The 5 Stages of Behavioral Health and How They Can Impact Both Employees and Employers

By: Terri Rhodes | December 17, 2018

Terri L. Rhodes is CEO of the Disability Management Employer Coalition. Terri was an Absence and Disability Management Consultant for Mercer, and also served as Director of Absence and Disability for Health Net and Corporate IDM Program Manager for Abbott Laboratories.

Dr. Dan Jolivet, Workplace Possibilities℠ practice consultant, Standard Insurance Company

For this Risk Insider contribution, Terri Rhodes is accompanied by Dr. Dan Jolivet, the Workplace Possibilities^℠ practice consultant at The Standard, where he previously led the Behavioral Health Case Manager team and managed the psychiatrist and psychologist peer consultants. He is a clinical psychologist licensed in Georgia and Oregon and has worked in behavioral health since 1981. Dan is also the practice leader for Motivational Interviewing and goal-directed case management at The Standard. Prior to joining The Standard, Dan worked in managed behavioral health care organizations for 20 years in a variety of management roles and was in clinical practice as a child psychologist until 2003.

Nearly 1 in 5 U.S. adults lives with a mental illness. These illnesses are like any other — they can impact the employee and employer. And because of the interplay between mental and physical health, mental health issues also raise the risk of even greater direct and indirect costs. These costs include absence, disability and lower employee productivity.

The good news is that employer attitudes toward mental health and substance abuse are changing. While the stigma has not disappeared, there is a growing awareness that the “whole person” comes to work — and that whole person needs to be well to perform well. Employers have a role to play in programs and management techniques that address the two largest mental health issues: stress and depression.

More employers than ever want to provide the support their employees need to treat and even prevent undue stress and other mental health issues that reduce productivity and increase costs. For example, financial wellness programs have joined physical wellness programs as employers have come to understand how money worries can impact performance and absence.

To most effectively address the full range of mental and behavioral health issues, employers need to understand and be able to identify the stages in which symptoms manifest.

Stage 1: Emergence of mental health and substance abuse conditions

Whatever the cause — from job-related stress to the loss of a loved one — symptoms are often mild at their onset. Not always recognizing the potential seriousness of a situation and wanting to avoid stigma, employees tend to try to handle things on their own.

The responsibility of identifying and managing any medical condition ultimately falls to employees. But employers can provide support or find help for an employee at this stage. Employee assistance programs (EAPs) are helpful — but often underutilized — resources.

Employers should communicate regularly with employees about the support EAPs provide. Part of that communication includes messages of support for those seeking necessary medical treatment and the importance of mental wellness in addressing or even preventing behavioral health conditions.

Employers can also provide information about programs that indirectly impact mental health. Physical and financial wellness programs, employee affinity groups and work-related social activities are just a few programs that can help employees find supportive and positive experiences.

Stage 2: Early clinical symptoms

At this stage, symptoms increase. Fearing stigmatization or other negative reactions, employees may continue to conceal their behavioral health issues, which means symptoms greater in number and severity may go unnoticed. However, work performance usually suffers more at this stage, so a noticeable decline in performance can alert employers to possible issues.

Referrals to EAPs are still appropriate at this point. However, absence management and stay-at-work disability management strategies can be more effective. By providing these options, employers can help employees address issues proactively and help them stay at work or return to work quickly.

Stage 3: Severe conditions

At this stage, severe symptoms directly impact an employee’s ability to work. This may require accommodations or even disability leave.

This can be a difficult stage to manage, with specific risks for employers. Supervisors may interpret these symptoms negatively, including constant complaining from colleagues, unreliability, difficulty working in teams and general dissatisfaction. This can lead to mismanagement of an employee’s health situation.

To prevent this, and the potential legal risks it can cause, it’s important at this stage to provide employees with outside resources and other assistance. This includes referrals to an EAP, reasonable accommodation strategies under the ADAAA, support of the employee’s FMLA application and help to identify in-network health care providers. It’s important that supervisors understand the restrictions or limitations imposed by the condition so they can be supportive.

Stage 4: Chronic impairment

This stage involves severe or chronic symptoms, which greatly increase the risk of significant costs. At this stage, employees may see themselves as disabled. This could lead to use of the Americans with Disabilities Act accommodations and long-term disability benefits.

To assist employees at this stage, employers should look to goal-directed case management and return-to-work strategies. It’s important to keep in mind these interventions are useful but potentially limited in their effectiveness when employees come to see a condition as chronic. The earlier the intervention, the better the chances are that an employee will return to work.

Stage 5: Recovery

Recovery can occur at any stage in the behavioral health journey. This can be the result of effective interventions and assistance. Or a condition could simply run its course. Early recovery, before severe or chronic symptoms develop, usually depends on employees receiving timely and effective care and support.

During recovery, stay-at-work and return-to-work strategies can have a positive impact on limitations and restrictions. It is also very important that managers and supervisors receive training, so they can help employees remain well. This includes knowledge of and communication about EAPs, wellness and HR support. And, of course, training in basic management techniques that promote all forms of individual and team wellness.

There was once a time when cancer and other serious illnesses were discussed in whispers. There’s still too much whispering with illnesses that affect the mind. All the whispering does is increase employee anxiety and employer cost and risk. The first step in reducing these downsides is to promote awareness of mental and behavioral health issues and ensure employers have the tools to effectively address them. Understanding the five stages is a big step in that direction.

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.

The 5 Stages of Behavioral Health and How They Can Impact Both Employees and Employers