The Wellness Abandonment Tax
Why Companies Are Now Paying Double for Giving Up on Their People
We are in the season when people begin to think about resolutions. How will they make next year better? What could they do differently? Who can they become.
We are also in the season where business owners and CFOs finalie their budgets and plan for their investments in the coming year.
Many are still trying to process what the hell happened to their health insurance plan? Companies are still reeling from some of the largest increases the industry has ever seen. Specialty drug costs have exploded. Post-pandemic catch-up care isstill surging. And million-dollar claims have increasingly become normal.
You’ve already raised deductibles. Tightened the formulary. Negotiated harder with the carrier. But as you finalize that budge and you stare at those numbers, you know it means smaller bonuses, delayed hiring, and another difficult conversations in the months to come.
The unavoidable question is, “How do we prevent this from happening again next year?”
Most employers respond to this question by doubling down on plan design changes, pharmacy benefit management strategies, and stop-loss shopping. These tactics matter. But they’re addressing symptoms, not causes.
There’s a more fundamental lever that most organizations are missing entirely.
The best way to manage healthcare costs is to need less healthcare.
And right now, companies that ignore employee wellbeing aren’t just missing an opportunity. They’re paying a hidden tax that compounds every renewal cycle. I call it the wellness abandonment tax, and it’s costing employers millions in ways they never see coming.
The Hidden Invoice
Let’s talk about what you’re already paying.
When employees are stressed, burned out, and struggling with their health, it doesn’t show up as a single line item on your budget. Instead, it bleeds across dozens of categories, making the true cost nearly impossible to track.
Here’s what the research shows:
Presenteeism (employees who show up but aren’t really there) costs up to $12,000 per employee per year. That’s seven times more expensive than absenteeism. These are people sitting at their desks, attending meetings, responding to emails, but operating at 50% capacity because they’re exhausted, anxious, or unwell.[1]
Burnout costs between $4,000 and $20,000 per employee annually, depending on their role. For executives, that number climbs above $20,000. And here’s what makes it particularly insidious: 89.5% of these costs come from presenteeism, which means most employers have no idea they’re paying it.[2]
Turnover driven by burnout and poor well-being costs between 50% and 200% of an employee’s annual salary to replace them. That includes recruitment, training, lost productivity during the transition, and the knowledge that walks out the door.[3]
Absenteeism costs $4,080 per employee annually in the U.S., adding up to $600 billion across the economy each year.[4]
Do the math for a 500-employee company. If even half your workforce is experiencing moderate levels of burnout and disengagement, you’re looking at $2 to $6 million in annual hidden costs. These aren’t projections. This is what’s happening right now.
And every single one of these costs feeds directly into your healthcare trend. Burned-out employees get sick more often. They delay care until problems become expensive. They’re more likely to end up in the ER instead of urgent care. They develop chronic conditions that require ongoing treatment.
The wellness abandonment tax isn’t a future risk. It’s a current expense you’re already paying.
The Visible vs. Invisible Cost Trap
After a brutal renewal season, budgets are tight. Leadership is looking for places to cut. And wellness programs can look like an easy target.
After all, the wellness program has a clear price tag: maybe $150 to $1,200 per employee per year, depending on what you’re offering. That’s $75,000 to $600,000 for a 500-person company. It’s right there in black and white.
The costs of NOT investing in wellness? Those are spread across your entire P&L. They show up as:
Overtime pay covering for absent employees
Temporary staffing fees
Recruitment and onboarding expenses
Training costs for new hires
Lost productivity that never gets measured
Healthcare claims that seem disconnected from wellbeing
Disability claims
Workers’ compensation costs
CFOs see the program cost crystal clear. But they miss the abandonment tax entirely because it’s distributed across so many categories that no single line item screams “this is a wellbeing problem.”
The short-term logic seems sound: “We’ll save $500,000 by cutting the wellness program.”
The reality: You’ll pay $2 to $3 million in hidden costs instead. And when renewal season comes around again, you’ll be right back where you started, except now your workforce is in worse shape and your healthcare trend is even steeper.
