Corporate Wellness Program Proposal

Studies show that roughly five percent of personnel drive about 80 percent of your health benefit costs.

No shocker here –  Smokers and obese staff are the highest risk group for developing the sorts of chronic medical problems that send costs through the roof.

A small, but rapidly growing number of employers are taking desperate measures to avoid the costs associated with these staff members.  The step can be broken down into three levels of aggressiveness and potential risk/reward.

Level one –  the employer installs a wellness program in which non-use of tobacco workers and those who commit to maintaining a healthy weight receive financial incentives that lower their share of monthly insurance premiums.

Level two –  the company disqualifies job candidates who smoke or are significantly overweight from hiring consideration. Alternatively, some firms require new hires to undergo a health risk appraisal as a condition of being hired.

Level three –  the company docks pay or fires workforce who fail to control their lifestyle-related health risks. Example –  A organization called Clarian Health has sent notifications to workforce that starting in 2009, workforce who smoke or chew tobacco will be charged $5 per paycheck.

Are these strategies legal? at level one, the answer is a certified yes. health insurance portability and accountability act (HIPAA)s non-discrimination rules permit such incentives under several conditions.

Health Promotion incentives walk a fine line for HIPAAs non-discrimination rules. It is legal to reward workers for wellness participation but its illegal to punish those who fail to improve their health.

Example – If an employee follows a weight-loss program in good faith but fails to lose weight, you can’t withhold the incentive. In like fashion, if an employee fails repeated tries to quit tobacco use, you’re still legally obligated to give them another shot next year.

Also keep in mindthat, by law, the size of the reward or penalty under your health promotion program cant exceed 20 percent of the sum cost of coverage.

The other two are still largely uncharted waters in the courts. Businesss considering these policies should proceed with extreme caution. Keep in mind that the question of “can you do it” (i.e., is it legal?) is different from “should you do it?” (i.e., is it good business?)

Wellness programs come in all shapes and sizes. But regardless of plan design there are five common components that set the successful wellness programs apart from the rest.

At their core, wellness programs require constant monitoring and periodic adjustments.  The wellness programs that get mediocre results are the ones that are left to run on autopilot. That’s why it’s crucial to -

1. Know thine enemy You have to know what’s driving your largest claim costs on your health care plan – both among staff and their dependents.

2. Create realistic expectations. With wellness, what an corporation gets will almost always depend on how much it spends, how well it plans and how well it sustains communications with participants and the vendor.

3. Maintain strong communications.  The wellness programs that achieve the greatest success are those which are communicated aggressively from the get go and are sustained. Repetition is your friend when doing employee education.

4. Integrate wellness with other benefits. Real-life experience has shown that you should consider your worker assistance programs (EAPs) an extension of the health promotion program. You should also consider issues like absenteeism, disability and worker’s compensation to be pieces of the wellness puzzle.

5. Practice what you preach.  The key to ensuring staff member buy-in is for executive management to lead the wellness program by setting a positive example. If upper-level managers are unwilling to participate and address their own health issues, don’t expect many staff members to take the wellness program seriously.

Here’s more evidence that health promotion programs pay for themselves -

Over the last two years, one company in five has seen significant improvement in employees’ health status ?.” and began to stabilize their costs ?.” as reported by one study.

Among firms noting improvement, nearly two-thirds (64%) feature wellness programs offering incentives for healthier life choices.

Here are three twists on traditional incentives that’re getting good results -

1. Wellness coach outreach

A lot of firms require staff members to work with an individual wellness coach to get a discount on monthly premiums or earn cash incentives.

The most common set-up –  on a regular basis, the staff member must set up appointments with and report to (either over the phone or face to face) his or her wellness Coach.

But experience has shown there’s often a high dropout rate.

People  get off to a excellent begin ?.” and they’re enthusiastic about the incentive ?.” but once they realize there’s some effort involved, they lose interest.

The good news –  Firms have found a simple-to-arrange alternative that keeps individuals  on the right track. Rather than requiring personnel to contact the wellness Coach, a growing number of businesses require participants to take calls from the wellness Coach.

Potential result –  Fewer folks fall off the wagon. There’s no outreach effort involved, and the wellness coach keeps people  accountable.

2. Nutritional education/therapy

A newer ?.” and cost-effective ?.” feature in the battle against staff member obesity –  offering an staff member nutrition-education program administered by a expert nutritionist.

Just 11 percent of companies ?.” 18 percent  of large businesss and 7.5 percent of small to medium ones ?.” have such wellness programs, as reported by SHRM’s most recent benefits survey.

Even fewer offer (via their EAPs) nutritional therapy for individuals  with eating disorders. But available data on these wellness programs shows they generally pay for themselves.

The stronger the firm’s emphasis on teaching healthful eating, the faster and more dramatic the reduction in major health claims.

Common plan features –  lunch and learns featuring healthy food options, giving out nutrition-linked gift cards and extending obesity-prevention incentives to people ‘s family members.

