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National
The National Wellness Institute defines "wellness" as “an active process through which people become aware of, and make choices toward, a more successful existence.” Wellness is intentional—people must decide to make healthier choices. Therefore, workplace wellness programs exist to encourage and assist employees in taking steps to be well.
The concept of wellness encompasses every aspect of our lives. Bill Hettler, MD, cofounder of the National Wellness Institute (http://www.nationalwellness.org), has developed a model called The Six Dimensions of Wellness, which is generally accepted by the wellness community. The six dimensions are:
Physical. Bodily health through exercise, nutrition, and abstaining from harmful activities, such as smoking
Emotional. Emotional health through learning to recognize, express, and control feelings and moods
Intellectual. Mental health through developing creativity, learning ability, and problem-solving skills
Occupational. Job satisfaction through learning individual aptitudes and skills and finding meaning in work
Social. Community connections through learning the part we play in our interconnected world
Spiritual. Larger life questions through learning to choose and live by a set of values that give meaning to our lives
States that provide a tax credit for employers that implement wellness programs include:
Maine. Employers with 20 or fewer employees are allowed an annual tax credit of up to $100 per employee or $2,000, whichever is less (ME Rev. Stat. Tit. 36 Sec. 5219-FF).
Massachusetts. State law provides an annual tax credit of up to $10,000 for instituting wellness programs (MA Gen. Laws Ch. 62 Sec. 6N). The law will be repealed effective December 31, 2017.
Employers have a great deal of flexibility in designing wellness programs. However, it is a good idea to review any program with an attorney, and employers should work closely with insurance providers if the wellness program will offer financial incentives or benefits through group health plans. There are a number of laws to be aware of when developing and implementing these programs.
Americans with Disabilities Act (ADA). The ADA requires employers to offer a reasonable accommodation to an employee with a known disability, and it prohibits employers from making medical inquiries or requiring medical examinations (unless job-related and consistent with business necessity). It is also unlawful under the ADA to take any adverse employment action based on an individual's actual or perceived disability. Please see the national Disabilities section.
The Equal Employment Opportunity Commission (EEOC) has offered employers some guidance on the ADA's restrictions on medical inquiries and examinations. Under the guidelines, an employer may conduct medical examinations and activities that are part of a voluntary wellness and health screening program. Therefore, offering employees the opportunity to voluntarily participate in health screening programs for high blood pressure and cholesterol monitoring is not likely to violate the ADA, as long as there is no penalty (economic or otherwise) for not participating. Employers must treat any information acquired as a confidential medical record.
Final rule on wellness incentive—ADA. In May 2016, the EEOC issued final regulations on wellness programs that allow employers to offer incentives up to a maximum of 30 percent of the cost of employee-only coverage to promote participation in a wellness program. If an employer does not offer health insurance but wants to offer an incentive for employees to complete a health risk assessment or to have annual tests that check their glucose and cholesterol levels, the employer may offer an incentive up to 30 percent of the cost that a 40-year-old nonsmoker would pay for self-only coverage under the second-lowest-cost Silver Plan available through the state or federal healthcare insurance exchange in the location of the employer’s principal place of business.
The program may include disability-related inquiries or medical exams as long as participation is voluntary. The term “voluntary” means that a covered entity:
• Does not require employees to participate;
• Does not deny access to healthcare coverage under any of its group health plans for nonparticipation or prohibit any employee from choosing a particular plan; and
• Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes.
An employer must provide employees with written notice that explains what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure. The EEOC will make a sample notice available on its website at https://www.eeoc.gov.
Genetic Information Nondiscrimination Act (GINA). GINA prohibits employers from discriminating against employees based on genetic information. It also prohibits employers from requesting or requiring genetic information from employees, including family medical history. According to GINA regulations, financial inducements may not be offered for individuals to provide genetic information. However, inducements may be offered for participation in completing a health risk assessment that includes questions about family medical history or genetic information—as long as it’s clear the incentive will be paid whether or not the participant answers the questions about genetic information.
Example: A health risk assessment has 100 questions and only the last 20 request genetic information. The instructions on the assessment must make it clear to employees that they will receive the incentive if they answer the first 80 questions, regardless of whether or not they answer the last 20 questions.
Final rule on wellness incentive—GINA. In May 2016, the EEOC published a final rule on wellness program incentives relating to GINA and information that may be requested from an employee’s spouse. Under the final rule, employers that offer wellness programs may provide incentives in exchange for information provided by an employee’s spouse regarding whether the spouse has or had a manifested disease or disorder. The maximum incentive is 30 percent of the lowest-cost major medical self-only plan the employer offers. If the employer does not offer a group health plan, the maximum is 30 percent of the total cost to a 40-year-old nonsmoker purchasing coverage under the second-lowest-cost Silver Plan available through the state or federal healthcare insurance exchange in the location of the employer’s principal place of business.
