Lost time from work due to COVID-19 could cost employers more than $23 billion in benefits for absent workers, impacting up to 5.6 million employees, new research finds.
The staggering figure comes from the Integrated Benefits Institute, which assessed potential sick leave wages, short-term disability payments and spending on employee benefits for absent workers. IBI used employment, wage and leave benefit data from the US Bureau of Labor Statistics and lost workday experiences contained in IBI’s dataset of employer-sponsored STD claims to model lost work time impacts for low-, mid- and high-range scenarios depending on the total COVID-19 cases across the country.
In terms of the costs of COVID-19 absences, “what we might see play out are the implications of employers’ decisions about emphasizing care management and support for healthy lifestyles as part of their overall benefits strategies,” says Brian Gifford, research and analytics director for IBI. “That could turn out to be important not only for leave payments, but for some people the difference between whether or not they needed scarce resources such as ventilators in order to pull through. We may not know the answer to that until we are able to get a look at employees from different companies with different benefits policies and see how they fared during and after the pandemic.”
Up to 5.6 million employees could be impacted by coronavirus-related leave, IBI notes, with nearly 3 million workers at firms with fewer than 500 employees entitled to paid leave per the Families First Coronavirus Response Act that went into effect April 1.
IBI’s analysis follows other research that indicates the significant cost COVID-19 is having on benefits. Willis Towers Watson, for instance, recently found that employer healthcare costs could increase up to 7% this year due to coronavirus treatment and testing costs–on top of the 5% increase companies had already projected before the pandemic. That analysis finds that a 30% infection rate could increase medical and prescription drug costs between 4% and 7%, depending on how sick COVID-19 patients become.
“Despite employers and employees taking the right precautions at this perilous time, the coronavirus continues to spread and place enormous pressure on our nation’s healthcare system,” says Trevis Parson, chief actuary at Willis Towers Watson. “This spike in the demand for care is likely to lead to a significant jump in employer healthcare costs beyond previous expectations.”
Gifford adds that the best benefits cost control strategy for employers is “minimizing exposure to infections by enforcing social distance policies where possible and operating safely when the work has to continue for essential services.”