Posts from — June 2010

In this recession economy and out-of-control worker debt, many companys who don’t have automatic 401(k) enrollment have seen participation drop.

Here’s how one small business in Arizona cleverly tied 401(k) education to employees’ other financial concerns. Rather than simply holding its usual 401(k) open enrollment education meeting, it held a “financial health fair.”

Stressed 401(k) importance

How it worked -  on the same day the company’s 401(k) provider sent a plan rep to discuss the retirement plan, the business also arranged for a licensed financial planner to speak to workers.

The financial planner went first. She started the session by pointing out that she wasn’t affiliated by any method with the management of the 401(k) plan.

That was vital both for the company’s legal protection under ERISA and for building trust with staff members. She then discussed why it’s vital for individuals  to participate in the 401(k) plan, and offered attendees budgeting tips and basic strategies for cutting their debt.

The financial planner’s talk cut to the heart of a few major issues that hurt both worker salary satisfaction and 401(k) participation. Numerous studies show that the No. 1 reason many individuals  avoid 401(k) participation is that they feel they can’t sacrifice any part of their entire paycheck and still survive financially.

The second part of the session was the standard 401(k) enrollment presentation from the vendor. End result -  Staff Members were more attentive and there was a noticeable uptick in both new 401(k) enrollments and salary contributions from already-enrolled workers.

The event was such a smash that the company plans to make the Financial Health Fair a regular part of 401(k) enrollment. While the financial planning advice is generic (the company may add third-party personal finance planning as a voluntary benefit in the future), it’s also timely.

The 401(k) signup appeal comes while the financial planning tips are still fresh in employees’ minds and they’re aroused to do something to help themselves.

Looking for incentives to get overweight employees to buy into a wellness program? A recent published study  suggests many employees are even willing to pay much - or all - of the cost themselves.

Roughly 35 percent of firms with wellness programs focus on providing staff members with convenient access to weight loss resources.

A poll of 1,352 employees by the Strategies to Overcome and Prevent Obesity Alliance found that many people  would gladly chip in for the cost of the program when they believed it would help them lose weight. What employees want -

• confidential support and counseling

• access to a professional nutritionist or fitness trainer, and

• on-site fitness programs.

Until recently, only big businesses were able offer such programs as part of their wellness benefits.   But the fastest growth of these programs in the last two years has been in smaller firms (sometimes with as few as 50 full-time employees).

The majority of firms split the cost with employees. Typically, employees pay up to about 25% of the cost. But some plans are fully worker paid.

Studies show that roughly five% of staff members drive about 80% of your health benefit costs.

No shocker here -  Smokers and obese staff members are the highest risk group for developing the sorts of chronic medical problems that send costs through the roof.

A small, but quickly growing number of corporations are taking desperate measures to avoid the costs associated with these workers. the step could be broken down into three levels of aggressiveness and potential risk/reward.

Level one -  the corporation installs a wellness program in which non-smoking staff members and those who commit to maintaining a healthy weight receive financial incentives that lower their share of monthly insurance premiums.

Level two -  the company disqualifies job candidates who smoke or are significantly overweight from hiring consideration. Alternatively, some firms require new hires to undergo a health risk (assessment|appraisal} as a condition of being hired.

Level three -  the corporation docks pay or fires workers who fail to control their lifestyle-related health risks. Example -  A corporation called Clarian Health has sent notifications to workers that starting in 2009, workers who smoke or chew tobacco will be charged $5 per paycheck.

Are these strategies legal? at level one, the answer is a qualified yes. health insurance portability and accountability act (HIPAA)s non-discrimination rules permit such incentives under several conditions.

Wellness incentives walk a fine line for HIPAAs non-discrimination rules. It is legal to reward workers for wellness participation but its illegal to punish those who fail to improve their health.

Example -  If an employee follows a weight-loss program in good faith but fails to lose weight, you can’t withhold the incentive. Likewise, when an employee fails repeated tries to quit tobacco use, you’re still legally obligated to give them another shot next year.

