Depending on the total number of Covid-19 cases in the United States, the collective costs for sick-leave wages, short-term disability payments, and spending on employee benefits could range from $6.1 billion to $23 billion, according to an analysis by the Integrated Benefits Institute (IBI).

"Employers and their disability insurance partners will bear substantial lost work time costs, with STD [short-term disability] claims estimated to take between 20 percent to 75 percent of the premiums collected in 2018 due to the growing number of U.S. employees diagnosed with Covid-19," says IBI's president, Thomas Parry. "As the numbers change daily, these findings are a very conservative estimate of coronavirus-related lost work time costs and exclude costs pertaining to paid family leave, which was beyond the scope of this analysis."

The report outlines three potential scenarios:

Under the low-range scenario of 4 million Covid-19 cases in the United States, 1.5 million of those patients will be employed—800,000 working for small companies and entitled to paid sick days under the Families First Coronavirus Response Act (FFCRA). This scenario will result in almost 650,000 Covid-19–related short-term disability claims and $1.2 billion in STD wage replacements. The total cost for lost work time (assuming an average of 20 days per case) will be $6.1 billion—a 6.4 percent increase from the $97 billion in total sick day and STD payments in 2018.
Under the mid-range scenario of 8 million U.S. cases, 3 million of the patients will be employed, and 1.6 million will work for small companies and be entitled to paid sick days under the new law. There will be 1.3 million Covid-19 short-term disability claims and $2.4 billion in STD wage replacements. The total cost for lost work time will be $12.7 billion—a 13 percent increase from 2018.
Under the high-range scenario of 15 million U.S. cases, 5.6 million will be employed patients—3 million of whom will work for small companies and are entitled to paid sick days under the new law. There will be 2.4 million Covid-19 short-term disability claims and $4.5 billion in STD wage replacements. The total cost for lost work time will be $23.3 billion, a 24 percent increase from 2018.

"One important thing to keep in mind is that however the pandemic plays out—whether that is 1.5 million infected employees, 5 million, or something else—about half of employees at large companies won't have the income protection afforded by disability insurance or FFCRA," says Brian Gifford, IBI's director of research and analytics.

"Even if employees have some sick days to fall back on, on top of everything else, they're going to lose about $2,000 in earnings if they contract coronavirus," Gifford says. "That's not only going to impact the U.S. workforce, but also consumer spending when businesses try to restart after the pandemic."

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Sick Leave, Short-term Disability Payments Could Total $23 Billion

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