What the Data Actually Shows
Let’s look at what happens when companies actually invest in employee wellbeing.
The ROI on wellness programs ranges from $3 to $6 for every dollar invested. Johnson & Johnson, one of the most studied examples, saved $250 million over six years through their wellness initiatives, generating $2.71 for every dollar spent.[5]
Seventy-two percent of companies see reduced healthcare costs after implementing wellness programs. Ninety-five percent of companies that actually measure their wellness program ROI report positive returns.[6]
But the benefits extend far beyond direct healthcare savings.
Companies with comprehensive wellness programs experience 14% to 19% lower absenteeism rates. They see 25% less employee turnover compared to organizations without wellness initiatives. And companies with high employee wellbeing have one-third less voluntary turnover across their entire workforce.[7]
The connection between wellbeing and performance isn’t abstract. Healthier employees are more focused, more creative, and more productive. They make fewer errors. They collaborate more effectively. They bring their best thinking to the problems that matter most to your business.
Mental health support specifically returns $1.50 to $4.00 for every dollar invested, primarily through reduced absenteeism and healthcare costs.[8]
Here’s the piece that connects directly back to your renewal challenge: lower utilization drives lower trend, which creates more manageable renewals. When your workforce is healthier, they need less healthcare. It really is that straightforward.
Wellness isn’t a perk. It’s the most sustainable cost containment strategy you have.
Beyond the Gym Membership
The wellness programs that actually work aren’t the token gestures most people picture. They’re not about offering a gym discount and calling it a day.
Modern, effective wellness programs are holistic. They address the full spectrum of what impacts employee health and performance:
Physical health: Preventive care, activity programs, chronic condition management, biometric screenings that catch issues early, and disease-specific support for diabetes, hypertension, and other common conditions.
Mental health: Employee Assistance Programs, counseling services, stress management resources, and genuine organizational commitment to psychological safety.
Financial wellbeing: Education on benefits decisions, retirement planning, debt management, and the financial literacy that reduces one of the biggest sources of stress in people’s lives.
Work-life integration: Flexibility in how and when work gets done, clear boundaries around after-hours expectations, and a culture that doesn’t glorify burnout.
The engagement factor matters enormously. A wellness program only delivers ROI if employees actually use it. Participation rates are the difference between a program that pays for itself and one that’s just an expense.
Leadership modeling makes the difference here. When executives talk openly about using mental health resources, when managers take their PTO without apology, when senior leaders participate in wellness challenges, it signals that these programs are legitimate, not just HR theater.
Evidence-based programs consistently outperform ad-hoc initiatives. One study showed 38% fewer hospitalizations among participants in structured wellness programs compared to non-participants.[9] When programs follow established models with proven effectiveness, the results speak for themselves.
For self-funded employers, you have a significant advantage: data access. You can see exactly where your costs are concentrated. If GLP-1 medications for diabetes are driving pharmacy spend, you can implement targeted weight management programs. If musculoskeletal issues are generating claims, you can focus on ergonomics and preventive physical therapy. If mental health is the pressure point, you can expand counseling access and stress management resources.
This isn’t guesswork. It’s using your own data to address your specific population’s needs.
From Cost Center to Competitive Advantage
The strategic question isn’t whether wellness programs cost money. Of course they do. The strategic question is whether you’re going to pay proactively or reactively.
And right now, the wellness abandonment tax is growing every single year.
Burnout rates are at record highs. Mental health claims continue climbing. And here’s what should concern you most: younger workers (Gen Z and Millennials) are experiencing burnout at significantly higher rates than older generations. Sixty-eight percent of Gen Z and 61% of Millennials report experiencing burnout, compared to 47% of Gen X and 30% of Boomers.[10]
This isn’t a problem that’s going to solve itself as your workforce ages. It’s getting worse.
Organizations that invest in wellbeing now position themselves for sustainable success across multiple dimensions:
They reduce future healthcare trend over a three-to-five-year horizon. They improve retention in labor markets where top talent has options. They build cultures where people actually want to work, which matters when 87% of workers consider health and wellness offerings when choosing employers.[11]
And they prevent the renewal shock you just survived from becoming an annual ritual.
