Most Canadian tech companies don’t insure short-term disability. They pay for it themselves, which in practice means continuing an employee’s salary for the weeks or months they are off work. Self-funding is a reasonable financial decision for a growing company, but it quietly creates a second job that rarely gets discussed. Someone has to decide whether each claim is justified and how long the leave should last, and in most self-funded arrangements that someone is HR.
That arrangement asks HR to do work it was never built for, and it leaves employees with very little privacy. There is a way to separate the two jobs so the employer keeps paying the salary while the medical decision moves to people who are trained to make it.
Two jobs that usually end up on one desk
A company that self-funds short-term disability takes on two separate responsibilities. The first is financial, which means funding the leave through payroll. The second is clinical, which means reviewing medical evidence, deciding whether the employee qualifies, and determining how long they should be away. The first responsibility sits comfortably with the employer. The second is where the problems begin.
Where internal handling breaks down
Privacy
To make a decision, HR needs to see the diagnosis and the physician’s notes. That means a colleague, often someone the employee works with regularly, now holds detailed medical information about them. Employees understand this, and some respond by under-reporting a condition or delaying a leave they need rather than disclose it internally.
The concern is sharpest for mental health. The Mental Health Commission of Canada estimates that about 30 percent of short- and long-term disability claims in Canada relate to mental health, and other estimates place the share closer to 40 percent. These are the claims an employee is least willing to discuss with someone down the hall, which makes privacy a central issue in disability management rather than an occasional one.
Expertise
Approving or declining a claim, and setting how long it lasts, is a clinical judgment. HR professionals are not trained or licensed to make that call, yet in a self-funded plan without outside support they are making it anyway. The same team is often responsible for managing the company’s costs, which puts them in a conflicted position whenever a claim is borderline.
Consistency
Many self-funded plans have no written policy behind them. Without a documented standard, two similar claims can be handled differently depending on who reviews them and when. Without a structured return-to-work plan, leaves also tend to run longer than the medical situation requires, which adds cost for the employer and leaves the employee without a clear path back.
The alternative is third-party adjudication
Third-party adjudication separates the funding from the decision. The employer continues to pay the employee’s salary through payroll, exactly as it did before. What changes is who reviews the claim. An independent firm of trained claims professionals receives the medical documentation, assesses it against a consistent standard, and builds a return-to-work plan into every file. In Canada, Acclaim Ability Management and Organizational Solutions Inc. (OSI) are two established firms that provide this service to self-funded employers.
The process typically runs in four stages:
- The plan administrator opens the claim. When an employee needs to go on leave, the employer’s plan administrator notifies the adjudicator and starts the claim process.
- The employee submits medical documentation to the adjudicator. The diagnosis and physician’s notes go directly to the adjudicator, and HR never sees them.
- The adjudicator reviews the claim. Trained claims professionals assess the documentation and either approve or decline the claim.
- The duration and return-to-work plan are set. The employer is told the outcome and runs payroll for the approved leave.
HR’s role shifts from owning the file from start to finish to receiving the outcome and paying the salary.
How the cost works
These services don’t require the employer to buy an insurance policy or pay monthly premiums. Acclaim, for example, charges a flat rate for each claim file, and that fee covers the claim from intake through to the employee’s return to work or the end of the benefit period. Under that model, a company pays nothing in a month when nobody goes on leave. Each claim is billed at a flat fee, and additional costs may apply if further medical testing is required. Even so, the fee is modest compared with the cost of a leave that runs weeks longer than it should because no one was managing it.
What employers gain
Stronger protection for employee data
Both Acclaim and OSI hold their handling of medical information to recognized Canadian privacy standards, and both staff their claims teams with credentialed professionals. Each firm keeps the employee’s health information away from the employer and shares only what is needed to manage the leave and the return to work.
- Security: Acclaim is SOC 2 compliant, which means its security controls are independently audited. It encrypts medical files in transit and at rest and limits access to the assigned case manager. OSI manages claims on its own secure platform with strict access controls.
- Privacy law: Both firms comply with PIPEDA, Canada’s federal privacy law, and OSI also adheres to provincial legislation including PHIPA and FIPPA.
- Clinical expertise: Acclaim’s team includes NIDMAR-certified disability management consultants working alongside psychiatrists, psychologists and registered nurses. OSI’s team includes licensed physicians and recovery facilitators with medical backgrounds.
That is a higher standard of protection than a diagnosis sitting in an HR inbox, and it comes with outside accountability that an internal process almost never has.
A written policy
Many self-funded arrangements were never formally documented, which is more common than most employers assume. Providers usually build the policy as part of setup, covering eligibility, benefit amounts, recurring claims, appeals and exclusions. For a company that has been operating without one, this closes a meaningful gap on its own.
Better information about the plan
HR stops seeing individual medical files but starts receiving more useful information about the plan as a whole. That includes monthly status reporting on open claims, quarterly statistics, and year-over-year comparisons against industry benchmarks. Most self-funded employers have never had this level of visibility into what their disability costs are and where they are heading.
Keep funding the leave, but hand off the decision
Self-funding short-term disability remains a sound choice for many Canadian tech companies. The issue is not who pays for the leave but who decides whether it is justified. Moving that decision to an independent adjudicator protects employee privacy, puts clinical judgments in the hands of people qualified to make them, and brings consistency and reporting to a process that has usually had neither.
Orchard has put together a one-page overview of how third-party adjudication works for self-funded employers, including how the process runs and what it costs.