Number of Employees with Depression:
Number of Employees with Depression Who Remain Untreated:
12-Month Excess Cost Due to Absenteeism in Untreated Employees:
12-Month Excess Cost Due to Presenteeism in Untreated Employees:
12-Month Excess Medical Claims Costs Related to Untreated Depression:
Estimated Avoidable Costs of Untreated Depression to Your Company
Total Avoidable Costs:
Avoidable PEPM Costs:
Cost of Depression Calculator
Depression is a major cause of disability, absenteeism, presenteeism, and productivity loss among working-age adults. Fill out the two fields below and see how much depression really costs your company.
May 2015 U.S. Dept. of Labor Occupational Wage Estimates – Mean Hourly Wages
- $13.59 – Agriculture, Forestry, Fishing, and Hunting
- $30.44 – Mining, Oil, and Gas Extraction
- $24.66 – Construction
- $18.83 – Other Services
- $25.17 – Education
- $21.65 – Real Estate, Rental, and Leasing
- $38.27 – Management of Companies and Enterprises
- $17.07 – Arts, Entertainment, and Recreation
- $37.29 – Professional, Scientific, and Technical Services
- $26.02 – Federal, State, Local Government
- $15.04 – Retail Trade
- $32.40 – Finance and Insurance
- $22.20 – Transportation and Warehousing
- $24.51 – Health Care and Social Assistance
- $35.14 – Utilities
- $33.86 – Information
- $26.36 – Wholesale Trade
- $23.82 – Manufacturing
- $17.63 – Administrative and Support and Waste Management Services
- $11.70 – Accommodation and Food Services
About the Calculation for the Avoidable Costs of Depression
Methods Used to Calculate Company-specific Avoidable Costs of Depression
Depression is a common and debilitating illness. It is treatable, but the majority of persons with depression do not receive even minimally adequate treatment.1 Depression is characterized by changes in mood, self-attitude, cognitive functioning, sleep, appetite, and energy level.2 The World Health Organization found that major depression was the leading cause of disability worldwide.3
Depression not only imposes significant costs on those who have it and their families, it imposes a serious economic burden on employers. Many businesses have not examined the costs of undetected and untreated depression on their bottom lines.
To help employers better understand the business cost of depression, Beacon Health Options has devised a calculator that shows how untreated depression generates avoidable health care costs. The Calculator for the Avoidable Cost of Depression estimates the business impact of untreated depression using client-specific information, grounded in research, about the impact.
Average Hourly Wage Rates
Average hourly wage rates by industry were obtained from the Occupational Employment Statistics published by the United States Department of Labor, Bureau of Labor Statistics, May 2015 National Industry-Specific Occupational Employment and Wage Estimates.4
Cost of Fringe Benefits
The calculator computes total employer costs for employee compensation by adjusting average hourly wages and salaries for the cost of benefits provided to employees. The factor used to make this adjustment was calculated using data available from the Employer Costs for Employee Compensation news release for December 2015 published by the United States Department of Labor, Bureau of Labor Statistics.5 The average total employee compensation for private employers in December 2015 of $33.58 was divided by the average hourly rate of wages and salaries of $23.06 to obtain a fringe benefit cost factor of 1.45620.
The Prevalence of Depression
Among common conditions that dominate health-related lost labor time costs, depression is among the most costly because it is highly prevalent and comorbid with other conditions. Furthermore, although workers with depression are usually present at work, their performance can be substantially reduced. To estimate the number of employees with depression in a one-year period, Beacon Health Options used the prevalence (i.e., how widespread the disorder is in society) of any depressive disorder in the U.S. workforce of 12.29 percent estimated using data obtained from the Depressive Disorders Study of employed individuals who participated in the American Productivity Audit.6
The Number of Employees with Depression Who Are Untreated
The economic burden of depression is driven by a number of factors, including its prevalence rate, its treatment rate, and its debilitating nature. Assumptions concerning the treatment rate of depression for the calculator were based on updated estimates derived from the National Comorbidity Study (NCS) and the NCS Replication survey (NCS-R). Results showed that treatment rates varied considerably by employment status. Depressed individuals who were employed had a 40.2 percent treatment rate.8
Excess Cost of Lost Productivity Due to Absenteeism and Presenteeism in Untreated Employees
Beacon Health Options has an ongoing program that examines the impact of behavioral health issues on workplace productivity. Beacon Health Options staff routinely interview adult members when they call Beacon Health Options for an outpatient behavioral health or EAP referral. Members are asked about their levels of productivity, absenteeism, as well as their overall mental health status in the 30 days prior to their call. Follow-up interviews are conducted with a sample of these members 90 to 120 days later to measure the impact of services. The Productivity Tracking Program has consistently demonstrated substantial improvement during the period between their intake survey and follow-up survey.
