurich has the opportunity to start considering the role of rehabilitation before individuals would be eligible to use the Fit for Work scheme. Indeed, there are occasional instances where Zurich will be notified even in advance, or on the day, of the absence those in advance are limited to scenarios where there is a known, planned medical intervention and the individual remains at work until the point at which treatment begins. A further advantage of Zurich s engagement with employers on an ongoing basis is that Zurich receives notifications about employees who are still in work but facing particular challenges regarding potential incapacities. Such cases typically relate to mental health and musculoskeletal difficulties and Zurich s rehabilitation experts can provide advice and support to both employers and employees before conditions deteriorate in order to help to prevent absence from work. Early vocational considerations Depending on the nature of the absence, after notification Zurich will gather medical information about the claim. If it appears that rehabilitation may be able to bring benefits then Zurich would involve specialist vocational rehabilitation consultants (VRCs) in the case. Zurich has an in-house dedicated rehabilitation unit and also uses external rehabilitation specialists for some cases. Both the internal unit and the external specialists include VRCs who are medically trained. When they are brought into the case, the rehabilitation experts will usually start by having an assessment call with the individual. Typically lasting around minutes, this will cover the history of the illness, the main issues and symptoms, and what the effect is on the individual s abilities to perform their work role. 9 The six month period is often referred to as the deferred period. Other reasonably common lengths for the deferred period are 13 weeks and 52 weeks. 10 See 11

12 This discussion would also cover the individual s treatment plan and what the expectations are concerning when any treatment is expected to occur and whether there are any outstanding needs within that plan. The VRCs will particularly have in view the impact of the illness or injury on their work role and the individual s ability to return to their work at an appropriate time. They will also co-ordinate with employers regarding the work and responsibilities that the individual has, such that a clear understanding of any relevant obstacles to returning to work are identified. Early treatment Recommendations from the rehabilitation unit will not necessarily include medical treatments if an appropriate plan is already in place, either through the NHS or through separately funded private medical insurance (PMI). If no additional treatment plan is needed, the role of the VRCs will focus on the ongoing reassessment and return to work plans that are discussed below. However, there are many cases where additional, or faster, treatment would be expected to aid a faster return to work than would be the case without rehabilitation support. For example, in the case of musculoskeletal problems the use of physiotherapy is common, but using only the NHS may involve a delay to when treatment can start, as well as a frequency of treatment that may not be optimal for getting someone back to work. Additional physiotherapy funded by Zurich may, for example, enable physiotherapy to start a month earlier than it otherwise would and be held weekly rather than fortnightly. Alternatively, in areas such as alcohol and drug abuse, which are commonly associated with other mental illnesses, Zurich may be willing to pay for individual counselling sessions rather than relying on group counselling alone. With mental illnesses more generally, there are usually significant waiting lists associated with seeing clinical psychologists. Zurich s rehabilitation experts consider that this is an area where the advantage of Zurich being able to pay for treatment outside of the NHS is extremely valuable. Mental illnesses, particularly those associated with depression and anxiety, are recognised as areas where the value of early intervention can be very significant. This is because these illnesses can get progressively worse over time so the effort and extent of treatment that is needed from early intervention can be substantially less than if the treatment is delayed. By contrast, delays to intervention in these cases can mean that the likelihood of achieving a successful return to work diminishes. Hence in many cases early intervention not only starts the treatment early, but is likely to be associated with the treatment and recovery time being shorter overall and increased likelihood of that return to work being successful. The involvement of insurers and the VRCs also brings benefits from facilitating the practicalities of obtaining the necessary treatment. Zurich s claims team will commonly be undertaking a co-ordinating role between the various stakeholders to ensure that treatment plans are appropriately agreed. In addition, VRCs will be responsible for monitoring that the treatment plan is actually followed up over time and that, for example, nothing falls through the gaps if anticipated treatment does not happen as first expected. Additional or specialist treatment The majority of rehabilitation interventions that are paid for by Zurich are associated to treatments that individuals would have received under the NHS but on a different timescale or at a different intensity. However, there are some cases where the 12

