Employers of all sizes feel the pain from rising health benefits costs. While there’s no single solution to keeping benefits costs under control, many organizations are finding that wellness initiatives, when done right, offer an effective way to save money.
An Ailing Country
Wellness programs offer many advantages to employers, including reduced health care costs, improved employee health and increased productivity. The reasons for America’s staggering health care costs are many, but these statistics provide some insight.
• The U.S. spends $147 billion in direct health care costs associated with poor diet and physical inactivity.
• Obesity continues to rise, with nearly 28 percent of U.S. adults now considered overweight.
• Diabetes cases in America have increased nearly 43 percent since 2001. Nearly 9 percent of the population has diabetes.
• More than 17 percent of Americans smoke.
(Source: BenefitsPro.com, “Preventable Chronic Disease on the Rise.”)
Companies Suffer the Consequences
These health issues spill over directly into the workplace, as an unhealthy workforce hits employers squarely in the pocketbook:
• Obese employees with three or more chronic health conditions miss an average of 3.5 days of work per month, or 42 days per year.
• Obese Americans spend approximately 36 percent more on health care costs and 77 percent more on medications than those with a healthy weight.
(Sources: Gallup, “Unhealthy U.S. Workers’ Absenteeism Costs $153 Billion,” and the Office of the Surgeon General, “The Surgeon General’s Vision for a Healthy and Fit Nation Fact Sheet.”)
Wellness Initiatives as a Cost-Control Strategy
Wellness initiatives are among the top cost-control strategies implemented by employers. The Society for Human Resource Management's (SHRM) June 2011 Employee Benefits report shows that 75 percent of employers supply their workforce with wellness resources and information.
Many employers that aren’t on the wellness bandwagon plan to hop on board soon. A September 2011 survey of government employers by the International Public Management Association for Human Resources showed that 51 percent planned to implement wellness programs or promote healthy behaviors in the next 12 months.
The return on investment for employers that offer wellness programs looks compelling, regardless of size. For every dollar invested in wellness programs, companies can save up to $6 on health insurance costs, according to the University of Michigan's Health Management Resource Center's 2010 Cost-Benefit Analysis and Report.)
Employees Like Wellness Programs, Too
Employees respond positively to wellness programs and are motivated by them. The Principal Financial Group's fourth-quarter 2011 survey of employees who work at small- and mid-sized businesses provides validation.
• Nearly half of all employees (40 percent) agreed that having an employer-sponsored wellness program would encourage them to stay in their current job.
• 41 percent agreed that wellness benefits encouraged them to work harder and perform better.
• 52 percent agreed they had more energy to be productive at work by participating in a wellness program.
Communication Boosts Participation
For wellness programs to be effective, employees must know about the offerings. According to a report by consultancy Towers Watson, 58 percent of employers said low engagement was the greatest obstacle to their wellness initiatives. Reasons for poor participation included:
• An assumption by employees that wellness programs are meant only for individuals with existing health conditions.
• Inadequate education of employees about the resources available to them.
• Lack of clear communication to employees when the wellness program is introduced and implemented.
A Personal Approach Works Best
Fine-tuning a company’s benefits communication efforts can pay big dividends in getting employees involved in a wellness program or other wellness initiatives. Some employers adopt wellness champions or ambassadors who help spread enthusiasm about the program throughout the organization. They might include regular articles in their company newsletters or distribute personal benefits statements that highlight their total compensation package. Others turn to outside resources for communications support.
Some benefits carriers offer one-to-one benefits counseling services as part of their enrollment package. This individual, personalized communication can provide consistent messages that help employees understand the wellness services available and the benefits of participation.
A Colonial Life survey of employees who meet individually with benefits counselors during enrollment indicated the effectiveness of the one-to-one method. Virtually all (96 percent) of employees surveyed said personal benefits counseling improved their understanding of their benefits and that this type of communication was important (98 percent).
The upshot: Adding wellness initiatives—or maximizing the ones the organization offers—can help lower benefits costs. At the same time, employee morale can improve as workers begin to feel better about themselves and their employers.
Jeff Brown is the senior vice president and chief marketing officer at Colonial Life & Accident Insurance Co., a provider of insurance benefits for employees and their families through the workplace.
© 2012, Colonial Life & Accident Insurance Co.
What Level of Impact Fits Your Wellness Plan?, SHRM Online Benefits Discipline, April 2012
Measuring the Success of Wellness Programs Still a Challenge, SHRM Online Benefits Discipline, April 2012
How can wellness programs benefit employers, and what are the general steps for implementing a wellness program?, SHRM HR Q&As, January 2012
Designing and Managing Wellness Programs, SHRM Toolkits, December 2011
Employees Want Personalized Plans that Support Health Improvement, SHRM Online Benefits Discipline, November 2011
Declining Health of U.S. Workers Is Driving Up Employer Costs, SHRM Online Benefits Discipline, April 2011
Finding Wellness's Return on Investment, HR Magazine, June 2008
The ROI of Wellness Programs: From Perk to Priority Investment, SHRM Online Benefits Discipline, January 2007
SHRM Online Benefits DisciplineSHRM Online Health Care Reform Resource Page