The rule prohibits requests for information about the spouse’s own genetic information or information about a child’s current or past health status.
2017 court ruling on EEOC wellness rules. A federal district court remanded the EEOC wellness program rules, finding it unclear how the 30 percent threshold met the ADA’s requirement that wellness programs be “voluntary” (AARP v. EEOC, No. 16-2113 (D.D.C. 2017)). The court left the rules in place while requiring the EEOC to reconsider them. The ruling applies to the EEOC rules for both the ADA and GINA.
The EEOC reportedly plans to propose new rules by August 2018 and to issue new final rules by October 2019.
Health Insurance Portability and Accountability Act (HIPAA). HIPAA rules provide guidance for complying with the law's nondiscrimination provisions and on the implementation of wellness programs. Please see the national Health Care Insurance section.
HIPAA nondiscrimination provisions generally prohibit group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductible, copayment, or other cost-sharing requirements based on a health factor. Health factors include health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), and disability. However, there is an exception that allows plans to offer wellness programs if they meet certain criteria.
Under the regulations, examples of wellness programs that comply with HIPAA’s nondiscrimination requirements without having to satisfy any additional standards (assuming participation in the program is made available to all similarly situated individuals) include:
• A program that reimburses all or part of the cost for memberships in a fitness center
• A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes
• A program that encourages preventive care through the waiver of the copayment or deductible requirement under a group health plan for the costs of, for example, prenatal care or well-baby visits
• A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking
• A program that provides a reward to employees for attending a monthly health education seminar
A wellness program that conditions a reward on an individual satisfying a standard related to a health factor must meet these five requirements:
• The total reward must be limited. Generally, it must not exceed 30 percent of the cost of employee-only coverage under the plan. If dependents such as a spouse or children may participate fully in the wellness program, the reward may be based on the cost of coverage for the employee and the dependents.
• The program must be reasonably designed to promote health and prevent disease.
• The program must give individuals eligible to participate the opportunity to qualify for the reward at least once per year.
• The reward must be available to all similarly situated individuals. The program must allow a reasonable alternative standard (or waiver of the initial standard) for obtaining the reward to any individual for whom satisfying the initial standard is medically inadvisable or unreasonably difficult due to a medical condition.
• The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of a waiver of the initial standard).
Effect of the Affordable Care Act (ACA). The ACA codified the nondiscrimination rules. Effective for plan years beginning on or after January 1, 2014, the reward limit is increased to 30 percent of the cost of coverage. The ACA allows the secretaries of Labor, Health and Human Services, and the Treasury to increase the reward level to 50 percent if they determine that an increase is appropriate.
The U.S. Department of Labor (DOL) issued a list of frequently asked questions on HIPAA’s nondiscrimination requirements to assist the employee benefits community in complying with the new rules. The information is available on the DOL website at http://www.dol.gov. The DOL has also published a Wellness Program Checklist to help employers determine if their wellness initiatives are required to comply with HIPAA regulations. Once an employer has established that its program is subject to HIPAA, the checklist helps determine if the program is in compliance. The checklist is part of Field Assistance Bulletin No. 2008-02, which is available on DOL's website at http://www.dol.gov.
National Labor Relations Act. Employers that have negotiated a collective bargaining agreement with a union are required by the National Labor Relations Act to bargain over "wages, hours, and other terms and conditions of employment." Therefore, a union may claim that a wellness program is a term or condition of employment that mandates bargaining. Employers should also check the governing collective bargaining agreement to see if a wellness program falls under a subject they have agreed to negotiate. For example, a bargaining agreement may mandate negotiation over the amount of employee-paid insurance premiums, but not health insurance or other employee insurance benefits. Please see the national National Labor Relations Act section.
Internal Revenue Code. Depending on the incentives and benefits included in an employer's wellness program, there may be tax consequences for the employer and the employee. For example, some employee incentives may constitute taxable income for employees. Generally, the value of an incentive is includible in the employee’s gross income (e.g., gift cards, memberships to off-site exercise facilities). However, there are some exceptions, including:
• Free or subsidized access to a gym or athletic center that is operated by the employer and located on the employer’s premises
• Discount on employee contribution required to participate in employer-sponsored health plan
• Contributions to an employee’s flexible spending account
In addition, a discount to an employee’s healthcare insurance offered as an incentive to employees who participate in a wellness program would probably not be considered taxable income for employees. Employers are well advised to obtain guidance from a tax professional as tax laws are complex and regulations can change frequently.
State laws that protect off-duty conduct. Several states have laws protecting the off-duty conduct of employees. Some states, including Connecticut, Indiana, Kentucky, Louisiana, Maine, New Mexico, Nevada, New York, North Dakota, Oklahoma, Rhode Island, and the District of Columbia, have "Smokers' Rights" laws that protect individuals from discrimination based on the lawful use of tobacco products outside of the workplace. Other states, such as California, have broader coverage that includes any lawful activity occurring away from the employer's premises during nonworking hours.
