Corporate Wellness Incentive Plans

Company Wellness Programs first became popular during the economic boom of the late 1980s and early 90s. Programs featured onsite gyms and massages, and were used as recruitment tools for young staff members searching for nontraditional work environments. However, when the tech bubble burst, so too did the willingness to spend money on perceived perks, and employers returned to a more old-school benefit structure focused on managed medical care.

In recent years, as Health Care costs have spiraled out of control, organizations have explored the potential of Employee Health Promotion Programs as a cost-saving strategy. Businesses such as Johnson and Johnson, General Motors, Motorola and Union Pacifi c Railroad have all seen a signifi cant return on investments in employee health (See Case Studies, p.20). Employee Health Promotion Programs can help lower the costs associated with:

Medical Care premiums – The expense a organization pays for health insurance: According to a 2005 study by Hewitt, the Medical Care expense per employee in the U.S. in 2006 will average $8,046, with corporations absorbing nearly two-thirds of that expense.

Pharmaceutical costs – The price of a prescription drug plan: According to a 2005 study by Mercer, the average annual prescription drug costs for large employers grew 11.5 percent, making it nearly a decade straight of double-digit growths in cost.

Short-term disability (STD) – The cost of offering short-term disability insurance to staff members: According to a 2004 study by insurance provider Cigna, the average short-term disability claim results in $13,094 in direct disability payments and healthcare costs. The report also found that 26% of claims related to health care events were a result of chronic conditions that could likely be mediated through Worksite Health Promotion Programs, and that these cases amount for 56% of the STD-related healthcare costs.

Absenteeism – The price of missed work: Absenteeism cost organizations $660 per employee in 2004, with nearly one-third of organizations characterizing the trend as a serious issue.

Presenteeism – The cost associated with workers who work at decreased productivity levels: Sixty percent of the total cost of employee diseases come from presenteeism, according to a 2004 study by the Institute for Health and Productivity Studies at Cornell University.

The evidence is clear that strategically designed Company Health Promotion Programs can decrease both direct and indirect Health Care costs. A 2004 review of Company Health Promotion Programs revealed that, in total, an investment of $1 by a corporation in Wellness Programming returned a median cost savings of $2.05 to $4.64.