13 involvement of Zurich s rehabilitation experts can identify additional treatment methods that may not have been immediately considered by an individual s GP. For example, Zurich s rehabilitation unit has faced cases of chronic fatigue where GPs may be less familiar with some of the specialist physiotherapy options that are available for treatment and where Zurich may be willing to fund specialist treatment in consultation with the GP. Ongoing assessment Ongoing reassessment of claims also aids engagement with health professionals and VRCs can prompt clinicians about changing treatment over time. 11 With longer-term claims, regular assessment occurs which varies according to the nature of the injury. For example, mental health claims may be reassessed monthly, musculoskeletal around quarterly while catastrophic injuries where there is limited chance of return to work will be reassessed only annually. The ongoing interaction between VRCs, the employer and the employee also helps with continuing the co-ordinating role that the VRCs play. This can help with ensuring that employees remain engaged with their employer and vice versa. This will also maintain expectations on the employer as to their responsibilities over time. VRCs can also play a role of mediating between the employer and the employee which can be especially important where the incapacity is due to stress triggered by work activities. Having an external party speaking with both employer and employee can reduce disputes and ease the anxiety of the employee about returning to work. Once individuals are ready to return to work, the VRCs help to make it more likely that they will be motivated to return to their own job rather than returning to a job to which they may not be well suited, which can be the risk if the initial employment relationship has been terminated. The close monitoring undertaken by insurers also helps to mitigate the moral hazard risk which arises when individuals receive the benefit of Income Protection payments. That is, some individuals may seek to remain out of work living on the insurance pay-outs rather than return to work even though they are capable of work. Ongoing reassessment by insurers and VRCs limits this effect since regular checks on their health status will be made. Following medical advice is typically one of the requirements of continued eligibility to receive the pay-outs. As part of the ongoing assessment, Zurich will undertake a robust review of the individual s circumstances and work situation to understand how the ongoing incapacity affects their ability to work. Whereas NHS services would usually focus on treating the symptoms of the incapacity, Zurich will be more focused on how this matches with the individual s ability to work. Undertaking a functional capacity assessment will enable consideration of whether the individual is able to do parts of their job even though they may be unable to do all of it. Ongoing assessment and interaction with the VRCs can therefore give individuals confidence in the skills and capabilities that they do have rather than focusing on where they are not currently capable. With longer-term claims, the role of the VRCs in keeping the individual motivated to make progress and be able to return to work is considered very valuable. Zurich can also work with both employer and employee if the individual needs support into an alternative role as well as when going back to their original role. 11 For example, VRCs may refer to National Institute for Health and Care Excellence (NICE) guidelines regarding varying treatments of mental illness after a certain period of time if the existing treatment approach is not having any effect. 13

14 Phased return to work When individuals have had an extended period of time out of work due to illness, it is highly likely that they will benefit from having a graduated, or phased, return to work in which they do not immediately return to the full-time hours that they had previously been working. While many GPs will recommend a phased return, they usually only give general guidance about it rather than designing a detailed plan. In the absence of such a plan, employees and employers will be left to determine the plan but lack the expertise to be able to do so appropriately. Both parties may simply be too optimistic about the speed and intensity of the return that can be achieved, particularly where individuals are highly motivated to return to work and push themselves too far too fast. Having an external expert involved in designing the return to work plan can both ensure that the plan is appropriate and also take the pressure off both employees and employers from having to justify a particular plan. The Income Protection payments themselves may also make the employer more willing to accept a slower return to work than they might otherwise desire. In order to construct the plan, VRCs gather information on issues such as: whether the employee is based at one location or has to travel to multiple locations or sites to do their work; any international travel responsibilities; the feasibility of working from home for part of the week; or the impact of commuting times and the mode of transport that is used. Throughout these plans it is also important to take into account any ongoing medical treatments that the individual will be pursuing to ensure that there is a sensible interaction of the treatment and the working hours. VRCs also hold conversations with the employer to discuss any necessary adjustments to working conditions such as limiting workloads to issues which are not time-critical, or to lighter duties in the case of physically demanding jobs. The resulting return to work plan can last around 4-12 weeks depending on these various factors as well as the preceding absence duration, and the level of functioning that individuals need to be able to display when at work. The key reason for designing an effective return to work plan is to ensure that when the individual returns to work this will be in a sustainable and successful manner. While some people will cope where a return to work plan is lacking (albeit making the return harder than it needed to be), others will not. They may face a relapse in their circumstances, become absent from work again leading to further delays, and then need to attempt a subsequent phased return to work at a later date. The risk of relapse is particularly clear in cases of anxiety or depression, and in musculoskeletal cases, especially where these have been triggered by factors at work. Returning on a partial basis can reduce the anxiety felt around the return, whereas returning straight to their full-time hours may trigger further anxiety and a sense that they can not cope. Zurich s VRCs have seen evidence of a number of cases, where VRCs were not involved, in which individuals attempt to return to work too quickly, relapse in their conditions and have to commence the process again (with greater levels of anxiety due to the initial failure). As with the treatment plan generally, VRCs will be monitoring the success of the return to work plan and making any adjustments on an ad hoc basis if required. This monitoring process can also play a motivational role for individuals who need encouragement to stick with the plan and assurance that there can be a successful outcome to the process. VRCs will also remain in regulator contact with employees and employers for a few weeks after the individual has returned to full-time work to ensure the sustainability of the working arrangements. 14

