Employee Benefits Bulletin
May 2009
The Costs of Substance Abuse in the Workplace
The Exxon Valdez oil spill in 1989. The collision between a bulk carrier and Bridge 11 in Welland in 2001. An Amtrak train collision in Maryland in 1987 that killed 14 people. What do all of these events have in common? These devastating accidents were all the result of drug or alcohol abuse in the workplace. Substance abusers are three times more likely than someone who doesn’t abuse drugs and alcohol to have an accident on the job, according to Dr. Graeme Magor, an Occupational Health Physician and Certified Health Physician. And the long-term effects of alcohol and drug abuse can be just as damaging. “Even the highly functioning addict starts to have things unravel in the workplace,” said Dr. Magor, who is also a Medical Consultant for Cowan. Dr. Magor was among several presenters at our March seminar on “Substance Abuse in the Workplace.” (See below for future seminar dates.) The event brought together speakers from a variety of backgrounds to provide employers with advice on how to deal with this issue from a legal, medical, counselling and human resources perspective.
Workplace consequences
For most of the attendees – and employers in general – they will fortunately never face a situation in which an employee causes a disaster like the Exxon Valdez. There is, however, always a cost – to an employee’s career, life, family, and their employer. The workplace costs could include reduced productivity at work, time missed for medical appointments, increased disability and health benefit costs, and the costs of in-patient treatment programs (depending on whether the employer is sharing in the cost of these programs).
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What’s inside
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- The Costs of Substance Abuse in the Workplace (cont’d from page 1)
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- Is Long Term Disability Coverage Enough? - Survey Results – Mental illness an issue for most employers, but many have not taken action
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- Newsletter Q&A: Suspension of Pension Plan Contributions - Check Out Our New Blog!
We care about what you care about.
The Cost of Substance Abuse in the Workplace (cont’d from page 1)
And these substance abuse costs can add up. Canadian employers paid an estimated $24.3 billion in indirect costs such as productivity losses, according to 2002 statistics from the Canadian Centre on Substance Abuse. These stats also show that substance abuse overall cost the Canadian economy nearly $40 billion in 2002 – which is double the cost from just 10 years earlier ($18.45 billion in 1992). reasonable in the circumstances for the protection of a worker.” This could mean any number of measures, including implementing a substance abuse policy, which Dr. Magor highly recommends. He also suggests using a fitness to work policy, and a disciplinary component, such as a last-chance agreement. “We will also sit down with employees to draft a voluntary substance abuse agreement, and then begin to organize the necessary accommodation. And the earlier you can do this, the better,” said Laurene Wittich, Health and Disability Management Supervisor at Cowan. “Employers tend to hesitate placing employees on contract, seeing it as heavy handed or punitive. In reality, that signed contract can be a much needed motivator for employees to regularly attend essential treatment and access support services,” she told attendees at the seminar. In our next newsletter – Part 2 in this series on Substance Abuse in the Workplace will focus on substance abuse policies, fitness to work checklists, and last-chance agreements. If you have any questions, please contact your Cowan consultant, or Teresa Norris-Lue, Vice President of Benefits for Cowan: 1-866-912-6926 ext. 51304; teresa.norris-lue@cowangroup.ca.
Employees also have a right to dignity and privacy, he said, and this is where “We are already five years from the a third party adjudicator can help. 2002 data,” said Peter Fisher, Director of Clinical Services at the Catholic Cowan will work Family Counselling with employers Centre in Waterloo and supervisors Region. “Where are Cowan’s Health and to help them we going in the Disability Management understand future?” Services Team can assist their roles and you with: Mr. Fisher told boundaries. attendees at the “I often hear relief • Policy review and rewrite seminar that as the from supervisors recession continues, • Training for employees once they know there are more what their role and employers people using is,” said Dr. Magor. • Sick-leave adjudication alcohol and drugs • Return-to-work programs to self medicate.
• Transition to long-term
“But even before disability the economic • Workers’ compensation troubles of the last management year, we have been hearing from people who say they are Cambridge Office (repeat session) stressed out,” he said. “And there is Date: Wednesday, June 3rd a real connection between people Time: 8:30 – 11:30 feeling stressed and depressed, and RSVP: To Shannon Geil by May 29th abuse of alcohol and drugs.” 1-866-912-6926 ext. 51409 or shannon.geil@cowangroup.ca
Substance Abuse in the Workplace – Upcoming Seminars
Your duty as an employer
Whether employees are struggling due to the recession, or just general life stresses, the Ontario Health and Safety Act (OHSA) includes a general duty clause that says an employer is required to “take every precaution
Ottawa Office Date: To be announced – in the fall Contact: Susan Novo 1-888-509-7797 or susan.novo@cowangroup.ca
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Is Long Term Disability Coverage Enough?
