top of page
  • Writer's pictureMeghana Kasula

Healthcare, Absenteeism and Compliance: Significant Financial Implications for an Organization

With the ever-evolving landscape of modern-day businesses, these most significant financial implications are rising. The costs of Healthcare, Absenteeism, and Compliance impact the bottom line of your business, thereby making it crucial to learn and optimize these costs.

Healthcare expenses for organisations are rising

In this blog, we shall explore each cost and understand the first step to limit them.

Employee healthcare expenses are increasing. Healthcare expenses are a significant part of any company's budget. These expenses include not just insurance premiums but also costs like onsite clinics, preventive care services (vaccinations and booster), disability benefits & insurance and medical treatments.

the price of healthcare premiums keep increasing every year

The annual family premiums for employer-sponsored health insurance rose 4% to average $22,221 in the 2021 Employer Health Benefits Survey by the Kaiser Family Foundation. It also projected that average costs for U.S. employers that pay for their employees' health care could increase 8.5 percent to more than $15,000 per employee in 2024 [4] . Additionally, the National health expenditures in the USA are projected to grow 5.4 percent YOY as declared by a study by Sean P. Keehan and others in 2020 [1] .It is essential to take note of the rising trend in employee healthcare costs.

A multitude of factors, such as the aging workforce, prescription drug costs, and the rising cost of medical services, account for this significant increase.

Sickness absenteeism impacts your employee productivity.

Absenteeism is the frequent and unplanned absence of employees from work. When employees are absent due to illness or other personal reasons, it can disrupt workflow and productivity and hence contribute to financial losses.

Absenteeism and presenteeism contribute to increase in healthcare costs

Absenteeism cost the U.S. economy between $427.5 and $578.5 billion in 2020 alone [2] . Due to sickness absenteeism, companies frequently have to spend money on temporary substitutes, overtime compensation, or even temporary outsourcing to continue operations in the absence of regular employees. According to the World Health Organization (WHO), an estimated 12 billion working days are lost every year to depression and anxiety in 2022 [3] .

Presenteeism, in contrast to absenteeism, is when employees come to work while unwell or facing personal issues that hinder their productivity. This phenomenon is often underestimated but can have severe implications for a company's financial health. The 2019 survey found that employees are losing on average 38 productive days per employee, owing to absence or presenteeism. It is estimated that the cost of presenteeism in the United States ranges from $150 billion annually [4] . The cost of presenteeism has been steadily increasing year over year.

Both absenteeism and presenteeism result in significant financial implications for businesses. Absenteeism leads to lost productivity and additional costs, while presenteeism diminishes employee efficiency, both contributing to financial burdens on companies.

Expenses of legal & regulatory compliances for health and safety are at a spike.

The costs associated with complying with health and safety regulations and legal expenditures are inevitable for any growing business. In 2020, large firms report that the average cost of maintaining compliance runs approximately $10,000 per employee [5] . A Risk Management Association survey said they spend 6-10 percent of their revenue on compliance costs. The study also found that global compliance costs increased $33 billion from 2019 to 2020, totaling $213.9 billion last year. More than 89% of those costs were borne by U.S. and western European businesses [6] .

Legal and compliances regarding healthcare are at spike

Meeting health and safety regulations is not just about avoiding fines; it's about safeguarding your employees and your business reputation.

Want to reduce these costs significantly? We are here to help.

Understanding the financial implications of healthcare costs, absenteeism, and compliance is essential for any organization's success. The first step to reducing these costs is to measure and monitor your employee wellbeing. This helps you differentiate your employment value proposition, manage healthcare costs & ultimately improve productivity.

As Peter Drucker, a management expert, said,

"If you can't measure it, you can't improve it." is the tool you need to enable you to take the first step which is to measure and monitor your employee health and wellness.


1. ationalhealthexpenddata/nhe-fact-sheet






7. pliance-costs-heres-how-to-get-back-on-track/

29 views0 comments

Recent Posts

See All


bottom of page