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BENEFITS OF AN EMPLOYEE WELLNESS PROGRAM

Consistent with findings in previous years, poor employee health habits are the top challenge that employers face in managing their health care costs in 2013.20 Wellness programs remain the primary tool that employers use to target poor employee health, and the use of wellness programs is trending upward. According to a recent MetLife study, the number of employers that offer wellness programs has grown significantly, from 27 percent of employers in 2005, to 44 percent of employers in 201121 — a percentage that will only increase. In addition, of those offering a wellness program, 73 percent believe the program is effective in improving employee health.22

Most wellness programs are designed to improve employee physical health and come in a variety of forms, including:

  • Weight loss programs
  • Biometric screenings
  • Smoking cessation programs
  • Lifestyle or behavioral coaching
  • Gym membership discounts
  • On-site exercise facilities
  • Classes in nutrition or healthy living
  • A wellness newsletter

While larger employers are more likely to offer a wellness program, smaller employers are beginning to offer them as well.

Offering wellness programs is one thing; getting employees to participate is a challenge in itself. Overall, there is low interest and participation in wellness programs.23 To increase employee interest, employers primarily use frequent communication through emerging technologies. More and more, employers are interested in using social media tools, online discussion groups and gaming software to promote and support wellness programs.24 Competition among employees, usually tracked through gaming software, and employee testimonials are also increasing in popularity among employers as a way to stimulate wellness program interest.25

In addition to communication and technology, employers need to creatively incentivize employees to maximize wellness program participation. Although incentives come in many forms, employers are turning more toward financial rewards. Since 2009, the use of financial incentives or rewards among those companies offering a wellness program increased exponentially (36 percent in 2009 versus 61 percent in 2012 — anticipated to increase to 82 percent in 2013).26

Other incentives gaining in popularity include using penalties (e.g., an increase in premiums or deductibles if an employee does not participate in a wellness program); rewards based on smoker or other biometric status; and rewards based on completion of a health risk assessment or annual physical exam.27 PPACA allows wellness rewards in the form of premium differentials of up to 30 percent (50 percent in the case of differentials based on tobacco use), so long as certain requirements are met. Employers seeking to implement wellness programs that offer rewards based on health factors should consult with outside counsel, since such programs may face challenges under HIPAA, the Americans with Disabilities Act and state law (including smoker protection laws).

Employers should also consider offering dependent participation in employee wellness programs, since much of the cost in a typical employer health plan is directly tied to an employee’s dependents (primarily the employee’s spouse) and since spouses can be key influencers of the overall family health environment.

Finally, while cost-containment may be the primary reason to offer a wellness program, there are other reasons to offer one. Those include improving the health of employees, reducing absenteeism, and improving employee morale and productivity. Whatever the reason, employers should consider making wellness programs an integral part of their overall health and welfare strategy going forward.



20 Ibid, Page 17, Figure 17.

21 “10th Annual Study of Employee Benefits Trends: Seeing Opportunity in Shifting Tides,” MetLife, (2012).

22 “The Kaiser Family Foundation and Health Research & Educational Trust Employer Health Benefits 2012 Annual Survey,” Page 219, Exhibit 12.8 (2012).

23 “Performance in an Era of Uncertainty: 2012 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care,” Page 18, Figure 18 (2012).

24 Up from 17 percent in 2011 and anticipated to increase to 36 percent in 2013. See “Performance in an Era of Uncertainty: 2012 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care,” Page 24 (2012).

25 Ibid

26 Ibid, Page 25

27 Ibid, Page 25, Figure 27.

This material was created by National Financial Partners Corp., (NFP), its subsidiaries, or affiliates for distribution by their registered representatives, investment advisor representatives and/or agents. This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP nor its affiliates offer legal or tax services.