Employers Underestimate Costs of Worker Depression

May 28, 2009 (PLANSPONSOR.com) - Employees disabled by depression are away from work significantly longer than other employees on disability leave.

That was a conclusion of new research by the non-profit Integrated Benefits Institute in which approximately 10% of the more than 400,000 workers studied received medical treatment for depression during the three-year study period. Employees in the depression group have 44% more lost time than employees who had no depression treatment during their disability leave, which cost employers $3,408 more per case.

The true lost-time costs of these cases – including disability payments and lost productivity – are 2-1/2 times the costs of medical care and pharmacy benefits combined, according to a press release. Lost productivity is the largest single cost component, making up 60% of total costs.

In addition, the research found that twice as many employees develop depression after filing a disability claim, and in those cases lost productivity is also the biggest single cost driver, the press release said.

However, lost productivity is greatest for those depressed employees still at work, as more than 80% of all productivity losses for depressed employees are associated with sick leave and presenteeism (employees who are not fully functioning while at work due to ill health). Only 30% of workers reporting depression receive current professional medical care according to employee self reports.

“Our results show that depression is a case in point for employers wanting to improve the health of their workforce while improving business results: a huge potential for lost productivity, yet not on employers’ radar screens from the paid-cost standpoint,” said Thomas Parry, PhD, president of IBI, in the announcement. “A short-sighted focus on paid benefits causes employers to underestimate the true impact of depression on the workforce and fail to make appropriate investments in improving workforce mental health. Such an investment, reflecting the full costs of workforce depression, would benefit employers and their employees alike.”

A summary of the report, The Full Costs of Depression in the Workforce , is publicly available and can be accessed on IBI’s Web site at https://ibiweb.org/UserFiles/File/Depression_Brief.pdf .