When designing a wellness program, employers should review state laws prohibiting employment discrimination to be sure the program complies with state requirements. Once a program is in place, employers should take steps to ensure that employment decisions are not based on conduct that is protected by law. It is necessary to keep in mind that the Employee Retirement Insurance Security Act (ERISA) may preempt state law when a wellness program is part of an employee benefit plan. However, ERISA will neither preempt state laws that have only a "tenuous, remote or peripheral connection" to employee benefit plans, nor will it preempt state insurance laws. If a wellness program is challenged based on a state law that protects off-duty conduct, ERISA's preemption clause may come into play--but it would depend on whether the program is part of an employee benefit plan within the meaning of ERISA's preemption clause.
A federal court decision demonstrates the difficulties that arise when a mandatory wellness program conflicts with an employee's off-duty conduct (Rodrigues v. The Scotts Company LLC, No. 07-10104 (D. Mass. 2008)). In this case, the employer instituted a mandatory wellness program that included a tobacco-free policy prohibiting "smoking of tobacco products by its employees at any time and at any place, whether or not in the workplace or during work hours." The applicable state law does not have a provision prohibiting discrimination against employees who use tobacco products. The employer used random testing of employees to enforce its policy. When it subsequently discharged an employee who tested positive for nicotine, the employee filed a lawsuit based on various claims. The court ruled the former employee could pursue his lawsuit based on his claims of invasion of privacy and a violation of ERISA but not on his claim of wrongful termination or a violation of the state civil rights law. Subsequently, the court granted the employer's request for summary judgment on the remaining claims (Rodrigues v. EG Sys., 639 F. Supp. 2d 131 (D. Mass. 2009)).
Note: Because state laws and regulations vary widely, employers should have their wellness programs reviewed by an attorney familiar with applicable state laws, particularly if employee participation in a wellness program is mandatory.
There are a number of steps employers should take when setting up a wellness program to make sure it will be effective. These include obtaining support from senior management, assessing the current level of wellness in the workplace, creating a customized operating plan, launching the wellness plan, and communicating with and educating employees about the plan. Finally, employers should continually measure and assess the effectiveness of the workplace wellness program, adjusting as necessary when needs are identified.
The critical first step in starting and running an effective wellness program is getting senior management on board. In fact, save for a few notable grassroots exceptions, most workplace wellness programs do not result in a positive return on investment (ROI) without the committed support of senior management. Of course, this is true for any workplace initiative that aims to change employee behavior, which should be the ultimate goal of every wellness program. According to management guru Peter Drucker, “major change initiatives must be actively led by senior management.” Other prominent organizations ranging from the U.S. Department of Health and Human Services’ Substance Abuse and Mental Health Services Administration (SAMHSA) to the Society for Human Resource Management (SHRM) to the Wellness Councils of America (WELCOA) agree: Senior-level support is imperative to get maximum employee acceptance of and participation in workplace wellness programs.
Senior executives are the people responsible for setting priorities and allocating resources. To secure the financial resources necessary to deliver effective programming or to have effective access to the rest of the organization, the senior staff must be committed to the effort. Moreover, senior executives can provide additional assistance to link health promotion objectives to business outcomes—thus, positioning health promotion as an integral part of the organization. Last, but certainly not least, senior executives can significantly increase the likelihood that an initiative will be ultimately successful by crafting and implementing supportive corporate policy.
Make the business case for a wellness program. Profit, or at least sound financial practice, is the bottom line of every business, and senior management absolutely needs to see the financial benefits of incorporating wellness into the workplace culture. Senior officers need to be convinced that wellness is not merely a “nice” thing to do for employees’ health but that it’s also a “necessary” thing to do for the bottom-line financial health of the business.
Management expects bad news when it comes time to renew health insurance contracts. Making the specific case requires gathering crucial numbers such as the number and cost of workers' compensation claims and disability claims, and the cost of lost productivity due to sick days and light duty. Added to the rising increase of health insurance, the financial case should be easy to make. Data are also available about the cost of obesity, sedentary lifestyles, smoking, and stress both in terms of healthcare costs and lost time at work.
This bad news should next be contrasted with the good news about how the financial side of an effective workplace wellness program works. A helpful step in gathering information is to research other workplaces in the industry or the local community to find wellness success stories close to home that will give senior management similar scenarios to compare. More good news is that it doesn't take much of an improvement (less than a 1 percent reduction in risk factors) to make wellness initiatives pay off. In general, employers can earn back the cost of programs over the course of 5 years if they can reduce risk factors by less than 0.2 percent, according to Ron Goetzel, PhD, of Cornell University. Finally, wellness should be treated as an integral part of the workplace organizational culture by referring to it with the same terminology and respect that is used for other workplace departments.
