Boost Your Wellness Program with Budget Neutral Incentives

The old adage, “all’s well that ends well,” may be sage advice, but the saying needs a new twist when it comes to the right approach to wellness in the workplace: “Begin well.”

While last century’s benefit systems focused on acute care, America’s increasing health care costs demand a culture that nurtures health and wellness at the onset. The Centers for Disease Control and Prevention (CDC) reports that 75 percent of all medical expense is attributed to preventable disease. The CDC also estimates the cost of health care will reach $2.8 trillion by 2011 in the United States. This giant health care monster underscores the need for companies to assess the effectiveness of their health and wellness programs to tame costs and train employees to focus on prevention.

Beginning well.
When implemented correctly, wellness is a winning proposition for both employers and
employees. The result is reduced health care costs, increased productivity and improved
business performance. In fact, well-established health management programs can lower
health care costs by as much as 26 percent. (Source: World Health Organization)

Trends in wellness programs
Intuitively, it makes sense that companies are turning to wellness programs to control health care costs and increase the overall health and productivity of their workforce. Recent studies cite double-digit growth in the adoption of wellness programs. Almost 40 percent of large companies in the U.S. spend more than $200,000 annually on wellness programs, and 20 percent spend at least $1 million, according to a report released last fall by the Business Roundtable, an association of chief executive officers from 160 large U.S. companies representing a combined workforce of more than 10 million. [Source: HR Magazine, Finding Wellness’s Return on Investment, June 2008]

And according to the Society for Human Resource Management article, Workplace Wellness Programs on the Rise in 2008, two-thirds of more than 1,100 U.S.-based organizations have a benefits strategy promoting health and productivity, most commonly through wellness programs aimed at preventing chronic conditions such as heart disease and diabetes. The number of employers implementing specific wellness programs has tripled from 2007 to 2008. While this is positive news, there is growing concern about a lack of continuity among organizations’ wellness offerings.

Challenges
Ceridian LifeWorks recently surveyed a number of large employers and found that the
majority (62 percent) report a high level of fragmentation in their health and productivity
programs. There are several reasons companies struggle to build and maintain effective
wellness programs including the following:

Unclear outcomes. Many companies struggle to produce meaningful return on
investment reports, which is becoming one of the most significant challenges facing
their health and wellness program.
 
Disjointed programs. Many companies use multiple vendors to deliver various
wellness program components, programs that make for a disjointed employee
experience and one that places a significant vendor management and report
consolidation burden on the employer.

Budget challenges. In our challenging economic times, funding for programs
that can’t clearly articulate an immediate program ROI is hard to come by. Combined with the common challenge of providing meaningful reports, many companies struggle to get and keep funding that would help them build a sustainable wellness program that
produces a return on investment.

Low program adoption rates. In today’s “do more with less” work environment,
many companies launch wellness programs but become quickly frustrated with lack
of interest and participation in the programs. Low participation is often caused by
a lack of program awareness, inconsistent communications and a lack of effective
incentives that will truly drive participation.

Incentive-Driven Programs Find Success
One of the most effective ways to combat these challenges is to build incentives
into your wellness program that encourage healthy behaviors that tie directly to your
benefits programs. The trend toward using incentives in wellness programs is growing, with an additional 7.6 percent of employers stating that they were likely to add incentives in 2008. Incentives may include lower premiums, lower copays, flex credits, cash contributions to health reimbursement arrangements (HRAs) or health savings accounts (HSAs), gifts and merchandise discounts. But the LifeWorks survey showed that the most effective incentive is lowering health insurance premiums for employees who participate in wellness initiatives because it directly connects to the message that you want employees to be healthier.

If your organization wants to implement or continue an existing wellness program but is
struggling to find the funding, here are some successful strategies that Ceridian LifeWorks customers have used:

1. Offer premium differentials to employees who report healthy behaviors or who
participate in a wellness program to improve existing health behaviors.
An organization can either use data captured in a health risk assessment or gathered
during open enrollment with employee-verified documents. A LifeWorks client recently implemented this strategy during open enrollment by asking all employees to indicate whether or not they were current tobacco users. Employees who indicated they used tobacco paid $50 more per month towards their health insurance premium unless they chose to participate in the Ceridian LifeWorks iCan Quit tobacco cessation program. This effort resulted in 75 percent of the organization’s tobacco users enrolling in the program. While it’s still too early to determine the 12-month quit rate, initial results look promising. The great thing about this program arrangement is that the 25 percent of tobacco users that didn’t enroll in the program are actually funding the program through their increased health insurance premiums.
 
2. Roll the cost of your wellness program into your employee health insurance premiums.
Rather than directly footing the bill for employee wellness programs, some
employers are “passing the buck” to their employees. When new annual premiums
are released, employers build the cost of the wellness program into the premium.
This method only increases the premium by a few dollars annually. To achieve
optimal success with this approach, the employer should be ready to put money
toward an incentive. Incentives for participating in health coaching can go a long
way to driving program utilization. Both of these approaches have received a lot of traction among employers in recent months, and many employers have achieved great success in changing employee behavior as a result of their efforts. Both employers and employees need to remember that you can’t take a one-size-fits-all approach to wellness.

Staying well.
Even the strongest wellness strategies need ongoing nurturing and assessment to stay effective. Creating a culture of wellness, incorporating incentives and continually seeking feedback from employees to keep the program fresh is vital to your program. Equally important is finding a vendor that can truly be your partner. Partners provide consultation on how to achieve your desired results as well as a willingness to integrate with other employee benefits you provide though other vendors. Successfully improving employee wellness and reducing health care costs can contribute wealth to your organization in a number of ways: Healthy, happy employees, reduced health care costs and improved business results.