Designed to cover lost income when long-term sickness or injury occur, Long Term Disability (LTD) is the benefit that comes to the rescue when the wolf is at the door. For the majority of employees who collect LTD, the group plan does the job and does it well. For some, however, it can come up short. Often, executives’ higher incomes cannot be adequately protected because the maximum coverage under the group plan is too low. Underwriting limitations can restrict the amount and quality of coverage on group plans, particularly for smaller businesses. James Hoey, Living Benefits Consultant with Cowan Financial Solutions, reminds us that “group plans are often compromises that trade-off the individual needs of the higher wage earners for the needs of the population as a whole.” When this occurs there can be very effective solutions available using personal insurance policies. Essentially, there are three strategies that can help when group LTD is not enough. coverage and whether it may even pay at the time of claim. The LTD definition of disability may be stricter than you want for your executive. What works for the hourly employee may not for the CEO. You want income protection you know will work for the CEO. Subsequently, if the group plan does pay, the amount paid by the individual DI policy may be reduced depending on your pre-disability income. Because of this potential offset, the policyowner may qualify for a premium discount.
Survey Results – Mental
illness an issue for most employers, but many have not taken action
While 77% of plan sponsors reported that mental illness was an issue in their organization, 16% had not taken any steps to address this challenge, according to a survey conducted by Cowan Insurance Group. Of those who responded to the question “If you have taken steps to address this issue, have your initiatives been effective?”, 41% said “no” or “not sure.” “These numbers show that work needs to be done in this area,” says Teresa Norris-Lue, Vice President of Benefits for Cowan. “When you consider that mental illness is expected to be the leading cause of disability by 2020, we need to be more proactive in addressing this issue and measuring results.” For organizations that have taken action, initiatives included: • Holding training sessions for managers and HR professionals (17%) • Introducing or enhancing Employee Assistance Programs for employees (44%) • Providing employee information sessions (23%) The main reported outcomes of mental illness in the workplace included higher absenteeism rates and increased drug costs. “The need for information on this issue is so great that we have experienced waiting lists for our seminars on mental illness in the workplace,” says Norris-Lue. “By partnering with our clients, we aim to provide employers with the tools and assistance they need to identify, manage and assist employees dealing with this issue.” Plan sponsors participated in a survey at two conferences: the Grand Valley Human Resources Professionals Association (GVHRPA) conference, and the Ontario Hospital Association (OHA) conference, both in 2008.
Wrap-around
A “wrap-around” involves coordinating with an existing short-term benefit, or salary continuance program – for example, a group plan that pays for only two years. First, you need to top up or offset the existing benefit. Then you need a second benefit to take over after the short-term benefit ends. All of these policies can be purchased by the individual employee or the employer, depending on the tax and Human Resources strategy that best fits your requirements. With any case above, you may also want to add an Additional Insurance Rider (AIR), to cover future loss of LTD coverage. This way, if the covered employee leaves the group plan, the employee can increase the individual DI policy without proof of medical insurability. To help you navigate the route of this strategy, contact your Cowan consultant. We will steer you in the right direction.
Top-Up
If an employee’s group LTD is simply less than what is needed to adequately protect lost income, it is possible to “top-up”, by buying the difference through an individual Disability Income (DI) policy.
Offset
“Offset” means that you want more individual DI than a top-up would provide. This typically happens when you are worried about the comprehensiveness of your group
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Newsletter Q&A:
Suspension of Pension Plan Contributions
Q: Our budget is extremely tight in the current economic environment. Can we, as a pension plan sponsor, suspend our required contributions to the pension plan? A: The short answer is “no” - the company cannot cease contributions to a company-sponsored Defined Contribution Registered Pension Plan (DC RPP). However, a plan sponsor can file an amendment with the regulators (Financial Services Commission of Ontario, or FSCO, for Ontario registered pension plans) to reduce the level of contributions to a DC RPP. At a minimum, employers are required to contribute at least 1% of payroll. If a company sponsors a Group Registered Retirement Savings Plan (Group RRSP), then there is more flexibility in changing the contribution formula. In any case, when making any changes to any provision of a retirement savings plan a plan sponsor should proceed with caution. Although FSCO will allow adverse amendments, a well-planned communication strategy and adequate notice are a must, and go a long way to ensure employees’ understanding for the change. An adverse amendment reduces future benefits or could adversely affect the rights or obligations of members, former members or certain others. In addition, when considering reducing future benefits, an employer should be mindful of current wording in an employment contract to minimize any potential for litigation. These types of changes are not simple nor are they straight forward. We recommend you discuss the situation with your Cowan consultant.
Check Out Our New Blog!
In addition to our regular newsletters, Cowan is now a contributing blogger on a new site called the Manufacturing Innovation Network (MIN). Greg Barratt, the Executive Vice President of Business Development for Cowan Insurance Group, regularly blogs about insurance, benefits and risk management issues. You can read his blogs at: http://www.waterloomin.com/blogs/insurancea or by visiting www.cowangroup.ca and clicking on the MIN link off our homepage. If there are any issues you would like to see Greg comment on in his blog, or if you have any questions, please contact him directly at greg.barratt@cowangroup.ca.
This bulletin is produced by the Benefits and Retirement Consulting division of Cowan Insurance Group. We help public and private-sector clients manage their group benefits, retirement and health and disability management plans. We do this by consulting and providing administrative services tailor-made to any size and type of organization.
Cowan Insurance Group
700-1420 Blair Place Ottawa, ON K1J 9L8 Phone: 613-741-3313 Fax: 613-741-7771 Toll free: 1-888-509-7797 705 Fountain Street North PO Box 1510 Cambridge, ON N1R 5T2 Phone: 519-650-6360 Fax: 519-650-6366 Toll Free: 1-866-912-6926 www.cowangroup.ca/may-09