Important note. Once senior management is on board, it will be critical to keep them apprised of progress and results via formal reporting.
Assessment is required for any program to be successful. That’s why businesses do market research, politicians take polls, and producers show films to test audiences. Everyone who wants their project to succeed needs to research the market, the buyer, and the competition. “Know your audience” is the primary piece of advice for speakers, writers, politicians, businesspeople, anyone who has a message to present.
In the context of setting up a workplace wellness program, this means understanding the needs of the company and those of the employees and their families. For example:
• What wellness concerns are unique to the industry (e.g., ergonomic issues for processing plants)?
• What wellness concerns are unique to the workplace (e.g., areas with excessive noise or wet floors)?
• What wellness initiatives would most benefit employees (e.g., weight loss programs)?
• What wellness initiatives do employees want (e.g., gym membership discounts)?
• What potential barriers to success does the wellness program face (e.g., lack of participation, short-term commitments, or high employee turnover)?
For a wellness program—as well as any other workplace project—to be effective, all facets must be defined. There must be a detailed operating plan that provides specific definitions of what “works” and doesn’t work for the workplace. The following items should be an integral part of the wellness program operating plan:
• Mission statement
• Objectives
• Specific initiatives
• Implementation timeline
• Evaluation plan
• Budget
In addition, it is important to consider and develop an organizational structure to support the initiatives, such as a wellness team and committees to run individual initiatives.
Mission statement. An effective wellness mission statement is broad enough to include the many aspects of wellness (i.e., including as many of the six dimensions of wellness discussed above as possible), and detailed enough to mention the specific wellness initiatives the program offers. Leave room for flexibility to add and delete initiatives as the program offerings change. The wellness mission should also support the company's mission statement and goals.
Objectives. Based on demographic and medical research, list the problem areas in the workforce. Once these are identified, set specific objectives in each health area using the so-called SMART system. SMART objectives are:
Specific. Goals are clearly defined.
Measurable. Goals are quantifiable with specific numbers.
Achievable (attainable or actionable). Goals are possible for employees to meet with the resources provided.
Relevant (realistic or results-oriented). Goals are appropriate to employees and the organization's mission statement.
Timed (time-framed or time-specific). Goals are to be achieved within a set time.
Goal-setting, both for the wellness program and for employees, is crucial. In order to change employee behavior, employees need SMART goals that inspire and motivate. When employees get specific targets to aim for that are challenging yet achievable, they are more likely to rise to the occasion. And when the wellness program has specific, targeted goals, results can be measured against those goals to demonstrate the effectiveness of the programs.
Identifying specific initiatives for achieving goals. Continue the process of integrating wellness into the workplace culture by including the wellness initiatives already in place, such as health insurance, dental insurance, employee assistance program (EAP), or health savings account (HSA). Perhaps some of the objectives will involve modifying existing plans. Describe the initiatives that will be used to achieve objectives. In choosing initiatives, decide whether external or internal resources will be used. For those programs kept in-house, create a leadership team and assign team members. Human Resources (HR) should take responsibility for the company health policies (insurance, benefits, leave, disability, and vacation, as well as ensuring that all federal and state regulations are followed). The HR manager should also act as a point of contact for any other portions of the wellness program (for example, a Weight Watchers® program, exercise program, or smoking cessation program), but it will be more effective for non-HR personnel to work as team leaders, mentors, and coaches on the wellness team. Having employees involved on wellness teams makes the team less intimidating to other employees and will encourage more participation.
Whether using in-house or outside resources, choose the initiatives that will best meet the organization's goals. If the workforce is a typical American workforce, weight loss programs and/or "get active" programs may be a good starting point. Regarding weight loss choices, there are several commercial weight loss programs available that include meetings and support groups. Consider partnering with one of these groups that has a local chapter, such as Weight Watchers. Meetings can be held in the workplace or off-site to include family members as well.
For "get active" programs, consider partnering with the local YMCA. The YMCA Healthier Communities Initiatives program can help employees and their dependents get involved in an active lifestyle. See http://www.ymca.net. In addition, many employers start a formal walking program by mapping out routes in and around the worksite, issuing pedometers, and counting steps.
At some point in the workplace wellness journey, a health fair at the worksite may be a good option. Some workplaces may choose to kick off their wellness program with a health fair; others may want to ease into their wellness program and help build momentum by promoting an upcoming health fair at which more wellness initiatives will be revealed, and/or prizes awarded.
Develop a communication plan. The wellness operating plan also needs to detail how the wellness message will be communicated. There are several options, including but certainly not limited to:
• Including a brief wellness tip in workplace meetings
• Sending a weekly wellness e-mail tip
• Including a wellness section in workplace newsletters
• Hanging wellness posters on cafeteria or break room bulletin boards
• Distributing a wellness newsletter monthly or quarterly
• Conducting monthly or quarterly lunch time wellness talks
• Regularly communicating wellness success stories
Develop the implementation timeline. Create a specific timeline for the wellness program. Outline when each step of each initiative will begin and end. Give ample time for each step to be completed.