15 Zurich estimates that it will use a graduated return to work plan in around 90% of cases in which rehabilitation is needed. The remaining 10% of cases usually relate to large companies which have their own in-house occupational health department which will design the plan instead. On average, Zurich s VRCs consider that having an effective return to work programme may save around one month s absence compared to where the plans are not in place or fail to be implemented effectively. Finally, in the circumstances where individuals are unable to return to their previous contractual hours, Zurich and the VRCs can help to establish the level of hours which would be possible on a sustainable basis. In these circumstances, Zurich would make Group Income Protection payments on a proportional basis so that the employer pays the usual salary for the hours the employee can work, and Zurich makes a proportional payment to the employer for the remaining hours. In this way, the employee is encouraged to work the hours they can, but will be supported for the hours that they cannot work. 3.3 Rehabilitation in action This section provides additional information on the practicalities of rehabilitation within Zurich using anonymised case studies to demonstrate the impact on individuals. 12 It focuses on the three most common areas of claims Mental illness Mental illness represents a significant area of illness not only within Income Protection portfolios but also more generally. The OECD has stated that mental ill-health costs the UK economy 70 billion per year or 4.5% of GDP. 13 They have also highlighted that a lack of early intervention in getting people back to work can be particularly negative on people with a mental illness for whom periods of inactivity can often be highly detrimental for recovery. Mental health concerns also commonly arise in connection with other forms of incapacity and research has shown that around 30% of people with long-term physical health problems also have mental health problems, again indicating the importance of being able to act quickly and maintaining regular engagement with individuals facing these difficulties All names and some other pieces of information have been altered in order to preserve anonymity. 13 Mental Health and Work: United Kingdom, OECD Quoted in Long-term conditions and mental health, the cost of co-morbidities, Naylor et al, The King s Fund and Centre for Mental Health, February

16 Case Study: Anxiety Anne works in the marketing sector and suffered from anxiety and panic attacks brought on by work. Zurich was notified two weeks after her absence started in January 2015 and VRCs became involved after the claims team had spoken with her during the time she had been signed off from work by her GP. Cognitive Behavioural Therapy (CBT) was arranged via PMI and she was not fit to return to work until the middle of May. Regular calls between the VRC and Anne were maintained throughout this period. The VRC designed a six week return to work plan and provided support to Anne and, with Anne s consent, to her line manager about anxiety related illnesses. The VRC continued regular support throughout the return to work plan and for a number of weeks afterwards. Zurich s VRCs estimate that the absence duration was reduced by around 1-2 months due to the VRC input and return to work plan. thank you for all your help and support over the past few weeks you did a fantastic job and were a great person to speak with, especially at such a difficult time for me. Anne Statistics from the Health and Social Care Information Centre suggest that for psychological therapies, around 38% of patients have to wait longer than 28 days for treatment after they have been referred. 15 However, other figures suggest that 63% of patients have to wait longer than six weeks for CBT. 16 Zurich s VRCs also note that while it may be possible for patients to see counsellors for CBT, there is a lack of clinical psychologists as their number has not kept pace with the increase in mental illness that has been seen. Access to clinical psychologists through the NHS is considered to be challenging and associated to waiting lists of over six months before assessments can be made, and longer still before therapy sessions can begin. By contrast Zurich, commonly working with PMI providers, can enable much faster access to more qualified practitioners which ultimately leads to more favourable outcomes for the longer term Zurich estimates that in these case reductions in time simply to see someone and commence treatment would commonly be over six months and could easily be a year. 15 Psychological Therapies, Annual report on the use of IAPT services England 2013/14, Table 3b, Health and Social Care Information Centre. 16 Figures from Health Assured. 16

