The ROI of offering Medical Benefits (MB) to employees is traditionally
very hard to calculate, frequently involving qualitative and / or long-term quantitative
measures. This Medical Benefits (MB) ROI calculator™ has been designed combining the most
common measures in use by HR practitioners today.
In order to more comprehensively assess a company's ROI of investments in health and medical benefits, including medical insurance, over a period of up to 4 years. The calculator takes into account both tangible measures such as absenteeism costs and cost of medical claims, as well as the more intangible measures such as productivity losses from presenteeism and from employee disengagement due to illness, using statistics from The 2017 Global Benefits Attitudes Survey, by Willis Towers Watson.
When you have reliable data on absenteeism and health and medical expenses, the MB ROI Calculator™ can be a valuable decision-making tool for assessing the ROI on health and medical benefits.
Financial losses considered are as follows:
1. Cost of absenteeism due to illness - calculated as the total number of days of absenteeism from illness multiplied by the average daily salary
2. Cost of medical claims - cost of medical claims to the company, not including medical insurance costs
3. Overtime cost as a result of illness - taken directly from company data
4. Cost of recruitment for replacements due to illness - taken directly from company data
5. Cost of lost productivity due to illness (presenteeism) - calculated through number of days lost (based on the Global Benefits Attitude Survey) due to presenteeism multiplied by the average daily salary and a productivity factor
6. Cost of employee disengagement due to illness - calculated through number of days lost (based on the Global Benefits Attitude Survey) due to presenteeism multiplied by the average daily salary and a productivity factor
In the list above, financial losses 1 - 4 are practical, i.e. they come directly from quantitative measurements, whereas financial losses 5 and 6 are qualitative and derived measures. There is however ample evidence supporting the cost of lost productivity due to presenteeism (for example http://www.workforce.com/2012/09/17/tracking-true-cost-of-lost-productivity-remains-a-challenge/) and employee disengagement (for example: https://www.entrepreneur.com/article/246036). hese derived indicators rely on defining a general state of employee health in the organization, as defined by below average, good or very good (underperforming, average performance or above average performance against industry absenteeism benchmarks)
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