3. Assertive tobacco use cessation

A small, but quickly growing number of companys are taking more aggressive measures to avoid the costs associated with staff members who smoke.

The step could be broken down into three levels of aggressiveness and potential risk/reward.

Level one –  the employer installs a health promotion program in which non-tobacco use staff members and those who commit to maintaining a healthful weight receive financial incentives that lower their share of monthly premiums.

Level two –  the business disqualifies job candidates who smoke from hiring consideration. Alternatively, some firms require health risks assessments as a condition of being hired.

Level three –  the corporation docks pay or fires staff members who fail to control their lifestyle-related health risks.

Example –  Clarian Health made news last fall for sending notice to staff that as of Jan. 1,  2009, people  who smoke or chew tobacco would begin be charged $5 per paycheck.

Are these strategies legal? at level one, the answer is a qualified yes. HIPAAs non-discrimination rules permit such incentives within limits.

In a nutshell, it’s legal to reward personnel who quit tobacco use but illegal to punish those who try and fail. If an staff member tries but fails to quit tobacco use, you’re still legally obligated to give them another shot next year.

Furthermore keep in mindthat, by law, the size of the reward or penalty under your health promotion program can’t exceed 20% of the total cost of coverage.

At levels two and three, it remains to be seen if such policies would hold up in court. Proceed with caution.

Wellness programs are a long-term investment. But how long should you wait for results?

Finance and the CEO want hard numbers to show Return On Investment.  And wellness Return On Investment is tougher to calculate than, say, a 401(k).

18-month guideline

Recent studies have established some benchmark data on wellness ROI you are able to use as a guideline. It’s useful whether you already have a wellness program or are thinking about starting one.

It ordinarily takes at least 18 months from the launch of a wellness program to see any leads to your healthcare plan bottom line.

For a lot of firms, 18 months is the point at which workers’ improving health begins to cancel the cost of sponsoring and administering the health promotion program.

By and large, the long-term cost savings from a health promotion program are going to be driven by how much you’re willing to spend. Normally, organizations get what they pay for ?.” both in time and money invested.

As a rule of thumb, the typical cost to the corporation is about $3 to $5 per participating employee per month. Within three years of launch, you ought to be seeing significant savings.

The average ROI tends to be about $4 to $5 saved for every dollar spent. So how can you manage the costs in the short-term in order to achieve the long-term savings?  and how can you maximize the long-term payoff?

Consider making health promotion programs budget-neutral

For many companys, the most effective way to manage the cost of a wellness program in the start-up phase is to make it a budget-neutral expense.

In other words, the health promotion program neither adds to your health costs at the outset, nor decreases them. Example –  You plan to roll out a health promotion program effective Jan. 1.  The health promotion program will cost the corporation $5 per employee.

You can roll the $5 per month cost directly into the employee’s monthly share of their health care premium. In this age of continuous cost-shifting, most staff members are used to seeing small increases in their monthly contributions each plan year.

Just make sure you’re not hitting folks with a big hike on top of that $5. Comparably designed health promotion programs pay off about the same ?.” meaning staff members buy in and participate at the same rate ?.” whether they’re budget neutral or the corporation absorbs the cost.

But when employees get clobbered by large-scale contribution hikes at the outset, they often resist the health promotion program.  The long-term ROI for these health promotion programs is often disappointing.

When you’re faced with a situation where achieving a budget-neutral health promotion program would trigger push-back, your firm is better off absorbing most or all of the wellness costs.

The biggest hurdle is to get over the hump for those first 18 months or so.

A few years ago, company wellness fairs were all the rage. Now they’re making a comeback, with a slight twist.

In the past, the fairs often better served the provider(s) who came onsite than the needs of the hosting company or their staff. More lately, businesses have refined the planning of the events to serve in particular to launch or promote a wellness program.

To be successful, the events need to serve two purposes – improveing staff member education and building their enthusiasm to take part in the health promotion program.

To be certain you and your personnel get the most out of a wellness fair, it assists to be cognizant of the plusses and minuses – and some little touches that can mean the difference between a so-so event and a hit.

Health Fairs –  Double-edged sword

On the plus side, personnel received easy-to-grasp information on key wellness topics such as disease detection, symptom control and smarter medication practices. They also receive important services like free blood-pressure screenings.

On the down side, some professionals said the more newfangled events were more like “disease fairs” than “wellness fairs.” In other words, the tone was little too somber and workers weren’t particularly tuned in because they weren’t enjoying themselves.

Health Promotion program advisor Dr. Ron Goetzel believes that the savviest firms strike a balance in their health fairs. Stick with the screenings, but also feature exhibitors who offer “lighter,” more enjoyable services. Examples -

o  A booth from a local health-food store

o  A chair-massage station

o  elder-care info from the AARP, or

o  A “complimentary medicine” info booth (e.g.,a chiropractor or an acupuncturist).