17 Case study: Mental Health Brian works in the IT sector and has to travel to clients across the UK installing software. He had been absent from work from October 2013 with mental health concerns including depression, stress and had attempted suicide. Originally advised by his GP that he could return to work in March 2014, an occupational health assessment by a consultant psychiatrist identified that this was not appropriate. No regular mental health therapy had been arranged on the NHS due to the length of waiting lists and the consultant psychiatrist advised that CBT therapy was needed before a return to work could begin. CBT was arranged through his employers PMI cover. Once this had progressed, by mid-may 2014 Zurich s VRCs were able to be in contact with Brian before the CBT was completed in order to help with the preparation for returning to work. Given the severity of Brian s mental illness, and the length of time he was off work, the VRCs recommended a face-to-face psychological vocational assessment for a more comprehensive assessment than normal. This assessment led to the design of a six week return to work plan with specific recommendations about being located in his office or at home rather than travelling to clients. The VRC remained in regular contact throughout the plan and Brian returned to normal hours by the end of September Zurich s VRCs estimate that the additional rehabilitation activities lead to a reduction in the length of claim of two months due to the return to work plan although Zurich considers that cases such as Brian s risk absence duration continuing for multiple years without effective intervention Musculoskeletal conditions Some 31 million working days were lost due to musculoskeletal conditions in The prevalence of these conditions increases sharply with age as well as lifestyle factors such as obesity. 18 For example, men aged are 50% more likely to have a work-related musculoskeletal condition than those aged while women are 90% more likely. 19 Similarly, older men lose more than two and a half times the number of days at work compared to younger men, and older women lose more than four times the number compared to younger women. 20 With an ageing population, the importance of effective treatment for these conditions is therefore likely to increase. In many of the musculoskeletal cases that Zurich sees, swift access to physiotherapy can be facilitated by working alongside PMI providers and Zurich may be willing to extend the amount of physiotherapy offered in order to ensure a rapid return to work. As with mental illnesses, appropriately early physiotherapy can help to prevent a musculoskeletal condition from deteriorating further, and therefore shorten the course of treatment that is needed to return the individual back to health. 17 Sickness Absence in the Labour Market, February Burden of major musculoskeletal conditions, Woolf and Pfleger, Bulletin of the World Health Organization 2003, 81 (9), and Musculoskeletal disorders associated with obesity: a biomechanical perspective, Wearing et al, Obesity Reviews, August Work related Musculoskeletal Disorder (WRMSDs) Statistics, Great Britain, 2015, Health and Safety Executive. 20 Work related Musculoskeletal Disorder (WRMSDs) Statistics, Great Britain, 2015, Health and Safety Executive. In the comparison, younger men/women refers to those aged 16-34; older men/women to those aged

18 Case Study: Ankylosing Spondylosis Chris is an engineer who has Ankylosing Spondylosis (AS) which is a type of arthritis affecting the joints in the spine. He had suffered from this for a decade, was off work years ago, but had responded well to treatment. In September 2013, he was off work for one month due to the AS. He returned to work but was subsequently absent from early January After notification, Zurich sought case notes from the GP although these took seven weeks to be provided, but once available, a VRC was brought into the case. Physiotherapy and CBT were identified as required and paid for through Chris s PMI. Chris s employer stated that his return to work following the previous absence was too quick and may have led to the relapse and was therefore in agreement with a very gradual increase in hours. Contracted to work a 35 hour week, in July 2014, a plan was designed to increase his hours from around one and a half hours per day to three hours over a six week period to early September. Regular reviews from the VRC, and adjustments to the plan continued to apply taking into account increased attendance at his office over time and the associated impact of commuting. By the end of the year he had managed to increase hours to 27.5 per week which was agreed by the clinicians to be the maximum he could work without risking further relapse. Zurich has continued to make Income Protection payments to reflect the permanently reduced hours. Given the concern that the previous return to work had been too quick, and in the light of the very gradual build up in hours that was needed over a five month period, Zurich s VRCs consider that the duration of the claim was probably reduced by around three months compared to the situation had no plan been in place and given the significant likelihood of further relapse. In addition to the reduced absence, by agreeing to make payments to reflect the reduced number of hours worked, Zurich could ensure the sustainability of the working hours over a longer time to prevent, or at least delay, relapses in the future. For those with particularly physical jobs, return to work plans following serious musculoskeletal incapacities may require separate work assessments. Undertaking a job demands analysis combined with an assessment of the individual while actually at work can establish whether the individual is fit for all parts of the job. For example, following back injuries, it may be necessary to have a period of time on light duties or with restrictions, such as not working on a ladder or in a kneeling position. 18