Plan for the ongoing evaluation of wellness initiatives. Effective wellness operating plans need to have a clear evaluation plan. This is the only way to know definitively whether the initiatives have “worked.” In the evaluation plan, describe how each initiative will be measured. Design pre- and post-assessment forms for the overall wellness program and for individual initiatives.
Develop a budget for the wellness program. Even if the company does not intend on investing a significant amount of money initially on the wellness program, an itemized budget is still important. Follow the process and format for budgeting used by other departments in the company. This will continue the process of integrating wellness into the organizational structure and give it the same level of importance as other departments.
When developing a budget, first consider the scope of the program. How many employees will be involved? If it is a program where employees have to elect not to participate, 80 percent of employees are likely to participate. How many dependents and retirees will be involved? Will there be paid guest speakers? Will the company plan on buying equipment, such as pedometers? What kind of incentives will be offered?
This is a good time to consider what kinds of incentives the company would consider offering for participation in the wellness program. Financial incentives can be great motivators. According to some studies, the most effective monetary values run from $300 to $1,000. If this expense is too great, consider smaller incentives, such as discounts to sports or health food stores, gym memberships, or extra vacation time.
Gather figures for outside speakers, equipment, incentives, and other expenses. With these factors in mind, estimate what the program will cost. Next, consider who will pay for the wellness program. Will the employer pay all expenses? Will employees pay for the initiatives they participate in? Will they share the expenses?
To help make the wellness program as effective as possible, make sure the program launch includes these three elements:
Get senior management involved. As noted above, a wellness program will succeed only if senior management is part of the process and supports the initiative. Have senior management speak at a kickoff event, or perhaps even challenge employees to a contest to see if they can reach certain goals before senior managers meet those goals.
Play to the audience. Remember that effective wellness programs are aimed at the vast middle ground of the employee population, those employees who are generally healthy but who have one or two problem areas and are considered a medium risk. For most workplaces, that encompasses approximately 80 percent of the workforce. Also be sure to keep in mind and address the health needs of employees’ family members and dependents.
Make it fun. Generate excitement for wellness by making the launch activities enjoyable. Some workplaces choose to launch their wellness programs with a health fair. If a health fair is the kickoff activity, make sure it is well-organized so that it will run smoothly.
Once the program is launched, it is important to continuously communicate with employees. The real benefit to the company of a wellness program is the long-term reduction in healthcare costs and healthier, more productive employees. Therefore, maintain an ongoing effort to communicate, educate, motivate, and empower employees with the goal of changing behavior. The wellness program, initiatives, and goals should be a regular part of employee communication.
Measuring the results of the overall wellness program is vital to assess and adjust the program based on what works best with a particular group at a particular location. Execute this step in the same way as employee performance reviews, annual budgeting, or other formal, annual, continual improvement efforts. Doing so provides yet another way to ensure the wellness program is integrated into the organizational culture. In other words, think of wellness performance reviews as an (at least) annual time to report the progress and problems in the wellness program, to make adjustments, and to set new goals.
Assessments should not measure only dollars and cents. A financial ROI is critical and it is important to have positive numbers to report to senior management to continue or even enlarge the scope of your wellness program and perhaps receive a bigger budget. But it is also important to measure health changes and employee satisfaction.
Employee satisfaction. Because the success of the workplace wellness program depends on employee participation, this is an important measurement. Some key indicators include employee morale, absenteeism, and retention and turnover. An annual employee survey is a good tool for gathering information that will help assess employee satisfaction before and after the implementation of a wellness program. In addition, statistics on who is participating in the program and to what extent they are participating will provide important data for measuring employee satisfaction.
Employee wellness. The goal of the wellness program is to help employees stay well. When a program is developed, first assess the current level of wellness. Based on the health risks identified during the assessment, the wellness program will focus on specific areas and goals, and established timelines for achieving goals. Because the program targets key health concerns, measuring related changes in employee health is important. Measurements might include changes in body mass index (BMI), blood pressure, cholesterol level, blood sugar, smoking habits, and prescription usage. In addition, it is important to measure individual activity level.
ROI. A wellness program requires a long-term commitment to improving employee health and, over time, a company should realize financial benefits such as reduced healthcare costs and greater employee productivity. However, it is important to manage expectations in the short-term. So, while it is important to immediately track and measure the return on a wellness investment, it is important remember that most financial benefits will be long term.
ROI analysis deals strictly with the financial impact of the wellness program and is fast becoming an essential evaluation method for workplaces that invest in wellness. ROI analysis answers the question, “For every dollar invested in wellness, how many dollars does the employer get back?” Calculating ROI is critical to the long-term success of a wellness program because it:
• Is a concrete way to validate the wellness program as a business tool
• Can be used to justify the cost of the wellness program to senior management
• Can be a useful tool for choosing future wellness initiatives
Using the following formula when measuring the ROI provides the percentage of return earned for every wellness dollar spent.