Wellness investment is renewal insurance. It’s risk management. It’s workforce strategy. And it’s one of the few levers you can pull that improves both the human experience and the financial outcomes simultaneously.
The Choice You’re Actually Making
Let’s return to our CFO, sitting with those budget projections, asking how to prevent this from happening again.
The answer isn’t more aggressive pharmacy benefit management, though that helps. It’s not higher deductibles, though sometimes that’s necessary. It’s not shopping carriers every year, though competition keeps everyone honest.
The answer is addressing the root cause: the health and wellbeing of your people.
You’re not choosing whether to spend money on employee wellbeing. That choice has already been made for you. Your employees’ health status is driving costs whether you’re investing in it proactively or not.
What you’re actually choosing is how to spend that money.
Option A: Invest $500 per employee proactively in comprehensive wellness programs. Get $3 to $6 back through reduced healthcare costs, lower turnover, less absenteeism, and higher productivity. Build a healthier workforce that needs less expensive care.
Option B: Pay $4,000 to $12,000 per employee reactively through presenteeism, burnout, turnover, and absenteeism. Watch these hidden costs bleed across your entire organization. Then face another brutal renewal next year because your workforce’s health hasn’t improved.
The wellness abandonment tax comes due every single payroll period. It shows up in reduced output, in vacant positions that take months to fill, in overtime that never quite catches up, in good people who leave for opportunities at companies that seem to care more about their wellbeing.
And then it shows up again at renewal, when your carrier or actuary tallies up another year of claims and delivers projections that make you wonder how much longer this is sustainable.
When your people feel better, they do better. They show up with energy. They solve problems instead of creating them. They stay instead of leaving. And they use less healthcare.
It’s not complicated. It’s profitable. And it’s the most sustainable strategy for the challenge you just survived.
References
[1] Life Guides. “The True Cost of Employee Disengagement and Presenteeism...and How To Fix It.”
https://www.cdc.gov
(CDC research shows presenteeism costs up to $12,000 per employee annually, 7x absenteeism costs)
[2] Martinez, M.F., et al. “The Health and Economic Burden of Employee Burnout to U.S. Employers.” American Journal of Preventive Medicine, Volume 68, Issue 1, 2025. https://www.sciencedirect.com/science/article/abs/pii/S0749379725000236
[3] Enrich Financial Wellness. “The Cost of Replacing an Employee and the Role of Financial Wellness.” (Replacing employees costs 50-200% of annual salary)
[4] Employee Benefit Research Institute. “Unplanned absenteeism costs U.S. businesses approximately $600 billion annually, or $4,080 per employee.” 2024.
[5] Holisticare. “Corporate Wellness Programs: Real ROI Data for 2025.” November 2025. https://holisticare.io/blog/corporate-wellness-programs/
[6] SFM Mutual Insurance. “Measuring workplace wellness program ROI and VOI.” March 2024. https://www.sfmic.com/roi-and-voi-a-strong-wellness-program-measures-both/
[7] Infeedo. “Why Corporate Wellness Programs Are Worth Every Penny in 2025.” July 2025. https://www.infeedo.ai/blog/corporate-wellness-programs-worth-every-penny-2025
[8] Enthea. “How Much Does Mental Health Cost Employers?” April 2025. https://www.enthea.com/resources/how-much-does-mental-health-cost-employers
[9] SurveyConnect. “ROI Of Employee Wellness Programs & Assessments.” December 2025. https://surveyconnect.com/news/the-roi-of-employee-wellness-programs-and-assessments/
[10] Wellhub. “Employee Burnout in the US: Symptoms, Impact, Prevention, Stats.” November 2025. https://wellhub.com/en-us/blog/wellness-and-benefits-programs/burnout/
[11] Workhuman. “20 Impactful Workplace Wellness Statistics in 2025.” October 2025. https://www.workhuman.com/blog/workplace-wellness-statistics/