Dos and Don’ts When Linking Premiums to Wellness

23 Aug

Spurred along by large-scale health care reforms, wellness incentive programs have grown significantly in popularity over the past several years. Rising premiums and mandated extension of coverage has led employers to pursue cost savings through proactive talent management with health-based incentives. According to the Society for Human Resources Management, spending on wellness incentive programs has doubled over the past four years. Corporations are expected to spend an average of $521 per employee on wellness incentive programs in 2013, up from $460 in 2011 and $260 in 2009.

With such a surge in popularity, many companies are looking to adopt their own individualized initiative that links wellness to premiums. Navigating such programs can be confusing, however, leaving many employers at a loss on where to begin. Here are a few dos and don’ts for employee wellness programs.

Do:

Begin With Screenings
The first step to any wellness plan is to assess the current health of employees. This can be achieved through an initial checkup with a general practitioner. Doctors can measure weight, cholesterol, and blood pressure during these visits, giving staff members a general overview of their health. By using these results as a benchmark, it will be much easier to track individual progress made by workers.

For example, employers can extend incentives to those with high cholesterol that focus on reducing bad cholesterol and raising good cholesterol. On the other hand, those with good cholesterol readings can be encouraged to improve their health in other ways.

Link Wellness to Incentives
Once health assessments have been completed, an employer should set up incentive-based programs that reward improvements in health. One of the most popular reward systems is to decrease premium payments when health goals have been reached. According to the National Business Group on Health and Fidelity Investments study, 61 percent of employers offered reduced premium rates to employees who improve fitness levels.

A popular way to incentivize employees is to set up group or individual weight-loss programs. When employees reduce their weight by 10 percent, for example, they can become eligible for lower premiums, cash rewards, gift cards, or other savings. These measures spark motivation and drive to become more fit in the long and short term.

Communicate With Employees
Regardless of the benefits of a wellness program; it is likely that some staff members will resist the changes. It might not sit well with some who feel their personal life and health is beyond the purview of their employer. To counter negative responses and bad publicity, it’s important that executives or supervisors provide a thorough explanation of the plan and how it can positively affect workers.

Executives should hold companywide meetings to explain the plan in full and encourage questions from attendees. It is equally important to provide written explanations of the plan for team members, whether that means handing out physical packets of information or sending electronic versions by email. Supervisors and HR professionals should welcome input from staff. Opening the lines of communication can cut down on resistance and resentment.

Don’t:

Focus on Penalties
It is likely that many staff members will engage in a wellness program to save them money. However, staff should always feel free to opt out of fitness programs without penalty. Yet a Georgetown study found that some companies have chosen to create plans that work much differently from others.

The “Premium Incentives to Drive Wellness in the Workplace” report revealed that some employers are instituting programs in which deductibles are initially set at high rates. For example, companies have created programs where deductibles are first raised from $500 to $2,500. Workers can then participate in the program, and when they hit certain goals, their deductibles are decreased by $500 at a time.

This may be somewhat effective, but employers should expect heavy resentment among staff over increased rates.

Limit Access to Health Care
Another outcome of poorly developed programs is limited access to health care. When individuals have high deductibles and premiums, they may be less likely to visit the doctor for routine checkups or preventative care. An employer may not be directly stopping employees from visiting a physician, but such high costs may prevent individuals from seeking medical help when they need it.

Limiting access to health care will not only affect employees, but may result in higher absenteeism and illness among staff, costing a company money.

Discriminate Against Employees With Preexisting Conditions
When developing incentive programs for wellness, employers should be careful not to discriminate against workers with preexisting conditions. The Georgetown study cited one such example—itself a warning to employers:

At an unnamed company, a woman with Type 1 diabetes was unable to reach the Body Mass Index standards set forth by her company. Although she had been exempt from the program while pregnant, after the birth of her child, her employer reenlisted her in the weight-loss program. Her doctor, however, advised her not to lose any weight because of her issues with hypoglycemia and other medical troubles related to diabetes.

Her employer refused to remove her from the program, and as a result of her inability to participate, her premiums shot up from $175 per month to $320 per month. Programs like these are not only discriminatory, but may result in legal complications for a company.

When developing a wellness program linked to premiums as part of a human resources solution, it’s important to remember that employees should come first. Reducing health care costs will undoubtedly benefit a company, but in order for such a program to succeed, staff should always feel welcomed by a program rather than penalized or excluded.

On a related note, remember that the Patient Protection and Affordable Care Act’s (PPACA) individual mandate will go into effect on January 1, 2014. Prepare your business by visiting SageCanHelp.com to learn how.

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