Also rememberthat, by law, the size of the reward or penalty under your wellness program cant exceed 20% of the total cost of coverage.

The other two are still largely uncharted waters in the courts. Businesss considering these policies should proceed with extreme caution.  Remember that the question of “can you do it” (i.e., is it legal?) is different from “should you do it?” (i.e., is it good business?)

Wellness programs come in all shapes and sizes. But regardless of plan design there are five common components that set the successful programs apart from the rest.

At their core, wellness programs require constant monitoring and periodic adjustments. the programs that get mediocre results are the ones that are left to run on autopilot. That’s why it’s crucial to -

1. Know thine enemy You’ve to know what’s driving your biggest claim costs on your healthcare plan - both among workers and their dependents.

2. Develop realistic expectations. With wellness, what an company gets will almost always depend on how much it spends, how well it plans and how well it sustains communications with participants and the vendor.

3. Maintain strong communications. the wellness programs that achieve the greatest success are those which are communicated aggressively from the get go and are sustained. Repetition is your friend when doing employee education.

4. Integrate wellness with other benefits. Real-life experience has shown that you ought to consider your worker assistance programs (EAPs) an extension of the wellness program. You should also consider issues like absenteeism, disability and worker’s compensation to be pieces of the wellness puzzle.

5. Practice what you preach. the key to ensuring staff member buy-in is for management to lead the program by setting a positive example. When senior managers are unwilling to participate and address their own health issues, don’t expect many workers to take the program seriously.

Here’s more evidence that wellness programs pay for themselves -

Over the last two years, one organization in five has seen meaningful betterment in employees’ health status - and started to stabilize their costs - according to one study.

Among firms noting improvement, almost two-thirds (64%) feature wellness programs offering incentives for healthier lifestyles.

Here are three twists on traditional incentives that’re getting good results -

1. Health coach outreach

A lot of firms require employees to work with an individual health coach for get a discount on monthly premiums or earn cash incentives.

The most common set-up -  on a regular basis, the worker must set up appointments with and report to (either over the phone or face to face) his or her health coach.

But experience has shown there’s often a high dropout rate.

People  get off to a excellent start - and they’re enthusiastic about the incentive - but once they realize there’s some effort involved, they lose interest.

The good news -  Firms have found a simple-to-arrange alternative that keeps  people  on the right track. Rather than requiring employees to contact the health coach, a growing number of organizations require participants to take calls from the health coach.

Potential result -  Fewer folks fall off the wagon. There’s no outreach effort involved, and the health coach keeps people  accountable.

2. Nutritional education/therapy

A newer - and cost-effective - feature in the battle against worker obesity -  offering an worker nutrition-education program administered by a professional nutritionist.

Just 11% of organizations - 18%  of large companys and 7.5% of small to medium ones - have such programs, as reported by SHRM’s most recent benefits survey.

Even fewer offer (via their EAPs) nutritional therapy for people  with eating disorders. But available data on these programs shows they ordinarily pay for themselves.

The stronger the firm’s emphasis on teaching healthy consuming, the faster and more dramatic the reduction in major health claims.

Common plan features -  lunch and learns featuring healthful food options, giving out nutrition-linked gift cards and extending obesity-prevention incentives to people ’s family members.

3. Aggressive smoking cessation

A small, but rapidly growing number of companys are taking more aggressive measures to avoid the costs associated with employees who smoke.

The step could be broken down into three levels of aggressiveness and potential risk/reward.

Level one -  the employer installs a wellness program in which non-use of tobacco staff members and those who commit to maintaining a healthful weight receive financial incentives that lower their share of monthly premiums.

Level two -  the business disqualifies job candidates who smoke from hiring consideration. Alternatively, some firms require health risks assessments as a condition of being hired.

Level three -  the company docks pay or fires staff members who fail to control their lifestyle-related health risks.

