Benefits and Compensation

Wellness Programs: The Key to Saving on Healthcare Costs

Every employer is concerned about health care. If you’re looking to reduce the costs associated with these benefits, turn to your wellness programs, says Mari Ryan, CEO and founder of AdvancingWellness in Watertown, Massachusetts.

Ryan, who recently shared her expertise in a webinar presented by BLR® and HR Hero®, is a certified Worksite Wellness Program consultant and has published articles on worksite health promotion in the American Journal of Health Promotion and Occupational Health and Safety Magazine.

Individual worker health in the United States continues to decline. Among the troubling statistics Ryan presented were the following:

  • Waist circumference has increased by 54.2% from 1999 to 2011.
  • Real indirect costs for heart disease are estimated to increase 61% between 2010 and 2030.
  • One-third of U.S. adults experience weekly sleep difficulties—and insomnia alone costs U.S. companies $64 billion a year in lost productivity.
  • Stress is on the rise, with Millennials coming of age as America’s most stressed generation—39% say their stress increased in the last year.

These trends are certain to make themselves known in your company’s benefits expenditures, not to mention in lost productivity and absenteeism. Just how much is it costing your organization?

Need to improve your base pay structure? Start on December 17, 2014, with a new, interactive webinar, How to Design Base Pay Programs: What Works and What Doesn’t. Learn More

The Costs

The costs of your benefits plan are greatly determined by the health risks and behaviors that occur among your employees. Some of the risks and behaviors that will increase cost are:

  • High levels of alcohol consumption
  • High blood pressure
  • Body weight (i.e., a body mass index (BMI) greater than 27.5)
  • High cholesterol
  • Existing medical conditions (e.g., heart disease, cancer, or diabetes)
  • Infrequent physical activity
  • Tobacco use
  • A poor perception of health

Depending on the prevalence of these factors in an employee’s life, the employee can be categorized as low, medium, or high risk. The difference between high and low risk in terms of cost is like night and day, as shown in statistics provided by Ryan. An employee aged 19 to 34 with low health risk has an annual medical cost of $2,767; an employee in the same age group with high health risk incurs an annual medical cost of $7,968. The difference becomes even more dramatic in older age groups: An employee between the ages of 65 and 74 with low health risk will cost only $7,188 annually, while a high-risk employee of the same age will cost $18,556.

In order to minimize costs, the goals to strive for are simple: Reduce and/or eliminate the wellness risks in your organization, improve health status, prevent or delay the onset of chronic diseases, and perhaps most overlooked, keep your healthy people healthy!

Learn approaches to designing the base pay program that works best for your organization. Join us December 17, 2014, for a new interactive webinar, How to Design Base Pay Programs: What Works and What Doesn’t. Earn 1.5 hours in Human Resource Certification Institute (HRCI) Recertification Credit. Register Now

Do Wellness Programs Work?

It all depends on how well-planned and effective your program is. Ryan says to be sure you’re asking the right questions when you set out to create a wellness initiative—perhaps instead of asking the traditional question of “What can we do to help people change their behavior?”, shift your perspective slightly and ask “How can we create the conditions in which people will motivate themselves?”

But once you implement a highly effective health and wellness program, the results are very favorable. Citing research from Towers Watson, Ryan says that companies with effective programs not only have lower medical costs per employee but also better financial outcomes overall—higher market premium and shareholder returns, higher revenue per employee, and lower cost trends.

In tomorrow’s Advisor, more from Mari Ryan on specific cases when wellness programs saved on healthcare costs, plus we announce the timely webinar, How to Design Base Pay Programs: What Works and What Doesn’t.