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The Cost-Benefits of Employee Wellness Programs

The key to getting the biggest bang for your buck in your wellness program is to focus on a few tried and tested offerings that studies have found result in better health for employees and reductions in your overall health care insurance costs.

If you use a scattershot approach, the returns may not be as great, and the cost of a wellness program correlates directly with the width and scope of services offered.

The following are the top wellness offerings by participation rate, according to a study by the International Foundation of Employee Benefit Plans:

  • Flu shot programs, 50%,
  • Health screenings, 49%,
  • Health risk assessments, 48%, and
  • Health fairs, 45%.

The survey found the incentives most commonly provided to employees by organizations to participate in health risk assessments, health screening and fitness programs included:

  • Gift cards and gift certificates, 38%,
  • Insurance premium reductions, 37%,
  • Prizes and raffles, 31%, and
  • Cash rewards, 27%.

To save money, employers should skip providing costly physical exams, which include blood tests, EKGs and X-rays. They can amount to an unnecessary expense of $300 to $400 per employee. The fact is, the average healthy employee doesn’t need such a service on an annual basis. That money is better spent on a wellness program that works.

Choose what works best for you

The first choice you have to make is if you should run the program internally or hire a vendor.

It is difficult to be able to foresee the obstacles and costs of choosing to run everything in-house because the wellness team is typically led by health enthusiasts, and not by health care providers or wellness experts. This alone is one of the biggest reasons in-house programs fail.

At the same time, in-house programs are less expensive, as well-qualified people in-house can do the job for less than what a vendor or contractor would charge for the same work.

But some employers are better off hiring a wellness program vendor to do the job. Vendors have systems to deliver programs effectively as well as monitor their outcomes. And if the vendor works out, it’s easy to renew their contract, or fire them if they fall short.

Vendors may charge either a flat fee for each employee or one for each program participant. The former works well for employers since it holds the vendor accountable for improving health for a fee.

Monthly costs vary from $10 to $150 per employee in a wellness program. For that you should expect a high participation rate – greater than 50% – and health risk appraisals for every participant. You should also receive feedback and follow-up on ongoing intervention programs for your employees.

Ideally, the vendor should have a referral mechanism to connect employees to community resources for individualized services, such as fitness programs, Weight Watchers, stress management and tobacco cessation.

Getting your ROI’s worth

The return on investment related to employee wellness programs typically includes the overall health care cost savings achieved, as well as productivity increases due to a reduction in sick days taken by employees.

The “Rand Wellness Programs Study” examined two aspects of a large U.S. employer’s wellness program: the lifestyle management component and the disease management component. Disease management was responsible for 86% of the hard health care cost- savings, generating $136 in savings per member, per month, and a 30% reduction in hospital admissions.

And a report by the Harvard Business Review estimated the return on investment on wellness plans that focus on weight, loss, disease management, tobacco cessation and other health-oriented measures was $6 for every $1 spent.