Example -  Clarian Health made news last fall for sending notice to staff members that as of Jan. 1,  2009, individuals  who smoke or chew tobacco would begin be charged $5 per paycheck.

Are these strategies legal? at level one, the answer is a licensed yes. HIPAAs non-discrimination rules permit such incentives within limits.

In a nutshell, it’s legal to reward workers who quit use of tobacco but illegal to punish those who try and fail. When an worker tries but fails to quit use of tobacco, you’re still legally obligated to give them another shot next year.

Additionally keep in mindthat, by law, the size of the reward or penalty under your wellness program can’t exceed 20% of the sum cost of coverage.

At levels two and three, it remains to be seen if such policies would hold up in court. Proceed with caution.

Wellness programs are a long-term investment. But how long should you wait for results?

Finance and the Chief Executive Officer (CEO) want hard numbers to show return on investment (ROI). and wellness ROI is tougher to calculate than, say, a 401(k).

18-month guideline

Recent studies have established some benchmark data on wellness ROI you can use as a guideline. It’s useful whether you already have a wellness program or are thinking about starting one.

It typically takes at least 18 months from the launch of a wellness program to see any causes your health care plan bottom line.

For a lot of firms, 18 months is the point at which workers’ improving health starts to cancel out the cost of sponsoring and administering the wellness program.

By and large, the long-term cost savings from a wellness program will be driven by how much you’re willing to spend. Generally, corporations get what they pay for - both in time and money invested.

As a rule of thumb, the typical cost to the business is about $3 to $5 per participating staff member per month. Within three years of launch, you must be seeing meaningful savings.

The average ROI tends to be about $4 to $5 saved for every dollar spent. So how can you manage the costs in the short-term to achieve the long-term savings?  and how can you maximize the long-term payoff?

Consider making wellness programs budget-neutral

For a lot of employers, the most effective way to manage the cost of a wellness program in the start-up phase is to make it a budget-neutral expense.

In other words, the program neither adds to your healthcare costs at the outset, nor lowers them. Example -  You plan to roll out a wellness program effective Jan. 1. the program will cost the business $5 per employee.

You can roll the $5 per month cost directly into the employee’s monthly share of their health care premium. In this age of continuous cost-shifting, most workers are used to seeing small increases in their monthly contributions each plan year.

Just make sure you’re not hitting folks with a large hike on top of that $5. Comparably designed wellness programs pay off about the same - meaning employees purchase in and participate at the same rate - whether they’re budget neutral or the company absorbs the cost.

But when staff members get clobbered by large-scale contribution hikes at the outset, they often resist the wellness program. the long-term ROI for these programs is often disappointing.

When you’re faced with a situation where achieving a budget-neutral program would cause push-back, your firm is better off absorbing most or all the wellness costs.

The biggest hurdle is to get over the hump for those first 18 months or so.

A few years ago, business health fairs were all the rage. Now they’re making a comeback, with a slight twist.

In the past, the fairs often better served the provider(s) who came onsite than the needs of the hosting business or their workers. More lately, businesses have refined the planning of the events to serve namely to launch or promote a wellness program.

To be successful, the events need to serve two purposes -  improveing employee education and building their enthusiasm to participate in the wellness program.

To be certain you and your employees get the most out of a wellness fair, it assists to be aware of the plusses and minuses - and some little touches that can mean the difference between a so-so event and a hit.

Wellness Fairs -  Double-edged sword

On the plus side, employees received easy-to-grasp information on key wellness topics like illness detection, symptom control and smarter medication practices. They also receive important services like free blood-pressure screenings.

On the down side, some specialists said the more newfangled events were more like “disease fairs” than “health fairs.” In other words, the tone was little too somber and workers weren’t namely tuned in because they weren’t enjoying themselves.