Offering incentives

In many cases, workforce still need an incentive to attend the fair and get the desired screenings, in addition to doing the fun stuff. Some real-life wellness programs that’ve worked -

o  A contest offering prizes to workforce who visit every station

o  quizzes and prizes based on info from different providers’ literature

o  flex-scheduling or time-off incentives for getting screened (e.g., a comp day or an extra afternoon off), and

o  cash incentives (as little as $20 and as much as $100) to people  who voluntarily take part in various screenings.

Medical research has long shown quitting use of tobacco at any age can improve a person’s health.

But a Duke Univ. shows that the group you could think would be the least likely to quit – individuals  over the age of 50 – might actually have the best odds for quitting through a use of tobacco cessation program.

Researchers tracked 573 older patients over 10 years. They found that just 16 percent of those who joined the smoking cessation program later returned to smoking.  Meanwhile, previous research has found young smokers who try to quit have a 35 percent to 45 percent relapse rate within two years.

Bottom line –   Given the aging worker population and the cost of retiree health care, you could want to keep trying with smoking cessation education for your older employees.

The corporations with the most cost-efficient healthcare programs are the ones that streamline the services staff members receive for both their physical and psychological health.

As a long-term goal, having your general health plan, employee assistance program (EAP) and health promotion program communicating regularly with one another about employees’ treatments is the single best way to reduce redundant or contradictory treatments, eliminate unnecessary claims and improve the quality of the plans for which you pay.

Let’s look at the relationship between your wellness program and your employee assistance program (EAP) to illustrate the importance of attacking health costs cross a broad front.

You can begin a health promotion program with a health risk appraisal and then, if appropriate, roll out a tobacco use cessation program or a weight reduction program.

But ultimately you want to be sure that your wellness provider works combined with your employee assistance program (EAP) provider.

Here is why –  It’s very common for an worker to contact the EAP because the individuals feels depressed about his or her weight. What you want is for the EAP provider to treat the employee’s depression and behavioral issues, plus you want the EAP to refer the worker to the wellness program to deal with the root cause of the problem – obesity.

The same thing goes with the relationship your health promotion program and your workers’ comp provider, STD and LTD providers, rehab individuals , and/or illness managers. You want all them talking to – and sharing data with – each other. When they’re not, it’s costing you money.

In general, the employers who achieve the greatest cost savings through their health promotion programs are the ones who overlap wellness with behavioral and occupational health issues.

Attempting to do more with less money? Here are three proven ways to align the dollars and cents of a health promotion program in your budget.

Common thread –  the way you prepare ?.” and control ?.” your budget for a wellness program is vital to its success.

1. Top-down health promotion budget

Depending on the size of your business and health promotion program, you may have full budget responsibility or might need to work with a C-level who has budgeting professionalise.

Regardless of the arrangement, you’re likely to face one of two distinct challenges –  a top-down budget or a zero-based budget.

A top-down budget is when you’re given a finite dollar amount and told to run the health promotion program within the limit. If that’s the case, here are three vital questions to ask -

o  Does this limit include money set aside for worker incentives and future initiatives?

o  Should we keep long-tenured wellness programs that keep going up in price, and

o  Does Benefits/HR have to deliver all education about the health promotion program, or is there additional funding to hire staff?

2.  Zero-based wellness budgeting

In zero-based funding, you submit to upper-level management an itemized list of the wellness programs/features you want and the cost of each. Best practices -

o  Rank wellness programs by priority (health-risk assessments must be at or near the top)

o  Indicate which expenses are fixed and which are variable, and

o  List ways to incorporate existing resources (like an employee assistance program program) for a better return on investment.

3. Estimating health promotion Return On Investment

On average, health promotion programs generally take at least 18 months to break even. After three years, you should see savings.

When not, it’s time to take a fresh look at the wellness program design.

Given the immense growth of wellness programs over the last two years, it was inevitable resistance would creep up among watchdog groups.

In Washington, lobbyists have spearheaded a push for Congress, the DOL and IRS to crack down on “punitive” health promotion programs.

Namely, the groups seek to limit wellness programs in which employees’ share of their health care costs are directly tied to their willingness to take part in a wellness program.

HIPAA’s non-discrimination rules prohibit corporations from building negative financial incentives for personnel with health risks.

For  instance, you can’t raise someone’s premium share because he or she smokes. What you are able to do is offer a discount if someone completes a use of tobacco cessation program.

Reason –  the law does allow for financial incentives to employees who willingly take part in health promotion programs.

The watchdog groups seek greater regulation to make certain incentives and discounts are used only as rewards for healthy behavior, not as a thinly veiled form of discrimination against high-risk staff.

A recent survey finds nearly 42% of employers with 200 or fewer staff have some sort of disease management (DM) program.

That’s a huge increase from four years ago, when just 28 percent of smaller corporations offered such health promotion programs.

There’s more to come, too. Fifteen% of respondents that didn’t currently have a disease management (DM) component to their medical plan hope to add one by 2011.

The highest-demand disease management programs are for diabetes, asthma and heart disease.

Source –  Small Corporation Benefits Survey, PDR Consulting Group, 9/1/2008.