What is the actual cost to businesses of having caregivers in the workforce?

On its face, this question seems nearly impossible to answer. After all, much of the impact of having caregivers within your workforce seems somewhat nebulous: how do you even measure the lost mindshare of an employee who’s focusing, for instance, on a parent with memory issues or on a child with behavior challenges? Surprisingly, ample research exists to substantiate that the caregiving crisis is real, measurable, and growing.

For starters, understand that four out of every five businesses with more than 500 employees self-fund at least one insurance benefit, according to the Employee Benefit Research Institute. These “self-funded” businesses pay for 100% of their employees’ healthcare costs without the involvement of insurance brokers. More often than not, this calculated risk saves a company a considerable sum annually.

Now keep that number (80% of businesses with more than 500 employees) in mind as you process the following statistics. According to the National Alliance for Caregiving and AARP, as many as 18% of employees are active caregivers. And a 2012 MetLife survey revealed that on average, caregivers incur 8% higher healthcare costs than their non-caregiver counterparts. When you consider these statistics together, the hard, measurable costs of having caregivers in your workforce starts to take shape.

Employees who are juggling their full-time job responsibilities with the duties of caring for a loved one report significant impacts on their health. Stress, anxiety, and depression are common among caregivers (according to the NAC/AARP study) and can contribute to physiological complaints: lower back pain, exhaustion, debilitating headaches. The treatment required to address these health issues can put considerable strain on any business’ health insurance plan. Not to mention that the recipient of the caregiver’s attention may be on the employee’s health plan.

Consider, too, that employees at many organizations often don’t feel empowered to share their at-home caregiving responsibilities. They see a potential threat in disclosing that they have duties they have to attend to (often during working hours) to give their loved one the care they need. And in keeping their caregiver status quiet, they limit the options available to them. In time, these closeted caregivers may feel compelled to take a leave of absence (whether or not they are eligible under the Family and Medical Leave Act (FMLA) so that they can focus on their loved one. And FMLA costs businesses too, as it may be cost-prohibitive to replace an employee who is out on leave.

Those closeted caregivers also introduce a much-harder-to-measure challenge: presenteeism. Presenteeism refers to employees who are physically “at work” but who are distracted by their at-home circumstances. It’s virtually impossible to measure the actual impact of presenteeism, but the argument is this: If you have a fixed amount of “mental bandwidth” available at any one time, and you’ve got loved ones at home who are top of mind, you’re just not going to be able to devote 100% of that mental bandwidth to your work. And depending on the nature of an employee’s job, distraction can be incredibly costly and even dangerous.

Finally, there’s a cost to getting the right talent into the organization in the first place. Many industries are experiencing substantial talent shortages, making each hire much more competitive. Businesses that fail to consider a potential employee’s home situation may box themselves out of top hires, or be forced to offer more in salary to make up the difference in a benefits package. Those that do consider caregiving needs have both recruitment and retention advantages; supporting caregivers inspires loyalty among top talent.

To be clear, the caregivers-in-the-workplace challenge impacts your business. The easiest way to head off the issue is to address it head on. Remember, at some point, everybody will have a caregiving need in one way or another, either as a caregiver or as someone in need of care. With that in mind, businesses can develop policies that encourage employees to be forthcoming about their challenges and provide the flexibility and other supports they need to be successful both at work and at home.