Glossary of Frequently Used Terms

These terms are frequently used in the fields of Human Resources, Benefits, and Occupational Health.

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Active Living

A way of life in which physical activity is valued and integrated into daily life (including the workplace). It can include any kind of physical movement, including: recreation, fitness and competitive sport.

ASO (Administrative Services Only)

The majority of companies provide LTD and EHC benefits through an insurance carrier (premium-based). Some very large companies (with thousands of employees) choose to self insure and bear all or part of the risk themselves. They contract an insurance carrier to provide only the administration services necessary to manage the plan.

Benchmarking

A structured method of measuring processes and products against the same processes and products from another organization. The search for industry best practices that lead to superior performance.

Best Practices

The best way to perform a business process, or an activity within a process that leads to superior performance within any field of endeavour.

Cost/Benefit Analysis

A numerical evaluation of the actual or proposed value of specific process, including calculating the cost of the program and comparing that to the financial outcomes in the form of savings which can be expected from the program.

Demand Management

Demand management involves the policies, programs and processes involved in managing the demand for and use of employee health benefits. A successful demand management program lowers or maintains employee use of benefits at a predetermined acceptable level.

Direct Costs

Direct costs are those costs directly associated with the absence of an employee from the workforce. They also include salary of the absent employee (or, in the case of LTD, the cost plus expenses), and rehabilitation or medical costs as charged back through the insurance carrier or WCB (see also Indirect Costs).

Disability Management

Programs and policies designed to decrease or manage the length (or duration) of an illness or injury. A successful disability management system focuses on early intervention, active rehabilitation, effective claims management, and early return to work.

Duration

The length (usually measured in days) of an employee's absence due to illness or injury. Decreasing the duration of an absence assists in managing the costs of health benefits in the organization. Most injuries and illnesses have "average duration" norms against which an organization's results can be measured.

Early Detection

A prevention or health promotion program assists in the early detection of risks associated with illness and injury. Detecting, in advance, the potential of an illness or injury allows for the introduction of programs to manage the risk - or to change behaviour to prevent the onset - of a specific health issue.

Employee Assistance Programs (EAPs)

Employee Assistance Programs provide support to individuals regarding personal issues such as family counselling, financial planning, and alcohol and drug treatment. EAPs are provided either as an in-house service or through an external provider and funded by the employer. Employees, or their immediate family, contact the EAP provider directly, as needed. A supervisor in association with a work performance problem does not typically refer employees.

Employee Segmentation

A total group of employees within an organization can be segmented into smaller groups in order to create more meaningful data for health cost management. Segmentation can occur in whatever form is meaningful to the organization (e.g., geographic location, department, employee status, etc.). Consideration should be given to segments that are no smaller than groups of 50, allow for effective delivery of targeted and distinct program solutions, and fairly represent the organization.

Extended Health Care

Extended health care plans are offered to employees, usually on a cost-sharing basis, to cover the costs associated with medical care not covered under the provincial plan. Benefits normally include drug, dental, and hospital coverage. Some plans include vision, chiropractic and other tertiary paramedical, therapeutic (such as massage therapy, physiotherapy, etc.) and medical services (such as naturopathy, homeopathy, etc.).

Forecast

A computer simulation process based on the assumption that no changes are made in the organization's current benefit plan.

Health Enhancement Strategies

All strategies used to enhance the health of individuals thereby impacting the use of employee health benefits. Health enhancement strategies include early detection, health promotion, utilization controls and disability management.

Health Promotion

Health promotion programs are designed to enhance the level of awareness and self-responsibility of employees in order to increase or maintain an individual's health status and thereby reduce the incidence of illness and injury.

Health Recovery Management

This is another, more positive way of looking at disability management which focuses on prevention, as well as proactive rehabilitation and return to work efforts.

Healthy Employees

Those who manage their personal risks (blood pressure, smoking, cholesterol, weight/Body Mass Index, and stress) and enhance their lifestyle possibilities (fitness, nutrition, self esteem and sense of 'connectedness').

Healthy Organization

One with healthy employees and a constructive corporate culture.