Wellness program consultant Dr. Ron Goetzel believes that the savviest firms strike a balance in their wellness fairs. Stick with the screenings, but also feature exhibitors who offer “lighter,” more enjoyable services. Examples -

• a booth from a local health-food store

• a chair-massage station

• elder-care info from the AARP, or

• a “complimentary medicine” info booth (e.g.,a chiropractor or an acupuncturist).

Offering incentives

In many cases, employees still need an incentive to attend the fair and get the desired screenings, as well to doing the fun stuff. Some real-life programs that’ve worked -

• a contest offering prizes to workers who visit every station

• quizzes and prizes based on info from different providers’ literature

• flex-scheduling or time-off incentives for getting screened (e.g., a comp day or an extra afternoon off), and

• cash incentives (as little as $20 and as much as $100) to people  who voluntarily participate in various screenings.

Medical research has long shown quitting smoking at any age can improve a person’s health.

But a Duke Univ. shows that the group you may think would be the least likely to quit - people  over the age of 50 -  might actually have the best odds for quitting through a use of tobacco cessation program.

Researchers tracked 573 older patients over 10 years. They found that just 16% of those who joined the use of tobacco cessation program later returned to use of tobacco.  Meanwhile, previous research has found young smokers who attempt to quit have a 35% to 45% relapse rate within two years.

Bottom line -   Given the aging worker population and the cost of retiree health care, you may want to keep trying with use of tobacco cessation education for your older employees.

The organizations with the most cost-efficient health plans are the ones that streamline the services employees receive for both their physical and mental health.

As a long-term goal, having your general health plan, worker assistance program (EAP) and wellness program communicating regularly with one another about employees’ treatments is the single best way to reduce redundant or contradictory treatments, eliminate unnecessary claims and improve the quality of the plans for which you pay.

Let’s look at the relationship between your wellness program and your EAP to illustrate the importance of attacking health costs cross a broad front.

You can start a wellness program with a health risk (assessment|appraisal} and then, when appropriate, roll out a tobacco use cessation program or a weight loss program.

But ultimately you want to be certain that your wellness provider works in conjunction with your employee assistance program provider.

Here’s why -  It’s very common for an staff member to contact the employee assistance program (EAP) because the individuals feels depressed about his or her weight. What you want is for the employee assistance program (EAP) vendor to treat the employee’s depression and behavioral issues, plus you want the employee assistance program (EAP) to refer the staff member to the wellness program to deal with the root cause of the problem - obesity.

The same thing goes with the relationship your wellness program and your workers’ comp vendor, STD and LTD vendors, rehab individuals , and/or illness managers. You want all them talking to - and sharing data with - each other. When they’re not, it’s costing you money.

In general, the companys who achieve the greatest cost savings through their wellness programs are the ones who overlap wellness with behavioral and occupational health issues.

Trying to do more with less money? Here are three proven ways to align the dollars and cents of a wellness program in your budget.

Common thread -  the way you prepare - and control - your budget for a wellness program is crucial to its success.

1. Top-down budget

Depending on the size of your organization and wellness program, you could have full budget responsibility or may need to work with a C-level who’s budgeting specialistise.

Regardless of the arrangement, you’re likely to face one of two distinct challenges -  a top-down budget or a zero-based budget.

A top-down budget is when you’re given a finite dollar amount and told to run the wellness program within the limit. When that’s the case, here are three vital questions to ask -

• Does this limit include money set aside for employee incentives and future initiatives?

• Should we keep long-tenured programs that keep going up in price, and

• Does Benefits/HR have to deliver all education about the program, or is there extra funding to hire staff?

2.  Zero-based budgeting

In zero-based funding, you submit to  senior management an itemized list of the programs/features you want and the cost of each. Best practices -

• Rank programs by priority (health-risk assessments ought to be at or near the top)

• Indicate which expenses are fixed and which are variable, and

• List ways to incorporate existing resources (like an EAP program) for a better return on investment.

3. Estimating ROI

On average, wellness programs usually take at least 18 months to break even. After three years, you ought to see savings.

When not, it’s time to take a fresh look at the program design.