For many companies, medical costs consume 50% or more of corporateprofits.2
Growing Popularity ofWellness ProgramsIncreasingly, companies embrace wellness and preventive carebecause of rising health care costs. The cost of family health care coveragehas nearly doubled since 2001 and according to the Kaiser Family Foundation,the annual premium for family coverage was 9 percent higher ($15,073) in 2011.1 For many companies, medical costsconsume 50 percent or more of corporate profits and chronic diseases accountfor many health care issues and costs. 2 In fact, the indirect costsof poor health (e.g., absence or presence at work) can be two or three timesthe direct medical costs.3With employers desperately trying to reduce medical costs,wellness programs are touted as a useful tool for curbing these escalatingexpenses. Considering that at least one-fourth of the health care costsincurred by working adults are attributed to modifiable health risks, such astobacco use, diet, and lack of exercise, 2 proactive approaches aremore widely accepted as both cost-effective and necessary for a successfulbenefits program.While wellness initiatives are growing in popularity, notevery company has fully embraced these types of initiatives. According to theAflac WorkForces Report, seven in ten (70 percent) organizations do not have acompany-sponsored wellness program. As is often the case with bold newconcepts, many companies are not convinced of its effectiveness or they limitthe scope and implementation of their wellness programs. Profile of Company-Sponsored Programs36% of small companies have a wellness program.18% of mid-size companies have a wellness program.47% of large companies have a wellness program. Benefits decision-makers say that the primary reason their organizationmaintains a wellness program is to reduce health care costs. In fact, 59percent of companies overall agree that wellness programs can decrease healthcare costs. Improving employeesatisfaction is the second reason companies maintain wellness programs. On theother hand, businesses that do not offer wellness programs say they do not haveenough resources, they believe employees lack interest and they cannot determinereturn on investment (Chart 1). CHART 1 – TOP REASONS COMPANIES DON’T OFFER WELLNESSPROGRAMS*· I don’t have the time or resources to maintain awellness program (48%).· I have lack of interest from employees (37%).· I can’t determine ROI on wellness program (22%).· I can’t sell the value of a wellness program toexecutives (16%).· I don’t believe wellness programs have an impact(8%). *Participants could choose more than one option for thisquestion. The ROI of WellnessThe majority of businesses maintaining a wellness programsay they do so to reduce health care costs. However, nearly a quarter (22percent) of businesses do not offer wellness programs because of the difficultythey have determining return-on-investment (ROI). As more companies use wellnessinitiatives, more evidence-based outcomes and increased visibility of the truereturn on such programs is revealed. For example, a large-scale review of 42published studies of worksite health promotion programs shows the following:· An average of 28 percent reduction in sick days· An average of 26 percent reduction in healthcosts· An average of 30 percent reduction in workers’compensation and disability management claims· An average $5.93 to $1 savings to cost ratio.3The Aflac WorkForces Report found similar outcomes. Nearlyall (92 percent) companies with a wellness program agree that it is effective,and 47 percent of those say it is very or extremely effective. Only three outof ten (30 percent) disagree that they have been able to determine an ROI ontheir wellness program. Furthermore, 44 percent agree they are able to offerlower premiums as a result of their wellness program, and six in ten (61percent) agree they have a healthier workforce. The Influence ofWellness Programs on Employee SatisfactionSince benefits decision-makers say that improving employeesatisfaction is their second most important reason for offering wellnessprograms, the findings from the Aflac WorkForces report are particularlyimpactful. Workers who are offered wellness programs and take part in thoseprograms are significantly more likely to be satisfied with their job, feelpositively toward their employer, and consider their well-being betterprotected, compared to workers who aren’t offered a wellness program at all. CHART 2: The Influence Wellness Programs Have on WorkplaceAttitudes and Beliefs Driving EmployeeParticipationThe bottom line is that the success of any wellness programdepends entirely on the level of participation among employees. In fact, astudy by Towers Watson and the National Business Group on Health shows