Best Practices in Employee Wellness Programs

Posted on Wednesday, June 19, 2019

The Affordable Care Act has brought significant increases to some employee premiums and resulted in many plan changes. At the same time, employers also face significant direct and indirect health-related costs, thanks to lost time from sick days and injuries as well as "presenteeism." Presenteeism is the cost of employees showing up to work despite being sick or hurt, and working at a reduced productivity level and risking getting fellow employees sick or hurt in the process.

Benefits to Employers

According to one report entitled "Unscheduled Absence Survey" from 2007, absenteeism costs large employers as much as $764,000 yearly.

One health blog from National Medical Systems says the leading factors driving both absenteeism and presenteeism costs are as follows:

Diabetes (Type 2)
Smoking
Depression
Chronic stress
Alcoholism
Asthma
Obesity
Cholesterol
Migraines
Physical inactivity

Finally, other studies (including research at Ohio State University) combine to estimate that employees who smoke cost their employers $5,816 per year over their non-smoking peers, on average. The Ohio State study indicated that paid smoke breaks alone cost employers as much as $3,077.

This means that in the aggregate and over time, it's theoretically worth investing over $5,000 per employee in a wellness program if it could do nothing more than help them quit smoking. This is particularly true in larger companies where the law of averages has a greater effect.

It follows, then, that any efforts to improve employee wellness should focus on these issues, in order to maximize the net financial benefit to employees and employers alike.

Additionally, a report called Association Between Changes in Health Risk Status and Changes in Future Health Care Costs: A Multi-Employer Study, published in the Journal of Occupational and Environmental Medicine (JOEM) found that investment in a quality wellness program generated returns on investment of up to 3:1 by the third year.

One senior economist, Steven Nye authored a study written up by the Society for Human Resource Management (SHRM) for employers to consider.

"The bottom line for employers is that if you start to change employee behaviors, you will start seeing health care cost savings very quickly. An employer can save an average of $100 in health care costs per employee per health risk eliminated in the year of the change, and $105 per risk reduced in the year following the reduction. But if you don't keep healthy people healthy and employees start accumulating new health risks, you not only negate this savings but stand to add health care costs of $145 per employee per health risk added within just one year."

Best Practices

So what can employers do to stem the tide of preventable losses due to employee poor health? According to the SHRM, here are some of the best practices identified by the healthcare consulting firm Mercer in conjunction with the Health Enhancement Research Organization.

Place all wellness activities under a single header, or brand name
Have a formal, written plan with specific financial objectives
Senior leadership must set the example and participate, personally
Include employee spouses in any wellness programs
Offer personal coaching – face-to-face if possible or by telephone if that's not feasible.
Prevention is more cost-effective than mitigation.
Use biometric screenings to alert employees to specific health risks personal to themselves.

Use financial incentives, such as bonuses for non-smokers and those who are within a reasonable body mass index (with allowances made for weightlifters and bodybuilders who may be very healthy but have an elevated BMI). Companies which offer financial incentives were significantly more likely to report medical cost savings, according to SHRM, than companies that didn't provide such incentives (76 percent to 46 percent).

Of particular note: Employers which included spouses in lifestyle coaching problems were twice as effective as programs that focused solely on the employee, in terms of improvement of health outcomes.

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