FCE Methodology

Technical Appendix       Glossary

The following is a summary of the FCE methodology. For a detailed description, see the Technical Appendix. A glossary of terms is also available.

Estimated Metrics and Data Sources

The Full Cost Estimator (FCE) results are powered by the highest-quality data sources available. It draws on nationally-representative databases, IBI’s validated health assessment survey (the HPQ Select), and millions of disability claims from more than a dozen industry-leading suppliers to produce estimates of:

• Sick day absences and wage replacements
• Workers’ compensation claims, medical payments, lost workdays, and wage replacements
• STD and LTD claims, lost workdays and wage replacements
• Non-concurrent FML absences
• Employees' and dependents' medical and pharmacy claim costs
• Presenteeism
• Lost productivity burdens of lost time

Our data come from:

• Integrated Benefits Institute
  • IBI Benefits Intelligence
  • HPQ Select
• Bureau of Labor Statistics
  • Occupational Employment Statistics
  • National Compensation Survey
  • Injuries, Illness and Fatalities
  • Current Population Survey
• Centers for Disease Control and Prevention
  • National Health Interview Survey (NHIS)
• Agency for Healthcare Research and Quality (AHRQ)
  • Medical Expenditure Panel Survey (MEPS)

The most current comparable data available for this build of FCE are from 2010. FCE data will be updated to more current values when all elements are available, probably in the fall of 2012.

Basic Industry Estimates

To produce basic industry estimates, users supply their FTEs and select a comparison industry. Industry is the key for assigning default values when users do not provide other pieces of information. From industry FCE derives defaults for:

• Average wages and benefits
• Percentage of employees eligible for paid incidental absences
• Percentage of employees covered by an organization’s group health plan
• Workplace illness/injury incidents
• Workers’Compensation lost workdays and medical costs
• STD and LTD claims and lost workdays
• FML lost work days
• Opportunity costs of absence and presenteeism
• Sex, age, and occupation distributions

Average wages and benefits and average disability claims and lost workdays are used to estimate industry average disability costs. Group health costs are calculated from the industry’s average age and sex distribution. Regression equations estimate sick day absences and presenteeism costs based on industry demographic and paid sick day distributions.

Refined Estimates

Users can refine their estimates by entering their organization’s actual values for any or all of the following: 

• The percentage of employees eligible for pay when absent due to an incidental sick day illness
• The percentage of employees covered by their group health plan (excluding dependents and retirees)
• The % of employees participating in an organization's LTD and STD programs
• The $ of employees eligible for FML
• Total wages and benefits load
• The percentage of employees in different occupational groups
• The percentage of female employees
• The percentage of employees in different age categories

Refined estimates can contain a mix of a user’s actual values and industry defaults.

User can supply their actual costs and absence experiences to provide a context for the estimated results.

• Sick day absences and wage replacements
• Workers’ compensation claims, medical payments, lost workdays, and wage replacements
• STD and LTD, claims, lost workdays and wage replacements
• Non-concurrent FML absences
• Employees' medical and pharmacy claim costs
• All other health care expenses