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


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.

In his career, Gregg has developed specialized expertise in “consumer-driven” and high deductible health plans with HSA and HRA strategies, and sold the first HSA plans issued in Virginia through Assurant Health. He is an expert in analyzing plan design data and has served as account executive for national accounts such as Coca-Cola Enterprises and Tenet HealthCare. Gregg utilizes a strategic approach to establish goals based on each client’s unique culture and competitive environment, and measuring results against jointly established criteria. Gregg Kennerly is a Principal at Advanced Benefit Strategies of Virginia, LLC.
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