How Healthcare Costs Impact Employee Performance at Work

Healthcare costs do not stay at home. When employees are worried about bills, deductibles, and what their plan will not cover, that stress follows them into the workday. It shows up as distraction, shorter patience, and people pushing through symptoms because they feel they cannot afford to slow down.

For employers, this is a performance issue hiding in plain sight. When health care gets expensive and confusing, teams lose focus, attendance gets unpredictable, and managers spend more time reacting instead of building momentum.

The price pressure employees feel is real and rising

Employer coverage is still the main way many working Americans get insured, and the price tag keeps climbing. In 2025, the average annual premium is $9,325 for single coverage and $26,993 for family coverage. Employees also contribute a meaningful share through payroll deductions, averaging $1,440 toward single premiums and $6,850 toward family premiums. Then there is cost sharing, which decides whether people feel safe using care early. In 2025, the average deductible for single coverage among covered workers in plans with a general annual deductible is $1,886. (Source: KFF)

Once employees see they may have to pay a lot before coverage really helps, many start treating health care like a financial risk. That hesitation sets up the next problem, which is delayed care and the slow drip of productivity loss.

Financial stress and delayed care quietly drain productivity

When healthcare feels unaffordable, people change behavior fast. In 2025, 52% of U.S. employees said they feel anxious about health care costs not covered by their insurance, and 44% said they could not pay $1,000 in out of pocket costs for an unexpected illness or injury. That anxiety often turns into delay. Nearly half of employees reported delaying treatment or medical care because they could not afford it, and 40% avoided care because they were not sure it was covered. (Source: Aflac)

Once care is delayed, symptoms stick around longer. That creates more workdays where employees are present but running on low sleep, pain, or mental overload. It also raises the odds of last minute call outs when something finally escalates. Either way, performance drops because people are operating in survival mode instead of their normal rhythm.

Absences matter, but presenteeism can hurt even more

Most employers track sick days, but the bigger hit is often what happens before someone stays home. Presenteeism is when employees are technically at work but not truly well enough to perform at their usual level. That can look like slower problem solving, more mistakes, and less collaboration because people are just trying to get through the day.

In 2025, McKinsey Health Institute, in collaboration with the World Economic Forum, published research on thriving workplaces that connects stronger employee health with improved productivity, reduced absenteeism, and better retention. The report also estimates that improving employee health and well-being could create up to $11.7 trillion in global economic value, which signals how large the performance upside can be when health barriers are reduced. (Source: McKinsey Health Institute)

The connection is simple. When employees can access care earlier, manage ongoing conditions better, and feel supported, they bring steadier energy to work. Once that happens, teams spend less time covering gaps and more time producing consistent results.

A practical path forward employees can actually use

If rising costs and confusion are hurting performance, the fix has to reduce friction and improve take-home pay clarity. Employees do better when benefits are easier to understand and when their paychecks stretch further, especially if it helps them use care earlier instead of waiting for a crisis.

A Section 125 cafeteria plan is a formal arrangement that allows employees to choose qualified benefits instead of taking the same amount in cash wages. When they do, certain benefit contributions can be deducted before federal income tax, and usually before Social Security and Medicare taxes, which can increase net take-home pay while supporting benefit affordability.

If you want a workforce that shows up focused, steady, and ready to perform, start by making healthcare costs and benefits less stressful to navigate. Book an appointment with 125 Managed Health to learn how a managed health approach and Section 125 strategy can complement your current coverage, improve benefit usability, and support both employee well-being and workplace performance.

Start your journey with 125 Managed Health.

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