thatorganizations with highly effective wellness programs report significantlylower voluntary attrition than do those whose programs have low effectiveness(9 percent vs. 15 percent).4The 2012 Aflac WorkForces Report found that 56 percent ofcompanies agree that they have good employee participation in their wellnessprogram, and 21 percent disagree. The reality is that 42 percent of workers donot take part in company-sponsored wellness programs despite the apparentinfluence such participation would have on their attitude toward theiremployer. There is little question that workers could benefit fromwellness programs when you consider that 71 percent of workers agree they couldbe healthier if they exercised more regularly and 45 percent agree they don’teat as well as they should. When asked how their attitude toward their employer would beaffected if their company offered options to improve health and lifestyle, 28percent of workers said they would feel more satisfied and more loyal to theiremployer because they would feel their employer cared about their well-being.Nearly four out of ten (35 percent) would be happy to change their lifestylehabits if it meant they could lower their premiums. CHART 3 – SNAPSHOT OF WORKER HEALTH71% say they agree that they could be healthier if they exercised moreregularly. 45% say they don’t eat as well as they should.25% agree that they make poor food choices.26% agree that they rarely or never exercise.26% disagree when asked if they are healthy because they exerciseregularly and eat right. According to the Aflac survey, many workers have interest inwellness programs and are willing to participate. Nearly seven out of ten workers(69 percent) say they would be at least somewhat likely to participate inbiometric screenings.
EMPLOYEES’ MOST DESIRED WELLNESS INITIATIVES*1. Biometric Screening (69%)2. Health Fair (68%)3. Health-Related Seminar (67%)4. Company Fun Run (48%)*Participants could choose more than one option for thisquestion.
Best Practices: Developing a Wellness Program That DrivesParticipation and Results
One of the best ways for HR and company leaders to improvewellness programs is to take cues from those companies that have paved the wayand can offer best practices when it comes to developing and executing theprogram. The Carrot or theStick: Offering Employee IncentivesSome employers, especially those with highly developedwellness program experience, emphasize outcomes rather than participation.These progressive employers are looking at outcomes-based incentives. Forexample, instead of giving traditional incentives (e.g., $50 to join a gym) theyrequire that employees pass biometric screenings to receive discounts on theirhealth insurance premiums. Those who don’t meet the necessary biometric levelshave to enroll in a wellness program and after achieving a healthy body massindex and other biometric numbers, they can be eligible for discounts. The Aflac report found that ofcompanies that do offer a wellness program, nearly one-quarter (24 percent)offer incentives for lifestyle change and 12 percent impose penalties foremployees who choose not to make healthy lifestyle choices, such as not participatingin wellness screenings. Workers show their support for these types ofincentives. More than half (65 percent)of workers agree that it is fair for employees to receive reduced premiums orincentives to become healthier. Market, Don’t JustCommunicateIt may be that the ability to communicate employee benefitsin a way that drives participation increases perceived value and fosters acompanywide sense of trust is the most underestimated challenge for businessestoday. The Aflac WorkForces Report revealed that while 92 percent of employersbelieve they communicate somewhat, very or extremely effectively, nearly half(45 percent) of employees say they receive too little communication from theirHR departments about employee benefits.Promoting a culture of well-being and health takespassionate and persistent leadership from the C-level to those with “wellness”in their job description. It is imperative that workers are made aware of awellness program, its benefits and payoffs. One way to achieve the goal is tomarket to workers using outlets and venues that are most popular to them. More and more employers are turning to social media toreinforce healthy behaviors. For example, Telecom carrier Sprint recentlylaunched its first nationwide employee-fitness competition. Thousands of itsemployees used interactive social media tools to form teams, lose weight,exercise more and ultimately become healthier. Companies ought to beginintegrating new and digital media efforts into the marketing of wellnessprograms to ultimately drive employee participation. Build HolisticWellness Programs, Including