financial costs workplace wellness

Addressing Health Financial Costs Through Workplace Wellness

Personal and financial costs related to emotional wellness — whether through stress, depression, or other mood disorders — is part of what a strong program design seeks to address within a well-run workplace wellness program.

Last week we highlighted the Integrated Benefits Institute report on “Health and Productivity Impact of Chronic Conditions: Depression and Other Mood Disorders.”

The overview states: “Mood disorders, most commonly diagnosed as depression, not only degrade the quality of employees’ lives — these disorders have business costs for employers and the economy at-large.”

The report reviews data that goes deeper into the related health costs: “Helping employees manage chronic illnesses remains one of the most viable strategies for reducing employers’ healthcare and disability costs. IBI’s Health and Productivity Impact of Chronic Conditions series uses high-quality data to model healthcare, illness absence (i.e., sick days) and disability costs for populations of employees across different industries.”

Emotional Wellness; Financial Costs

As the report states: “Helping employees manage chronic illnesses remains one of the most viable strategies for reducing employers’ healthcare and disability costs. IBI’s Health and Productivity Impact of Chronic Conditions series uses high-quality data to model healthcare, illness absence (i.e., sick days) and disability costs for populations of employees across different industries. The results provide a scalable cost benchmark that employers and their supplier partners can use to assess the potential savings from reductions in the prevalence of a condition, costs of treatments, and illness-related absences and disability leaves.”

Among the costs identified include:

  • Excess medical and pharmacy treatment costs for employees with mood disorders averaged about $2,800 per year.
  • Employees with mood disorders had an average of 2.4 excess sick days per year, at a cost of about $640 in wages and benefits.
  • Each year, employers’ short-term disability (STD) insurance policies experience an average of 2.2 new claims for mood disorders per 1,000 covered lives. STD claims for mood disorders incur an average of 49 lost workdays, at an average cost of about $9,800 in wage replacements and paid employee benefits.
  • Each year, employers’ long-term disability (LTD) insurance policies manage an average of 1.1 active claims for mood disorders per 1,000 covered lives. Of LTD claims for mood disorders, 15% remain open two years after they begin. LTD claims for mood disorders incur an average of 153 lost workdays per year that they remain open, at an average cost of about $32,000 in wage replacements and paid employee benefits per year.
  • Overall, for every 1,000 U.S. employees, mood disorders in the workforce costs about $232,000 in excess healthcare treatments and lost work time. This does not include the value of returns to lost labor inputs, early exits from the labor force, excess turnover costs and presenteeism (underperformance on the job due to mood disorders).
  • Considerable cost differences are observed across industries, ranging from about $41,000 per 1,000 employees in construction to about $413,000 per 1,000 employees in finance.