ROI percent = ((Monetary Benefits minus Wellness Costs) divided by Wellness Costs) multiplied by 100
To get the figures for this formula, keep track of wellness costs, including: design and development (outside consultants for health risk assessments, outside partnerships); promotion (newsletter and poster printing); administration; delivery (staff, technology, outside consultant); materials (pedometers, health fair supplies); facilities (on-site exercise equipment, walking paths, outside gym memberships); employee wages (wellness team members); and evaluation (outside evaluation consultants). After wellness program implementation, keep track of monetary benefits, including health insurance savings; productivity increases through presenteeism reductions; absenteeism reductions; lower workers' compensation costs; and lower turnover costs.
Two other measurements to consider are cost-effectiveness analysis (CEA) and cost-benefit analysis (CBA). CBA works hand in hand with ROI and monetizes all costs and all benefits. Results are then presented in a ratio of benefit-to-cost and ROI. A 3-to-1 ROI means $3 were saved for every dollar that was spent. Cost-effective analysis is helpful when trying different programs to achieve the same wellness initiative, such as smoking cessation or weight loss. The cost effectiveness of Program A can be compared to the cost effectiveness of Program B by looking at the cost for each employee who achieved a goal to stop smoking or to reach goal weight. Costs include program discounts, group rates, and inflation adjustments. Results are reported as an incremental cost per unit of effectiveness for each respective program.
Ideas that employers can use in their wellness programs are as varied as the employees in an employer's workforce. It may take some trial and error to find the ones that create an enthusiastic response and achieve high levels of participation. Some successful programs have included one or more of the following:
• Voluntary screening to check blood pressure, cholesterol levels, and other risk factors
• Personal finance education and counseling
• Smoking cessation program
• Financial incentives for voluntary participation in healthcare assessment
• Reduced copayments for drugs that treat asthma, diabetes, hypertension, and other chronic conditions
• Health insurance discounts for nonsmokers
• Health insurance surcharges for smokers
• Discounted gym memberships
• Partnering with local restaurants to provide healthy lunch options
• Reimbursement for membership in Weight Watchers or other weight management programs
• Healthy food options in company cafeteria or vending machines
• On-site medical facility, fitness center, and pharmacy for employees' use
• No out-of-pocket cost to employee for preventive care, e.g., annual physical exam, well-child exams, mammograms
• Flu vaccinations
• Newsletters, e-mail notices, bulletin board postings, and other awareness strategies to increase participation in wellness initiatives
Both large and small employers can implement wellness programs that help reduce the cost of health care and improve the health of employees. Careful assessment of workforce needs, tailoring of programs to meet those needs, and a comprehensive health management strategy are all components that will help an employer's wellness program succeed.
Last reviewed September 2017.
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National
The National Wellness Institute defines "wellness" as “an active process through which people become aware of, and make choices toward, a more successful existence.” Wellness is intentional—people must decide to make healthier choices. Therefore, workplace wellness programs exist to encourage and assist employees in taking steps to be well.
The concept of wellness encompasses every aspect of our lives. Bill Hettler, MD, cofounder of the National Wellness Institute (http://www.nationalwellness.org), has developed a model called The Six Dimensions of Wellness, which is generally accepted by the wellness community. The six dimensions are:
Physical. Bodily health through exercise, nutrition, and abstaining from harmful activities, such as smoking
Emotional. Emotional health through learning to recognize, express, and control feelings and moods
Intellectual. Mental health through developing creativity, learning ability, and problem-solving skills
Occupational. Job satisfaction through learning individual aptitudes and skills and finding meaning in work
Social. Community connections through learning the part we play in our interconnected world
Spiritual. Larger life questions through learning to choose and live by a set of values that give meaning to our lives
States that provide a tax credit for employers that implement wellness programs include:
Maine. Employers with 20 or fewer employees are allowed an annual tax credit of up to $100 per employee or $2,000, whichever is less (ME Rev. Stat. Tit. 36 Sec. 5219-FF).
Massachusetts. State law provides an annual tax credit of up to $10,000 for instituting wellness programs (MA Gen. Laws Ch. 62 Sec. 6N). The law will be repealed effective December 31, 2017.
Employers have a great deal of flexibility in designing wellness programs. However, it is a good idea to review any program with an attorney, and employers should work closely with insurance providers if the wellness program will offer financial incentives or benefits through group health plans. There are a number of laws to be aware of when developing and implementing these programs.
Americans with Disabilities Act (ADA). The ADA requires employers to offer a reasonable accommodation to an employee with a known disability, and it prohibits employers from making medical inquiries or requiring medical examinations (unless job-related and consistent with business necessity). It is also unlawful under the ADA to take any adverse employment action based on an individual's actual or perceived disability. Please see the national Disabilities section.