Financial HealthEstablishing a healthy workforce requires thinking of notonly the physical health of an employee, but also the other factors thatinfluence their health and well-being. Traditionally, HR departments havesought narrow health solutions. Arguably, they have addressed physical healthconcerns with limited options and/or programs to do so, and many too oftendisregard the important role that financial security can play in overall employeewellness. The impact of the current economic landscape, combined with a generallack of basic understanding of financial principles, has left many Americanworkers in fiscal distress and high debt. In fact, the Aflac WorkForces Reportfound that only 8 percent of workers strongly agree that their family will befinancially prepared in the event of an unexpected emergency, while 51 percentare trying to reduce debt. Nearly six in ten workers (58percent) don’t have a financial plan in place to handle the unexpected, and thesame amount either don’t consider health insurance a part of their financialplan or consider it a minor part. Clearly, many Americans are in a difficultfinancial position and that often means turning to their employer for help. Employers are also feeling the effects of worker anxiety.Individuals with stress caused by large outstanding debts and unstablefinancial situations report incidences of ulcers and digestive problems;migraine and other headaches; and anxiety, depression, and even heart attacksat rates between two and three times the national average.5 Thisstress translates into higher health care costs and other negative effects onthe workplace. Financially-stressed employees experience higher absenteeism andturnover, lower levels of job satisfaction and lower productivity.6 Companies are also experiencing higher productivity lossesdue to distracted workers. One in five (20 percent) workers who haveexperienced a personal issue that affected their ability to get their work donesaid it was due to a health issue specifically. Additionally, the Aflac studyfinds that nearly half of companies (43 percent) estimate their averageproductivity loss stemming from employees’ concern over personal issues isbetween 11 and 30 percent. Productivity losses related to personal and familyhealth problems cost U.S. employers $1,685 per employee, per year, or $225.8billion annually.7The wellness model that successful companies have embraceduses a holistic approach and takes into account employees’ physical health, aswell as the benefit of empowering employees to become savvy savers, spendersand investors. These employers understand that by improving the financialwellness of employees, they are also creating an environment for better overallemployee wellness. ConclusionWhile many companies are looking to cost sharing,higher-deductible medical plans, risk rating, and health savings accounts, theseapproaches often just shift costs. Effective wellness programs and preventivemeasures are a long-term answer for keeping employees healthy, productive andsatisfied. With the many advantages to building a wellness program focused onproactive health management, there is significant reason to believe thatinvestments in wellness and health of a company’s most important asset — itsworkers — can have a tremendous impact on the bottom line. 1Kaiser Family Foundation (2011), Employee Health Benefits 2011 Annual Survey, <http://ehbs.kff.org/pdf/2011/8225.pdf>, accessed on March 28, 2012.2Vermont Department of Health, “WorksiteWellness,” April 2007, <http://healthvermont.gov/family/fit/documents/WorksiteWellness_factsheet.pdf >, accessed on March 28, 2012.3Partnership for Prevention (2012), “WorksiteHealth,” <prevent.org/Topics/Worksite-Health.aspx> accessed on March 28, 2012.4Leonard Berry, Ann Mirabito, andWilliam Baun, Harvard Business Review,December 2010, “What’s the Hard Return on Employee Wellness Programs?” <http://hbr.org/2010/12/whats-the-hard-return-on-employee-wellness-programs/ar/1>, accessed on March 23, 2012.5Aversa, Jeannine,“Stress Over Debt Taking Toll on Health,” The Associated Press, June 9, 2008,cited by LifeBenefits inarticle at <http://www.lifebenefits.com/lb/pdfs/F62382-28.pdf>, accessed on March 23, 2012.6Minnesota Life, 2010, “FinancialWellness: Tuning in to the Total Health Model,” <http://www.lifebenefits.com/lb/pdfs/F62382-28.pdf>,accessed on March 23, 2012. 7W.F. Stewart, J.A. Ricci, E. Chee, and D. Morganstein, 2003, Journalof Occupational and Environmental Medicine, “Lost Productivity Work Time CostsFrom Health Conditions in the United States: Results From the AmericanProductivity Audit,” December 2003, Vol. 45, Issue 12, pp.1234–1246, <http://journals.lww.com/joem/Abstract/2003/12000/Lost_Productive_Work_Time_Costs_From_Health.4.aspx>, accessed onMarch 23, 2012.
