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Here’s how much poor health costs employers every year

Employee illness costs billions, takes huge toll on productivity, research from the Integrated Benefits Institute finds.
By: | December 10, 2020 • 2 min read

Poor health isn’t just hurting employees—it’s costing employers big, to the tune of $575 billion and 1.5 million days of lost productivity.

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That new data comes from the Integrated Benefits Institute, a nonprofit health and productivity research organization that works with U.S. employers. It finds that the costs of illness-related poor worker health amount to 61 cents for every dollar employers spend on health benefits. Overall, employers spend roughly $950 billion on health benefits for their workers and dependents, the IBI report says.

Employees covered by sick time, workers’ compensation, disability, and family and medical leave benefits are absent about 978 million days due to illness and incur an estimated 540 million lost workdays due to presenteeism (underperformance on the job by employees with chronic health conditions). All told, that totals roughly 1.5 billion days annually of illness-related absence.

The productivity aspect is an important piece of data for employers to measure, says IBI President Kelly McDevitt.

“Employers who primarily focus on the cost of healthcare expenses and don’t include the cost of lost productivity and the effects on their business outcomes and employee total wellbeing should look closely at these results,” McDevitt says. “Designing programs and benefits that more fully support today’s employee needs will be an investment in long-term success for their business.”

Related: Employers need to get ‘back on the path to good health’ now

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For the analysis, IBI researchers analyzed data from the U.S. Bureau of Labor Statistics and its data from 66,000 employers from 2015 to 2019, so it does not include data in a COVID-19 world.

A review of past years’ estimates (2015-2019) reveals that the composition of lost productivity has changed over time. For example, lost workdays per employee due to workers’ compensation decreased by 13% each year, while workdays lost to short-term disability and long-term disability leave increased by 11% and 3% each year, respectively.

“The steady decline in workers’ compensation lost-time incidents is great,” adds Brian Gifford, director, research and analytics at IBI. “But five years on, the slow trend upward in short- and long-term disability lost work time—which we might not have given much thought to from one year to the next—is something that employers need to get serious about addressing.”

Kathryn Mayer is HRE’s benefits editor and chair of the Health & Benefits Leadership Conference. She has covered benefits for the better part of a decade, and her stories have won multiple awards, including a Jesse H. Neal Award and honors from the American Society of Business Publication Editors and the National Federation of Press Women. She holds bachelor’s and master’s degrees from the University of Denver. She can be reached at kmayer@lrp.com.

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