A Discussion of Absence Management, Lost Productivity and Return to Work

1. UFS A Discussion of Absence Management,Lost Productivity and Return to Work Jody Hunter ─ Koch Business Solutions Jim McConville ─ MetLife Group Disability October 2, 2012

2. Today’s Agenda • Overview of FMLA & State Paid Leave Laws • Lost Productivity and Associated Costs • Return to Work Guidance

3. Absence Management Overview of FMLA and State Leave Laws

4. Overview of the FMLA As originally passed, FMLA provides 12 work weeks of leave in any 12- month period (26 weeks in order to care for a covered servicemember* with a serious illness or injury) Qualifying Events • Birth, adoption, or foster care of a child • Care of a family member with a serious health condition • Employee’s own serious health condition • A qualifying exigency arising out of a family member’s active duty in armed forces in support of a contingency operation • Care of a covered servicemember* with a serious illness or injury Employee Eligibility • Worked for the covered employer • Minimum of 12 months • Minimum of 1,250 hours during the previous 12 months • Is employed at a worksite where 50 or more employees are employed by the employer within 75 miles of the worksite * The employee has to be either the spouse, son, daughter, parent, or next of kin of the servicemember

5. Overview of FMLA: Employee Entitlements • Qualifying employees are entitled to: • 12 workweeks of leave during any 12-month period to employees (26 weeks for care of a covered servicemember* with a serious injury) • Leave may be taken on a continuous, intermittent or reduced schedule basis • Maintenance of health benefits • Restoration to the same or an equivalent position with equivalent benefits, pay and working conditions following FMLA leave * The employee has to be either the spouse, son, daughter, parent, or next of kin of the servicemember

6. Revised regulations may present challenges for employers Changing Landscape of the FMLA • Since 2008, the FMLA has been expanded by: • National Defense Authorization Act (NDAA) of Fiscal Year 2008 (included in revised FMLA regulations effective in 2009) • Airline Flight Crew Technical Corrections Act of 2009 • National Defense Authorization Act of Fiscal Year 2010

7. State FML No State FML State FMLA Laws and Their Impacts • Many states have their own family and medical leave laws that are similar to the FMLA • Generally, FMLA does not supersede a provision of state law that is more beneficial to the employee, and employers must comply with the more beneficial provision • Variations by state include service eligibility and notice requirements

8. Administrative Burden Compliance Challenges Litigation Exposure Lost Productivity and Associated Costs TheBurdens Employers Face

9. Lost Productivity and Associated Costs

10. Lost Productivity and Associated Costs Productivity is important • Employers top benefit objectives • 53% want to control health and welfare benefit costs • 47% want to retain employees • 42% want to increase productivity in the workplace • Employers indicate increasing productivity as top objective • Perhaps because they are faced with the realities of accomplishing more with fewer employees ─ placing even greater importance on maximizing workforce productivity Source: MetLife 8th Annual Employee Benefits Trend Study, 2010

11. Lost Productivity and Associated Costs (cont’d) • Full Costs of Absence to Employers1 • Direct Costs (pay or benefit provided to an employee for time not worked) • PLUS Indirect Costs (replacement labor expenses and net lost productivity value • Indirect costs may cost up to 5 times the direct cost, depending upon the type of absence • Total costs equals the sum of direct and indirect costs, where the indirect costs are “netted out” or offset by the employee’s salary, since the direct costs (e.g., insurance premiums replace salary) • Lost time claims can cost employers more than $19,000 per employer per year2 1 Survey on the Total Financial Impact of Employee Absences, Mercer, June 2010 2 Employee Benefit News, 2010

12. Lost Productivity and Associated Costs (cont’d) • Total costs of employee absence to employers1 • 35% of payroll for unplanned incidental absences (5 days or less), planned absences (vacations and holidays) and extended absences (disability and qualifying leave under FMLA) • Average total costs of unplanned incidental absences plus extended leaves is 8.7% of payroll • This 8.7% figure represents more than half the cost of healthcare to Employers of 13.6% • Unplanned incidental absences results in the highest net loss of productivity per day at 19% • VS. 13% for planned absences and 16% for extended absences • 5.4 average unplanned incidental absence days per employee 1 Survey on the Total Financial Impact of Employee Absences, Mercer, June 2010

13. Employer Trends – Absence Management Tools on the Rise Since 2007 there has been an approximate 15% increase in companies reporting that they use an absence management tool—a number that rises to 20% for the largest companies with 10,000 or more employees. 10,000+ employees 500+ employees All employers < 500 employees Source: 10th Annual MetLife Study of Employee Benefits Trends. Percentages have been rounded to nearest whole number.

14. Productivity Improvements Source: 10th Annual MetLife Study of Employee Benefits Trends. Percentages have been rounded to nearest whole number.

15. Return to Work (and Return to Productivity)

16. Importance of Return to Work (RTW) • Employees participating in a formal RTW program may return to gainful employment 1.4 times faster than those not participating in a formal program1 • Employees who were satisfied with their employer’s response to their injury or illness returned to work 50% faster2 • Creating a return to work (RTW) program can help get your employees back to work safely after disability and reduce costs associated with employee retraining, overtime and temporary help • 1 Rand Working Paper, March 2010 • 2 1Chandler, DL. Constructing return to work programs: building for better returns. Public Entity Risk Institute. 2008

17. RTW – How a Carrier Can Help • Properly aligned incentives for employees to Return to Work and clinical therapy • Work Incentive Benefit permitting claimant to receive up to 100% Pre-Disability Earnings, Rehabilitation Incentive, Family Care Incentive, and a Moving Expense Benefit • Rehabilitation and/or Clinical Consultants on staff to assist the employer and the employee with Rehabilitation and RTW efforts • Assistance with worksite modifications • 1 Rand Working Paper, March 2010 • 2 1Chandler, DL. Constructing return to work programs: building for better returns. Public Entity Risk Institute. 2008

18. RTW – Employer Tips • Partner with experienced companies with dedicated resources that specialize in promoting RTW (and Return to Productivity), such as RTW Consultants and Vocational Rehabilitation Consultants • Early assessment and ongoing intervention is key to driving successful RTW experiences for employees • Consider RTW program that coordinates with Health and Wellness Programs and if applicable, the Employer's medical carrier • Track results over time to gauge program success and make appropriate and ongoing program changes to enhance success • Recognize that a leave resulting from a disability may have an emotional toll and remind employees of Employee Assistance Programs (EAP) services and other resources that may help their adjustment upon to RTW