How can a wellness program help reduce costs?
Healthier employees translate to lower use of medical services, with an accompanying decrease in health-insurance-related costs. But quantifying that correlation is tricky.
We began our wellness program in 2004. It includes annual blood draws to screen vital indicators such as cholesterol levels, and the completion of an annual risk assessment. Each employee receives an assessment from a third-party administrator, along with annual goals that must be met to receive a wellness program discount. For the first year or two, there was a slight increase in employee use, as employees went to their personal physicians for consultations and treatment of conditions uncovered by screenings. But results were amazing: A number of screenings uncovered potentially serious conditions that were caught early and treated. The success of the program hit a high point in 2008 when the health plan experienced an unheard-of premium equivalent increase of 0 percent due to the favorable claims experience.
A decrease in health insurance expenses is one way to quantify success. Another is gains in employee productivity, potentially measured by decreases in unscheduled days off due to illness. No matter how you measure it, employees’ well being is definitely a byproduct of a wellness initiative.
The PPACA allows for premium discounts up to 30 percent that employers can offer for successfully participating in a wellness program. The current limit on discounted premiums as set forth under HIPAA is 20 percent. Another potential impact of PPACA is the award of grants to small employers that implement comprehensive workplace wellness programs post-enactment of the legislation.
How can a business determine if offering an employer-sponsored health insurance program is a smart option?
It boils down to two issues: Can the company afford it, and what is the competition doing? This is one of the most important cost/benefit analyses a company will take part in over the next couple of years. Under the PPACA, beginning in 2014, employers will have to determine whether to provide employees with health insurance or pay the government-imposed penalty. If a company is in growth mode, stock price is high and it is flush with cash, it might be more inclined to keep providing coverage. But if a company is struggling, that difference in cost outlay for one benefit might be a deal-breaker. There are other issues that come into play, for example, what are other local companies in your industry doing? The fact is, offering health insurance coverage may no longer be the recruitment and retention carrot it once was if health care becomes much more widely accessible.
Robert DiCosola is executive vice president of human resources/training and development at Old Second National Bank, Aurora, Ill. Reach him at (630) 906-5546 or [email protected].
