Top 5 Reasons Why Businesses Need an Employee Wellness Program To Reduce Health Insurance Costs

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With the passage of Health Care Reform, there is increased interest in Employee Wellness Programs by employers striving to lower the profit-suffocating cost of offering Health Insurance to their employees. Health reform has clarified the incentives, both positive and penal that will be allowed by the Department of Labor. Surprisingly, there is wide latitude employers may use with incentives and penalties tied to Wellness Plan participation. There is mounting evidence that wellness programs can significantly lower health costs when implemented with proper incentives.

Here are the top five reasons:

#1: Decreased Health Care Costs

Although definitive studies have been difficult to quantify in the past, evidence is currently emerging that strong incentive wellness programs can significantly lower employer health care costs. The key to success lies in getting the participation of all employees. Significant financial incentives such as a $500 cash incentive for completing an evaluation, or significantly lowering contributions for participants who meet certain goals has proven to be cost effective.

#2: Increased Productivity

Healthier employees are productive. With the Great Recession still upon us, employees are being asked to be more productive than ever, just as business owners must be more productive with the resources they have to stay competitive. Keeping you human resources (people) in top shape with preventive maintenance is a common sense way to gain an edge on the competition.

#3: More Responsible Employees

It´s been proven that employees utilize medical care more efficiently when they have "skin in the game". In other words, people care more making smart choices when they have a financial stake in the outcome. Wellness Programs demonstrate to employees that the employer cares about their well being and that their actions have an impact on the company. The movement toward "Consumer Driven" health plans with higher deductibles that give employees a greater stake in their care are perfect partners for Wellness Programs. Employees easily see the advantage of becoming healthier and spending less on out-of-pocket costs.

#4: Reductions in Absenteeism and Sick Leave

This may seem to be common sense, but absenteeism and sick leave costs are significant and improving the health of employees is proven to lower the rate of absenteeism. Wellness Programs educate employees extensively as to avoid illness and often provide personal health improvement strategies that engage employees on a specific level that can reduce sick days for a large portion of the employee population.

#5: Intangibles

Although difficult to put a price on, employers implementing Wellness Programs report a surge in employee morale and loyalty to the company. When employees feel their employer is truly interested in their best interest, they tend to be loyal, hard workers in return. Reduced turnover and recruiting costs are also part of this equation, as a happier workplace results in less turnover.

Many companies that implement wellness tied to meaningful incentives are experiencing double digit decreases in health insurance costs and sick leave. Legal concerns about strong incentive-based wellness programs have been a deterrent to the adoption of programs by some companies. The Obama administration´s Health Reform guidance that permits and actually encourages tough requirements for wellness programs has reinvigorated the market for employer-sponsored wellness plans.

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    Effective July 1, 2010, ABS of VA will begin offering our clients free Section 125 Plan documents. If your company utilizes pre-tax salary reduction for benefit contributions, (and you should), your plan document must be complete and up-to-date. New regulations in 2009 required that the documents be amended and updated to maintain compliance. Let us know if you would like to take advantage of this offer to have us review your documents.

    If you are not yet a client or not sure if you have a Section 125 plan- contact us and we will be happy to guide you and take care of the details.

    This is just another example of how ABS strives to give you more value from your relationship with us.

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    We’ve developed this quick reference chart to help in your understanding of when various provisions of Health Reform take effect. As you can see, provisions affecting your Group Health Plan (GHP) must be included with your first contract renewal after 9/23/2010. Mandated changes for employers and health insurance carriers concerning coverage requirements and tax implications are slated for 2014.

    Locally, Anthem has agreed to immediately begin allowing currently covered dependent children to continue coverage to age 26. Optima Health is studying the regulation and has indicated it will make a decision soon on how it will implement this extension of coverage. In any event, it will become effective on your first renewal following 9/23/2010.

    We will continue to keep you updated as guidelines are issued by federal regulators. Please feel free to share this chart with your business associates and friends. Please call or email us with ANY questions.

    Insurer and GHP Reform Insurer and GHP Reform Tax Provisions
    Effective on or after 9/23/2010

    • Children covered until age 26
    • Lifetime limit restrictions
    • Annual limit restrictions
    • No pre-ex exclusion if under 19
    • Rescission prohibition
    • Standardized Benefit Summaries
    • Coverage of preventive care
    • 105(h) applicable to insured GHPEnhanced appeals process
    • Choice of PCP
    • OB/GYN services
    • Emergency services
    • High-risk pools
    • Reinsurance for pre-65 retirees
    Effective 1/1/2014

    • Increase to Wellness limits (30%)
    • Cost sharing limits
    • Prohibition on all pre-ex
    • Prohibition on annual limits
    • 90 day limit on waiting periods

    Employer Reform

    Effective 1/1/2014

    • Employer Mandate
    • Auto-enroll if >200 employees
    • Notification of Exchange
    • Free choice vouchers
    • Annual certification to IRS

    Individual Reform

    Effective 1/1/2014

    • Individual Mandate
     

    • 011-no OTC reimbursement from FSA
    • 2011-20% ineligible HSA claim
    • 2013-3.8% investment tax
    • 2013-0.9% FICA tax increase
    • 2013-$2,500 limit on HFSA
    • 2014-7.5% threshold to 10%
    • 2018-40% "Cadillac" tax
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