Right before New Year’s Eve, many people make resolutions to lose weight and eat healthier. Now summer is here, and many fell off the resolution wagon, now in a desperate attempt to make up for the winter months. Maybe you’ve joined a running group or are chewing nicotine gum like a cow. Maybe Jessica Simpson inspired you to join Weight Watchers. No matter what it is, having someone on your side as you fight to eat the right thing, not light up a cigarette, and exercise helps.
Now, people are noticing an unlikely ally, cropping up in the form of their bosses and HR representatives. Approximately 90% of companies offer wellness programs which work to incentivize being healthy, and who doesn’t like getting rewarded for doing the right thing? Especially if that comes in the form of flat-screen TVs, lower health insurance premiums, or contributions to FSA or HSA accounts. As Jimmy Fallon so eloquently says, “Who doesn’t like more cash?”
Apparently, a lot of employees do. A study conducted by Fidelity Investments and the National Business Group on Health (NBGH) revealed 9 out of 10 employers offer wellness-based incentives, and corporate employers plan to spend an average of $521 per employee for wellness-based incentives in the upcoming year, a 13% increase. In 2009, the average was $260, so companies are jumping on the bandwagon. However, there are other plans as well. In the spirit of childhood reward/punishment tactics, some penalize workers who don’t meet goals or sign up for programs. A recent survey revealed 58% of almost all 800 employer participants reported planning to impose penalties within three to five years for employees who don’t “take the appropriate actions for improving their health.”
Despite those who claim the rewards of wellness programs are hugely motivational, there’s been a back-and-forth debate about them for years now as people try to gauge their effectiveness. It’s hard to make a blanket argument though, due to the diversity of programs. While action-based incentives can motivate employees to take action, it doesn’t necessarily mean they will. The fact remains that healthy employees are instrumental in contributing to lower health insurance costs for everyone. If wellness programs keep employees healthy, it’s worth taking the time to find the right balance. That’s what health is all about, right? Here are five reasons businesses may want to implement wellness programs and what’s in it for them too.
1) Reduced Health Care Costs
In a recent survey by Tower Perrins, 300 companies were analyzed, with total health care costs amounting to more than $29 billion annually. On average, companies pay more than $9K per employee for health insurance. The more risk the employee holds by maintaining an unhealthy lifestyle, the more the company has to pay for comprehensive health insurance. For example, employees at risk for depression represent a 70% higher insurance cost, and one way to fight depression is exercise, a large component of wellness programs.
There’s no way to cheat such health risks either. All of a business’s collective employees would have to be drastically different than the country’s average demographics, because most businesses have employees that are merely ticking time bombs with huge health risks. According to the Department of Health and Human Services, the risk factors for every 100 employees breaks down to this:
- 25 have cardiovascular disease
- 12 are asthmatic
- 6 are diabetic
- 26 have high blood pressure
- 30 have high cholesterol
- 38 are overweight
- 21 smoke
- 31 use alcohol excessively
- 20 don’t wear seatbelts
- 24 don’t exercise
- 44 suffer from stress
Additionally, notice the presence of the word “risk” in the fact that those who have higher risks for depression have higher insurance premiums by 70%. If just the risk of some illnesses can cause such a spike, imagine the costs for those with issues already or who are close to developing them unexpectedly, issues not previously identified as a risk. Depending on the situation, some insurers exclude coverage for pre-existing conditions, but if it happens afterwards, there could be serious prices to pay. Wellness programs aren’t just beneficial in helping to ward off things people know they’re at risk for, but also promote practicing strong preventative health. The bottom line though, whether for or against wellness programs, is that healthy people are cheaper for employers to insure. With health care reform upon us, that will be crucial to companies’ benefits decisions.
2) Reduced Sick Days
We’ve all been in the office where someone has used up all their sick days to be a couch potato for a day or go shopping. Playing hooky from work isn’t like playing hooky in high school where any number of missed days can be excused with a doctor’s note. Instead, many people make the mistake of taking “sick days” when they don’t need them, and they’re the ones who complain about how horrible it is to be at work with the flu as they spread it to everyone else. Within the next month, everyone in the office is out or running on half empty, and business is stalled. This is a problem in over half of all companies, and such productivity losses can cost a business more than $180 billion per year on average. When wellness programs are established, healthy lifestyles are encouraged, which makes employees less vulnerable to illnesses.
Case in point? After establishing a wellness program, Delaware-based company DuPont saw a 14% drop in absences among 45K workers at more than 41 industrial sites. If your employees want a raise, and you don’t have it in your budget, here’s the way to give those raises. Similarly to the way healthy people pay less for health insurance, well-treated, productive workers not only don’t dread going to work, causing all that “hooky playing,” but they’re likely to work harder, a huge perk for employers. The costs of wellness programs and the ability to give raises, bonuses, and other perks will come full circle and practically pay for themselves and more.
3) Improved Worker Retention and Turnover
Maintaining valuable employees is something every business strives to do, and it’s normally accomplished by offering incentives. If an employee feels as if he or she matters and is cared for, they’re more willing to become a long-term asset. A wellness program can act as one of these incentives. Based on recent findings in a first quarter 2013 survey “Principal Financial Well-Being Index: American Workers,” 45% of employees saw wellness programs as one factor for staying with a company, and 62% of workers believed these programs successfully work at improving individual health.
4) Better Employee Morale
If you feel healthy, it’s only natural to have a more positive outlook on life. Why is the grass on the other side greener? It’s because you’re not there. However, when you’re sick, looking on the bright side of things is just too tiring. With healthy employees comes overall better attitudes, more willingness to work, and higher probability of participating in company activities. One study conducted by Balance + in conjunction with the Mayo Clinic found participants in wellness programs offering discounted healthy meals, fitness center access, and health education showed increased knowledge, life satisfaction, and energy, resulting in the company experiencing a steadier level of employee morale.
5) Monetary Perks
If all the above isn’t enough to start researching wellness programs, this might be the kicker. In addition to saving on health care costs, many companies experience other, more “direct” perks as side effects of these savings. Some states offer tax credits that can help reduce taxable income. There’s also savings for workers compensation premiums and claims. On average, companies that implemented wellness programs saw a 30% decrease in workers compensation and disability claims. Again, this has full-circle results and effects on indirect wellness program benefits – workers compensation insurance premiums are cheaper, fewer employees are absent from work, and team morale is higher when people feel well, meaning fewer people are desperately seeking a wet floor without a “wet floor” caution sign.
These are just a few reasons illustrating how developing wellness programs can work to a company’s advantage, but companies have to be smart about it. Unfortunately, there will always be a few bad eggs, and like most large issues faced today, there’s not one surefire cure-all.
As Aon Hewitt health and wellness consultant Stephanie Pronk has said of wellness programs, “Incentives themselves are not the silver bullet. It’s really important to change up the incentive design and keep people on their toes.”
Finding a “cure” for health problems and employment issues that seem to continuously increase isn’t as easy as simply instituting a wellness program. However, wellness programs certainly appear to be a key piece in the puzzle.
Follow Desiree on Twitter @DesireeBaughman.