An analysis of results for the five-year period from January 2011 through May 2016 for members with a depression-presenting problem showed that depressed individuals who were employed reported an average absence of 1.5282 days in the 30 days prior to calling Beacon Health Options for a referral. The impact of absenteeism is computed by multiplying the estimated number of untreated employees * Beacon Health Options estimated days per month absenteeism for depressed employees * 12 months * hourly wage rate * fringe benefit adjustment rate.
Depressed individuals who were employed reported an average of 8.2240 days of reduced productivity each month (commonly known as presenteeism). Since presenteeism involves being at work but less productive than as usual on those days, the Calculator discounts the value employees contributed to their company on those days. The best estimates are that presenteeism reduces productivity by about one-third9. The impact of presenteeism is computed by multiplying estimated number of untreated employees * Beacon Health Options estimated days per month presenteeism for depressed employees * 12 months * 20 percent discount * hourly wage rate * fringe benefit adjustment rate.
Excess Medical (Somatic) Claims Costs Related to Untreated Depression
Studies demonstrate that mental health conditions are frequently comorbid with other chronic health care conditions and that individuals with chronic health conditions that are comorbid with behavioral health conditions have higher health care utilization and costs. Comorbid depression clearly results in elevated total health care costs. Milliman Medical Index10 conducted an analysis of the cost impact of comorbid depression and anxiety on commercially insured patients with chronic medical conditions. It estimated that, in a commercial health insurance plan, there were 2,026 members with undiagnosed, untreated depression per 100,000 covered lives (or 2.026 percent) among 10 of the most common chronic medical conditions. Milliman further estimated increased medical costs of $418.33 PDMPM (per diseased member per month). For the purpose of the calculator, a 25 percent inflation adjustment was added.
There has been considerable research over the last 40 years on the impact that psychological interventions have on the use of medical services. Numerous studies have shown that overall medical costs may be offset by active outpatient behavioral health treatment for patients with diagnosed mental health disorders, a phenomenon known in the literature as medical cost offset. Average savings resulting from implementing psychological interventions has been estimated over a wide range, but most articles have demonstrated that dollar savings are substantial. Beacon Health Options has elected to use a 25 percent intervention cost-offset estimate based on a cost-offset literature review, which is likely a conservative figure since this is based on a percent of the differential cost rather than total cost. This is equivalent to a 5 percent to 15 percent reduction off total medical costs.
The 12-month excess medical (somatic) claims costs related to untreated depression for members with one of 10 chronic diseases is computed as the number of employees * % employees with chronic medical conditions and untreated depression (2.026 percent) * excess medical cost per co-morbid depressed member per month adjusted for inflation ($418.33 * 1.25) * 12 months * estimated net medical cost offset for BH treatment intervention (25 percent).
Estimated Avoidable Costs of Untreated Depression for Your Company
This calculator provides employers with estimates of the productivity and medical cost impacts of depression. The estimate for the Total Avoidable Costs for Untreated Depression are computed as:
Avoidable Costs per Employee per Month (PEPM) =
[Excess Cost of Lost Productivity Due to Absenteeism in Untreated Employees +
Excess Cost of Lost Productivity Due to Presenteeism in Untreated Employees +
Excess Medical (Somatic) Claims Costs Related to Untreated Depression] ÷
Number of Benefits-eligible Employees
- Wang PS, Lane M, Olfson M, Pincus HA, Wells KB, Kessler RC. Twelve-month use of mental health services in the United States: Results from the National Comorbidity Survey Replication. Arch Gen Psychiatry 62:629-40. 2005.
- Diagnostic and Statistical Manual of Mental Disorders, 5th ed. American Psychiatric Association, 2013.
- Lopez AD, Murray C. The global burden of disease, 1990-2020. Nature Med 4(11):1241-3. 1998.
- Occupational Employment Statistics: May 2015 National Industry-Specific Occupational Employment and Wage Estimates; published by the United States Department of Labor, Bureau of Labor Statistics.
- Economic News Release: Employer Costs for Employee Compensation – December 2015; published by the United States Department of Labor, Bureau of Labor Statistics .
- Stewart WF, Ricci JA, Chee E, Hahn SR, Morganstein D. Cost of lost productive work time among U.S. workers with depression. JAMA. 2003;289:3135-3144.
- Greenberg PE, Kessler RC, Birnbaum HG, Leong SA, Lowe SW, Berglund PA, Corey-Lisle PK (2003). The economic burden of depression in the United States: how did it change between 1990 and 2000? J Clin Psychiatry 64:1465–1475.
- Melek S, Norris D. Chronic conditions and comorbid psychological disorders. Milliman Research Report. July 2008.
- Kemp, P. Presenteeism: At Work—But Out of It. Harvard Business Review. Oct. 2004. https://hbr.org/2004/10/presenteeism-at-work-but-out-of-it
- 2015 Milliman Medical Index. http://us.milliman.com/uploadedFiles/insight/Periodicals/mmi/2015-MMI.pdf