The real cost of absenteeism — and what you can do about it

It’s natural to keep an eye on the cost of health care rates. But don’t stop there. Rates aren’t the only health-related costs that impact your business. Your employees’ overall health affects your bottom line in several ways.

The cost of actual health care has become more expensive. While costs held from 2019 to 2020, employers reported a median increase of 8% in 2021.¹ And as Americans continue to face the unfolding health impacts of the COVID-19 pandemic, the number of people who need care could increase.

Advanced cancer diagnoses — which are more expensive to treat than early-stage cancers — are expected to rise because of pandemic-related delays in preventive care.² Cancer became the top driver of large companies’ health care costs in 2022, with 13% of employers saying they’ve seen more late-stage cancers among their workers.³

Along with delays in preventive care, the pandemic spurred an increase in risky behaviors — like lack of exercise, poor nutrition, increased substance use, and smoking — that may lead to a decline in health and a rise in health care spending.⁴ More than 50% of primary care clinicians say their patients with previously well-managed conditions have become worse since the pandemic began — and they’re seeing more patients reporting depression, anxiety, and acute pain.⁵

When employees are in poor health, they’re likely to need time off work. Or they might work when they’re unwell, a situation known as “presenteeism” that impairs job performance. Working while sick can delay an employee’s recovery time and increase their risk of future health problems — as well as absences.⁶ Presenteeism can also occur when an employee is dealing with physical pain, mental health issues, or burnout.

You might not notice the financial impact of lost productivity on your business. These indirect costs can affect your bottom line in ways that are less apparent than rate increases — but no less real. Productivity losses linked to absenteeism and presenteeism from chronic illnesses and injuries cost U.S. employers $2,945 per employee per year.⁷ That number includes sick days, short-term disability, long-term disability, and impaired job performance.

Smaller businesses feel the effect of absenteeism even more, since an employee who misses work due to illness represents a larger percentage of the company’s workforce. It isn’t as easy for a sick employee’s work to be transferred to another person in the department — often, the sick employee is the department.

Reducing absenteeism and presenteeism begins with a plan

Investing in your employees’ health is an investment in your company. Research shows that employees who are in good health are more likely to be engaged with their work.⁹ And for every $1 employers spend on health coverage, they get $1.47 back in direct medical costs, productivity, recruitment, retention, and more.¹⁰ As you evaluate health plans for your employees, consider how well they can help you minimize absenteeism and presenteeism costs in these areas:

When you’re looking at the cost of different health plans, be sure to factor in how those plans will help you minimize other care costs. Because there’s more to your company’s health care expenses than monthly rates.