The Equal Employment Opportunity Commission (EEOC) has offered employers some guidance on the ADA's restrictions on medical inquiries and examinations. Under the guidelines, an employer may conduct medical examinations and activities that are part of a voluntary wellness and health screening program. Therefore, offering employees the opportunity to voluntarily participate in health screening programs for high blood pressure and cholesterol monitoring is not likely to violate the ADA, as long as there is no penalty (economic or otherwise) for not participating. Employers must treat any information acquired as a confidential medical record.
Final rule on wellness incentive—ADA. In May 2016, the EEOC issued final regulations on wellness programs that allow employers to offer incentives up to a maximum of 30 percent of the cost of employee-only coverage to promote participation in a wellness program. If an employer does not offer health insurance but wants to offer an incentive for employees to complete a health risk assessment or to have annual tests that check their glucose and cholesterol levels, the employer may offer an incentive up to 30 percent of the cost that a 40-year-old nonsmoker would pay for self-only coverage under the second-lowest-cost Silver Plan available through the state or federal healthcare insurance exchange in the location of the employer’s principal place of business.
The program may include disability-related inquiries or medical exams as long as participation is voluntary. The term “voluntary” means that a covered entity:
• Does not require employees to participate;
• Does not deny access to healthcare coverage under any of its group health plans for nonparticipation or prohibit any employee from choosing a particular plan; and
• Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes.
An employer must provide employees with written notice that explains what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure. The EEOC will make a sample notice available on its website at https://www.eeoc.gov.
Genetic Information Nondiscrimination Act (GINA). GINA prohibits employers from discriminating against employees based on genetic information. It also prohibits employers from requesting or requiring genetic information from employees, including family medical history. According to GINA regulations, financial inducements may not be offered for individuals to provide genetic information. However, inducements may be offered for participation in completing a health risk assessment that includes questions about family medical history or genetic information—as long as it’s clear the incentive will be paid whether or not the participant answers the questions about genetic information.
Example: A health risk assessment has 100 questions and only the last 20 request genetic information. The instructions on the assessment must make it clear to employees that they will receive the incentive if they answer the first 80 questions, regardless of whether or not they answer the last 20 questions.
Final rule on wellness incentive—GINA. In May 2016, the EEOC published a final rule on wellness program incentives relating to GINA and information that may be requested from an employee’s spouse. Under the final rule, employers that offer wellness programs may provide incentives in exchange for information provided by an employee’s spouse regarding whether the spouse has or had a manifested disease or disorder. The maximum incentive is 30 percent of the lowest-cost major medical self-only plan the employer offers. If the employer does not offer a group health plan, the maximum is 30 percent of the total cost to a 40-year-old nonsmoker purchasing coverage under the second-lowest-cost Silver Plan available through the state or federal healthcare insurance exchange in the location of the employer’s principal place of business.
The rule prohibits requests for information about the spouse’s own genetic information or information about a child’s current or past health status.
2017 court ruling on EEOC wellness rules. A federal district court remanded the EEOC wellness program rules, finding it unclear how the 30 percent threshold met the ADA’s requirement that wellness programs be “voluntary” (AARP v. EEOC, No. 16-2113 (D.D.C. 2017)). The court left the rules in place while requiring the EEOC to reconsider them. The ruling applies to the EEOC rules for both the ADA and GINA.
The EEOC reportedly plans to propose new rules by August 2018 and to issue new final rules by October 2019.
Health Insurance Portability and Accountability Act (HIPAA). HIPAA rules provide guidance for complying with the law's nondiscrimination provisions and on the implementation of wellness programs. Please see the national Health Care Insurance section.
HIPAA nondiscrimination provisions generally prohibit group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductible, copayment, or other cost-sharing requirements based on a health factor. Health factors include health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), and disability. However, there is an exception that allows plans to offer wellness programs if they meet certain criteria.
Under the regulations, examples of wellness programs that comply with HIPAA’s nondiscrimination requirements without having to satisfy any additional standards (assuming participation in the program is made available to all similarly situated individuals) include:
• A program that reimburses all or part of the cost for memberships in a fitness center
• A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes
• A program that encourages preventive care through the waiver of the copayment or deductible requirement under a group health plan for the costs of, for example, prenatal care or well-baby visits
• A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking
• A program that provides a reward to employees for attending a monthly health education seminar
A wellness program that conditions a reward on an individual satisfying a standard related to a health factor must meet these five requirements:
• The total reward must be limited. Generally, it must not exceed 30 percent of the cost of employee-only coverage under the plan. If dependents such as a spouse or children may participate fully in the wellness program, the reward may be based on the cost of coverage for the employee and the dependents.
• The program must be reasonably designed to promote health and prevent disease.
