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Skyrocketing health insurance premiums were ruining the bottom line of Coral Chemical, a $20 million, 90-employee company in Zion, Ill. "The only way to control costs was cut benefits or make the employees pay more," says CEO John Schueneman, who couldn't bring himself to do either. "I was in a horrible losing situation for years."
Schueneman eventually found a different fix. First he switched to a high-deductible health plan. Then he adopted his insurer's wellness program, offering free health screenings and group walks to his employees. Schueneman's premiums now are 4% below where they would be without the program. "We've been able to get employees thinking about health, offer really rich benefits, and still save money," he says.
Wellness programs run the gamut from employer-sponsored group fitness activities and healthy cafeteria food to formal activities linked to an insurance plan. Destiny Health, Schueneman's carrier, has offered a wellness program bundled into its high-deductible insurance plan since 2001. UnitedHealth Group is testing a high-deductible plan paired with a wellness program for companies with 100 to 1,000 employees and plans to offer it to smaller companies in 2008.
High-deductible health plans, however, have their critics. These programs pair deductibles of up to $11,000 for a family with lower premiums. Employees can pay their health-care bills out of individual health savings accounts (HSAs), to which they or their employer may contribute money tax-free. But unless a plan is linked to an active wellness program and proper education, an employee may end up with debt rather than savings. And wellness programs need significant incentives and active leadership to be successful.
Done well, though, the combination can sharply lower expenses. Companies sponsoring wellness programs saw a 30% reduction in medical and absenteeism costs within 3.6 years, according to a 2005 survey by industry publication The Art of Health Promotion. And the Wellness Councils of America (WELCOA) found a $24 return for every $1 a small company spent on a comprehensive program.HABIT-FORMINGEven if you don't sign on to a formal program, adopting some of its attributes can help. You may not see lower premiums, but you will see improved productivity, morale, and retention—and, of course, healthier employees.
You can get results by spending as little as $5 per employee per year. Liz Hagan Kanche, wellness program manager for American HealthCare Group, a health benefits consultant, says $100 per employee annually is enough for a comprehensive program.
Any wellness program should begin with building good habits and awareness among employees. Offering flexible schedules and nutritious snacks in your lounge instead of chips and soda, and creating a nonsmoking environment, are smart first steps. "You have to start somewhere," says WELCOA President David Hunnicutt. "A successful program builds awareness from employees and grows slowly." Thunder::Tech, a 20-employee, $1 million marketing agency in Cleveland, offers a sensible breakfast as well as fresh fruit and granola in its cafeteria. A nap policy allows employees a 20-minute snooze on office couches at any time. President Jason Therrien says he invests about $10,000 a year in healthy food and group fitness activities for employees, but estimates he saves triple that amount on productivity, morale, and retention. "You lead by example," says Therrien. "We're on the fifth floor of our building, so if we come in from a meeting together, rather than taking the elevators I just keep the conversation going and head for the stairs."
Next, invest in health risk assessments and screenings for workers. About 4% of people who undergo an assessment will learn of a previously unknown risk, says Robert Moffatt, director of health management at the nonprofit Council of Smaller Enterprises in Cleveland, a group that helps small businesses find health insurance. Organizations such as the Mayo Clinic, Axia Health Management, and WebMD Health offer tests online. Combine those with a health screening at a local hospital. "Normally an individual would have to pay a co-pay every time they saw a doctor for these sorts of tests," says Ronald Z. Goetzel, director of the Institute for Health and Productivity at Cornell University. "But an employer can eliminate that barrier."
Still, Hunnicutt says, only 10% of employees will take the tests voluntarily. But that number can jump to 70% with simple incentives, such as a couple of free movie tickets. You'll also have to be careful about privacy. The Privacy Rule of the Health Insurance Portability & Accountability Act of 1996 protects the information collected in health risk assessments. Unless 50 or more people participate, the aggregate results of the assessments, which are often used to shape wellness programs, cannot be shared with employers. You can get around the issue, however, if employees grant permission for an aggregate report. They can also work directly with the assessor without an insurance company or employer seeing the information.
Next, educate your employees. The 15-person Bangor Letter Shop, a small print shop in Bangor, Me., brings in a health counselor twice a month. She gives a short presentation to the entire company and then meets individually with employees about specific concerns. At Logical Information Machines (LIM), a software design company in Chicago, employees attend seminars on stress management and nutrition. Another option: subscribe to health-care newsletters from WELCOA, The Mayo Clinic, or Personal Best.MONEY TALKSWith those basics in place, it may be time to add a high-deductible plan. Insurance carriers that marry such plans with a wellness initiative offer their own incentives. Destiny will guarantee a 3% premium increase—compared with the typical 25% to 30% increase of a traditional insurer—if an entire company participates in its Vitality program. Vitality also has reward points for healthy behaviors, such as quitting smoking or losing weight, which can be redeemed for prizes from iPods to vacations. The first year LIM participated in the program, its monthly premium was within a dollar of a traditional plan for family coverage, says Terry Gray, LIM's chief financial officer. By 2005 the premium was 30% lower than it would have been otherwise. "Traditional plans could not hold up against the savings in this plan," says Gray.
Schueneman admits that his employees were lukewarm about the Vitality plan at first. So he tempted them with cash. After giving away $12,000, about 60% of employees participated and he saved $24,000 on his premiums. Schueneman funded more wellness programming, contributed to employee deductibles, and still had net savings.
The first year the Bangor Letter Shop switched to a high-deductible insurance plan, the company saved $11,000, says Irv Marsters, president of the $2 million business. To ease the burden for employees whose deductibles increased, Marsters paid claims up to $500, and still collected some of that $11,000 for his own pocket. Bangor now spends about $2,300 annually on its wellness program, or about $168 per employee per year. "We had an employee who hadn't seen a primary care physician in six years, but she was flagged for high blood pressure during her health risk assessment, so she went to the doctor," says Marsters. "The doctor discovered colon cancer." The employee received treatment and is recovering, which goes to show that what is good for your employees truly is good for your company. By Amy S. Choi