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By: Michael A. Schroder When the suggestion of a wellness program is presented to an employer, an expected response might sound something like this; “Where is the money going to come from? Our health insurance premiums are going up 30% this year!” How about the employees response when the suggestion of undertaking a healthier lifestyle is delivered at the workplace; “You got to be kidding me, when will I have time to do these activities, find this food or even think for one minute about myself? This job already has all my time and energy.” What would happen to these responses if the idea of a monetary reward were introduced into the dialogue? How about; “Run that by me again, I can reduce my health benefit costs by how much with a wellness incentive program?” Because of several factors including double digit premium rate increases, loss of control under healthcare reform and innovative health insurance programs that return dollars when health care costs are reduced, wellness programs coupled with financial incentives are becoming all the rage. Why not, they provide a great opportunity for both employer and employee to work together and reduce health care expense for each. How Does It Work? Most wellness programs typically begin with a round of tests to establish a baseline of health for each employee. Tests for cholesterol, blood pressure, diabetes, body mass index and smoking are undertaken. Standards or benchmarks from national data banks like the Institute of Health or Center for Disease Control are then applied to the employee scores. The test scores and the range of acceptable levels will be used to measure the employee’s progress toward improving their health or wellness. To assist the employee’s efforts, wellness programs offer resources like on-line dietary programs, exercise classes, smoking cessation programs and other health improvement concepts. Not surprisingly, the objective of any wellness program is to encourage a healthier employee population. The challenge or obstacle has been, however, employee participation. Despite lots of fancy bells and whistles like on line yoga or free use of a company work out facility, most studies show less than forty percent of employees actively participate in an employer sponsored wellness program. Based on this reality, the fundamental objective of any employer’s wellness initiative must be employee participation so that improved employee health has a chance of being satisfied. Otherwise, the cost of the wellness program becomes a frivolous expense that comes under attack. There is no question a company’s health costs can be reduced with an employee population that is healthier. There is also no question wellness can improve an individual’s health. Studies also show benefits of improved employee health include increased morale, loyalty, productivity and reduced absenteeism. Put in dollar terms, employers receive an average of $3.48 back in reduced health care expense for every dollar spent on employee wellness. Considering almost 90% of all health care costs are preventable, these dollar estimates appear conservative. Putting this all together, any employer focused on reducing its employee health benefit spend would be well advised to find the answer to the following question; “How do you improve employee participation in a company sponsored wellness program?” Incentives and Employee Participation Wellness program incentives range from recognition for participating in the company volleyball team to a monetary bonus for not smoking. Incentives can also include contributions to a health care savings account, merchandise awards (e.g., mugs, t-shirts, etc.), extra time off from work or product discounts. A common incentive for wellness score improvement is discounted health insurance premiums or employee deductible obligations. Not surprisingly, when savings on health insurance premiums are realized, the employer is motivated to encourage employee health. Of course, an employer requires a health insurance program that returns premium savings for improved employee health if a return is desired for the employer’s wellness investment. Not all health insurance products deliver this return on investment. It only takes a couple 15% renewals from the local fully insured product to discourage an employer from throwing more money into their wellness program. Why spend money for improved employee health if the lower claim costs inure to the exclusive benefit of the insurer. This is why most wellness initiatives are seen in the self- funded marketplace and not with fully insured employers. There are also insurance programs that offer a return on the wellness investment through innovative risk sharing beyond a self-insured retention. An example is Roundstone’s Mid Market Med program where the idea of wellness and incentives is elevated to another level. The Mid Market Med program offers risk pooling to medium sized employers with 50 to 1000 employees through the use of a group captive facility. The group captive serves as a reinsurer to a licensed AM Best insurer that issued policies to each employer. All participants in the group captive must institute a wellness program. Employee participation in the wellness program is enhanced through incentives built into plan designs. The return on the employer’s investment is easily recognized by not only how the employer’s retained or deductible layer performs, but by way of the annual distribution from the captive’s reinsurance coverage. Last year, Roundstone’s stop loss group captive distributions averaged 12% leaving little doubt that the employers made a good choice in offering a wellness program with incentives for employee participation. Conclusively, a healthy employee will save the employer and employee health insurance costs. Incentives such as reduced contributions by the employee for health insurance based on their improved wellness tests encourage employee participation. The employer’s investment in this kind of wellness program and the incentive dollars spent are best returned through an insurance program that tracks and returns dollars for reduced health care expenses. Who is Roundstone? Roundstone Management, Ltd. based in Westlake, Ohio is an insurance organization focused on the development, underwriting and servicing of insurance programs, including captives, rent-a-captives and other specialty insurance programs. Roundstone offers intermediaries and buyers an expertise in the captive and specialty program marketplace with an unbundled services approach. Michael A. Schroeder is President of the Roundstone organization. Mike offers more than twenty years of insurance industry management experience with responsibilities in the captive market, self insurance pools and trusts, publicly held insurance companies and the regulatory environment. Mike is also a member of the Workers’ Compensation Committee of SIIA.
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