19 Case Study: Cardiac, mental health and musculoskeletal David works in the IT sector and suffered from an infection related to his pacemaker which led to a series of operations and a stay in hospital lasting nearly three months until May Although the initial issue related to his pacemaker, the extensive time in hospital led to muscle wastage and mental health issues associated to the extent of the illness and potential for re-occurrence. Zurich s VRCs arranged for, and Zurich paid for, physiotherapy with two sessions a week for the first two weeks and a further five sessions on a weekly basis. Zurich also paid for eight sessions with a psychologist. The VRC also designed a return to work plan lasting eight weeks with a mixture of home and office working, highlighting that time critical or high volume work should not be undertaken. The return to work plan accommodated the physiotherapy and psychology appointments over time and David was back in full-time work by the end of August The VRC maintained support throughout the return to work plan and indeed beyond the point at which David was back to his full-time hours while the psychology treatment remained ongoing. Zurich s VRCs estimate that the combined effect of the physiotherapy, psychology and return to work plan could have reduced the absence duration by around 2-3 months. 19

20 3.3.3 Cancer The final of the top three categories of claim is cancer where rehabilitation activities for cancer tend to be somewhat different to those for mental health and musculoskeletal injuries. In the first two categories it is common for Zurich to seek to fund treatment because this can ensure that individuals receive treatment faster than they might otherwise. However, for cancer, it is much less common for Zurich to fund the direct cancer related treatment and instead more likely that the cancer treatment would be done through the NHS. Case Study: Throat Cancer Emily is an accountant who was diagnosed with throat cancer in early Following multiple operations, chemotherapy and radiotherapy, in the Autumn her consultant advised that she could begin to return to work on reduced hours. Unusually, Zurich was only notified about the claim at the end of October because the employer had originally expected Emily s treatment to have ended earlier than it actually did. Despite the delayed notification this was unlikely to have prevented any earlier intervention given the nature of the cancer and treatment plan. Once Zurich had been notified, the claims team spoke with the individual and a VRC was subsequently appointed. Although the member had already returned to work on a part-time basis, Zurich nonetheless wanted a return to work plan designed by the VRC to ensure that the return was appropriately phased. Within this plan, the VRC recognised the impact of fatigue from the lengthy cancer treatment, the significant commute that Emily had, and designed a plan which incorporated working from home as well as regular breaks to minimise stiffening of the neck. At the same time the VRC worked with the employer to conduct an ergonomic assessment of Emily s workstation to ensure correct positioning for the head and neck. The eight week return to work plan was agreed between parties and managed successfully with the VRC in regular contact with both Emily and the employer to make sure that she did not exceed the planned hours. Overall, Zurich estimates that having the return to work plan in place may have saved around one month of absence due to the high likelihood of fatigue and subsequent absence, had additional hours been attempted. In many cancer cases, the role of the insurer is focused on co-ordinating between employee and employer around the return to work plan such that this can be done in a sustainable manner. In some cases, Zurich may look to fund other forms of rehabilitation which are associated to the consequences of cancer. For example, many people suffering cancer will also face mental health issues with studies suggesting that this could affect between one-third and half of those with cancer. 21 Some of these effects can be long-lasting, for example, Macmillan Cancer report that around one-third of those diagnosed with cancer five years previously experience anxiety or depression and are more likely to have experienced anxiety than those without cancer. 22 Zurich will therefore commonly fund counselling, as well as specialist physiotherapy, in connection with cancer claims. 21 One in Three People with Cancer has Anxiety or other Mental Health Challenges, American Society of Clinical Oncology, October 2014; and Psychological and emotional support provided by Macmillan Professionals: An evidence review, July Cured but at what cost? Long term consequences of cancer and its treatment, Macmillian Cancer, July

