Sick leave, short-term disability payments could total $23 billion amid COVID-19 pandemic

Integrated Benefits Institute outlines how three possible scenarios will play out when it comes to employer spending.

Under the low-range scenario, there could be almost 650,000 COVID-19 short-term disability claims, and $1.2 billion in STD wage replacements. (Photo: Shutterstock)

Depending on the total number of U.S. COVID-19 cases, 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.

“Employers and their disability insurance partners will bear substantial lost work time costs with STD 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 excludes costs pertaining to paid family leave which was beyond the scope of this analysis.”

Related: Expanded paid sick leave requirements under the Families First Coronavirus Response Act

The report outlined three potential scenarios:

“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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