Healthy Organizational Culture

One in which the values, norms, rituals, beliefs and management practices are congruent with business objectives.

Incidental Absenteeism

Incidental absence is usually identified as any absence of five or fewer days and is almost always covered under an organization's program of salary continuance. Policies regarding length of absence without a doctor's note varies between companies and can extend to as long as two weeks. Policies also vary as to when an incidental absence becomes a short-term disability. According to the Conference Board of Canada, up to 33% of incidental absence is for personal or family reasons and is not a factor of illness or injury.

Indirect Costs

Indirect costs are all other costs (over and above direct costs) associated with an employee's absence and usually include replacement, administrative, and treatment and rehabilitation costs,

plus a decreased productivity factor. Indirect costs are assumed to be anywhere from 50-300% greater than direct costs. Where applicable, the business case assumes that indirect costs make up an additional 75% over and above direct costs.

Lifestyle-Oriented Diseases

Up to 70% of illness and injury in the Canadian workplace occurs as a result of the lifestyle or activity choices of individuals. Since lifestyle is a choice, individuals can choose behaviours that will lead to a healthier life and reduce the chance of illness or injury. Therefore, illness and injury due to lifestyle behaviour is considered preventable.

Lost Time Days

The number of days of absenteeism related to a particular illness or injury (or in some cases all illness and injury). This number defines how many days of work were lost due to illness and injury.

Long Term Disability (LTD)

Financial coverage provided to an employee who is unable to work due to illness or injury (either occupational or non-occupational). LTD is either funded through a premium-based insurance policy or self-funded by the company and managed on an ASO (administrative services only) basis. Insurance carriers have specific policies regarding eligibility and claim duration that need to be managed through the disability management plan of the company.

Musculoskeletal (MSC) Injury

MSC includes illnesses and injuries related to the musculoskeletal system.

Net Present Value (NPV)

NPV is a financial metric commonly used by many organizations to compare alternative utilization of capital investment. The "present value" of a single principal amount is the future principal less all compound interest discounted to the present at a specified interest rate (usually the rate at which the organization can borrow money for capital expenditures).

Prevention

Prevention programs are aimed at preventing the incidence of an illness or injury. Prevention strategies include early detection or risk identification and health motion.

Retrospective Analysis

This business case uses claims experience data collected from real cases conducted by Health Systems Group (HSG), in addition to normative data collected in HSG's Health Research Database from benefit consultants and industry reports. This data was used to conduct a retrospective analysis to show trends that can lead to planning prevention programs into the future.

Return on Investment (ROI)

Return on investment is computed by dividing the savings earned from implementing cost containment and prevention strategies by the investment (expenses) that were placed at risk to earn the savings and expressed as a percent.

Short Term Disability (STD)

STD is salary continuance provided to a salaried employee who is temporarily unable to work due to illness or injury. STD covers both occupational (unless WCB compensation is provided) and non-occupational claims. The 'start' date and maximum duration of STD varies from one organization to the next, and is usually specified in its sick day policies. Occasionally, the short-term disability plan is funded through a premium-based insurance plan. This is often called Weekly Indemnity (see Weekly Indemnity for further detail), and is usually available to hourly paid workers only.

Stress

Stress is not a disease but it is, nevertheless, compensated under the terminology of "Mental and Nervous Disorder" within STD, LTD, WI, and WCB.

Utilization Controls

Control procedures developed and implemented by an organization (plan sponsor) or insurance carrier to manage the use of employee benefits. Utilization controls have the same goal as demand management, but are heavily focused on benefit plan design and accompanying policies.

Weekly Indemnity

Another form of Short-Term Disability, weekly indemnity provides employees with payroll coverage through a premium based insurance package. This coverage is either fully paid by the employer, or employee, or is on a co-pay basis.

WCB (Workers' Compensation Board)
Workplace Safety & Insurance Board (in Ontario)

A provincial government-based insurance program to cover the on-going salary and rehabilitation of an employee who has been injured or becomes ill at the workplace. WCB coverage is mandatory for a significant portion of businesses in Canada. WCB costs can be managed in a company through prevention, an effective disability management program, and ongoing management of WCB claims and statements.