21 4 Quantifying the benefits of rehabilitation This Chapter estimates the benefits that rehabilitation activities bring through shortening the duration of absence from work. Section 4.1 considers the direct financial benefits associated with rehabilitation and section 4.2 examines indirect benefits related to areas such as having to pay for temporary staff to replace the individual who is absent. Section 4.3 considers the decision to instigate rehabilitation and section 4.4 sets out the impacts from increased take-up. 4.1 Direct benefits from rehabilitation As illustrated in Figure 2 earlier, direct financial benefits arise because an individual is restored to their pre-disability work faster than in the absence of rehabilitation. As such: Individuals gain because their earnings return to the higher level they were pre-disability; Taxpayers gain because welfare payments return to their lower level pre-disability and tax revenues return to their higher level pre-disability; Employers gain because they no longer need to pay occupational sick pay; and Insurers gain because they no longer need to make Income Protection payments and the saving can be passed on to customers through lower premiums. Proportion of claims in which rehabilitation is used Rehabilitation activities are not necessary in all cases since some individuals will face a clear treatment path and there may be little that insurers can do to speed the recovery. For example, this may be the case in standard cases of incapacity caused by simple fractures or modest musculoskeletal issues, where individuals can rely on existing NHS provision. However, where there is an opportunity for rehabilitation activities to bring benefits, then Zurich would seek to provide these activities across its whole portfolio. Zurich has provided evidence for this report that it undertakes rehabilitation activities in just over 25% of notified claims. 23 That Zurich, along with other insurers, is willing to incur the costs of rehabilitation activities in a substantial proportion of claims gives credence to there being a positive impact from these activities. Zurich anticipates that the use of rehabilitation is likely to increase in the future due to the maturing of its business and also due to increasing recognition of the value of rehabilitation. Similarly, rehabilitation activities may increase as employers absence recording improves and rehabilitation activities are viewed more positively by the employer. In as far as 25% is an under-estimate of the likely use of rehabilitation in the future, the financial benefits calculated in this report will also be under-estimated. 23 The previous research used an estimate of 20% of claims. A review of Zurich s data for 2014 revealed that 20% was an understatement of the proportion of claims in which rehabilitation is in fact used. 21

22 Reduction in absence period due to rehabilitation Other research has indicated that sickness absence and disability management is cost-effective and may reduce sickness absence by as much as 20-60%. 24 Recent work on rehabilitation has compared the outcomes of individuals who have access to certain rehabilitation support services with those who do not, although simple comparison between the two need to be interpreted cautiously since the two sets of individuals may have faced a different set of medical conditions. 25 Zurich, however, takes broadly the same approach to rehabilitation activities across all of its policies and therefore it is not appropriate to compare the outcomes of different groups to assess the impact of rehabilitation. Within the mix of claims that insurers deal with, the choice by insurers to pay for rehabilitation will be linked to the expected response to that rehabilitation for the specific individual. A range of complex factors will interact to determine the success or otherwise of rehabilitation activities including: the role of employers; the motivation of the individual; the nature of the disability; the type of medical interventions that are used; and their likely medical success. All of these elements, combined with the inability to observe what would have happened to a particular individual had they not received rehabilitation means that it is difficult to assess the precise impact of rehabilitation in each individual case. In consultation with Zurich, following examination of a range of case studies, and in the light of multiple discussions with Zurich s VRCs, the impact of rehabilitation activities has been estimated in terms of assessing the proportion of claims in which time savings of different amounts would be made. The resulting estimates are found in Table 3 below. Table 3: Time saved from rehabilitation activities Proportion of claims Time saved 10% 1.5 months 10% 3 months 5% 18 months 25% Table 3 indicates that, for example, there are around 10% of cases in which an average of 1.5 months would be saved through having rehabilitation activities. The claims sum to the 25% of cases in which rehabilitation activities is used within Zurich. On average it suggests a reduction in the length of claims of around 5.5 months where rehabilitation occurs. 26 Other recent work on the impact of rehabilitation has suggested that the average reduction in absence duration could be over one year. 27 It is therefore possible that the estimates for the reduction in absence duration in this report are underestimated and that the benefits from rehabilitation activities are similarly underestimated Waddell G, A K Burton, N Kendall, Vocational Rehabilitation What works, for whom, and when? 25 The Benefits of Early Intervention & Rehabilitation, Supporting employees when they need it most, CEBR for Unum, September This is calculated as the weighted average of the figures in Table 3 i.e. (10%*1.5+10%*3+5%*18)/25%. 27 The Benefits of Early Intervention & Rehabilitation, Supporting employees when they need it most, CEBR for Unum, September There are likely to be other differences between the assumptions made in this report compared to the CEBR report. For example, the CEBR report appears to focus only on absences lasting longer than 12 months whereas this present report includes the potential for rehabilitation activities to reduce absences before they reach 12 months. 22