• The program must give individuals eligible to participate the opportunity to qualify for the reward at least once per year.
• The reward must be available to all similarly situated individuals. The program must allow a reasonable alternative standard (or waiver of the initial standard) for obtaining the reward to any individual for whom satisfying the initial standard is medically inadvisable or unreasonably difficult due to a medical condition.
• The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of a waiver of the initial standard).
Effect of the Affordable Care Act (ACA). The ACA codified the nondiscrimination rules. Effective for plan years beginning on or after January 1, 2014, the reward limit is increased to 30 percent of the cost of coverage. The ACA allows the secretaries of Labor, Health and Human Services, and the Treasury to increase the reward level to 50 percent if they determine that an increase is appropriate.
The U.S. Department of Labor (DOL) issued a list of frequently asked questions on HIPAA’s nondiscrimination requirements to assist the employee benefits community in complying with the new rules. The information is available on the DOL website at http://www.dol.gov. The DOL has also published a Wellness Program Checklist to help employers determine if their wellness initiatives are required to comply with HIPAA regulations. Once an employer has established that its program is subject to HIPAA, the checklist helps determine if the program is in compliance. The checklist is part of Field Assistance Bulletin No. 2008-02, which is available on DOL's website at http://www.dol.gov.
National Labor Relations Act. Employers that have negotiated a collective bargaining agreement with a union are required by the National Labor Relations Act to bargain over "wages, hours, and other terms and conditions of employment." Therefore, a union may claim that a wellness program is a term or condition of employment that mandates bargaining. Employers should also check the governing collective bargaining agreement to see if a wellness program falls under a subject they have agreed to negotiate. For example, a bargaining agreement may mandate negotiation over the amount of employee-paid insurance premiums, but not health insurance or other employee insurance benefits. Please see the national National Labor Relations Act section.
Internal Revenue Code. Depending on the incentives and benefits included in an employer's wellness program, there may be tax consequences for the employer and the employee. For example, some employee incentives may constitute taxable income for employees. Generally, the value of an incentive is includible in the employee’s gross income (e.g., gift cards, memberships to off-site exercise facilities). However, there are some exceptions, including:
• Free or subsidized access to a gym or athletic center that is operated by the employer and located on the employer’s premises
• Discount on employee contribution required to participate in employer-sponsored health plan
• Contributions to an employee’s flexible spending account
In addition, a discount to an employee’s healthcare insurance offered as an incentive to employees who participate in a wellness program would probably not be considered taxable income for employees. Employers are well advised to obtain guidance from a tax professional as tax laws are complex and regulations can change frequently.
State laws that protect off-duty conduct. Several states have laws protecting the off-duty conduct of employees. Some states, including Connecticut, Indiana, Kentucky, Louisiana, Maine, New Mexico, Nevada, New York, North Dakota, Oklahoma, Rhode Island, and the District of Columbia, have "Smokers' Rights" laws that protect individuals from discrimination based on the lawful use of tobacco products outside of the workplace. Other states, such as California, have broader coverage that includes any lawful activity occurring away from the employer's premises during nonworking hours.
When designing a wellness program, employers should review state laws prohibiting employment discrimination to be sure the program complies with state requirements. Once a program is in place, employers should take steps to ensure that employment decisions are not based on conduct that is protected by law. It is necessary to keep in mind that the Employee Retirement Insurance Security Act (ERISA) may preempt state law when a wellness program is part of an employee benefit plan. However, ERISA will neither preempt state laws that have only a "tenuous, remote or peripheral connection" to employee benefit plans, nor will it preempt state insurance laws. If a wellness program is challenged based on a state law that protects off-duty conduct, ERISA's preemption clause may come into play--but it would depend on whether the program is part of an employee benefit plan within the meaning of ERISA's preemption clause.
A federal court decision demonstrates the difficulties that arise when a mandatory wellness program conflicts with an employee's off-duty conduct (Rodrigues v. The Scotts Company LLC, No. 07-10104 (D. Mass. 2008)). In this case, the employer instituted a mandatory wellness program that included a tobacco-free policy prohibiting "smoking of tobacco products by its employees at any time and at any place, whether or not in the workplace or during work hours." The applicable state law does not have a provision prohibiting discrimination against employees who use tobacco products. The employer used random testing of employees to enforce its policy. When it subsequently discharged an employee who tested positive for nicotine, the employee filed a lawsuit based on various claims. The court ruled the former employee could pursue his lawsuit based on his claims of invasion of privacy and a violation of ERISA but not on his claim of wrongful termination or a violation of the state civil rights law. Subsequently, the court granted the employer's request for summary judgment on the remaining claims (Rodrigues v. EG Sys., 639 F. Supp. 2d 131 (D. Mass. 2009)).
Note: Because state laws and regulations vary widely, employers should have their wellness programs reviewed by an attorney familiar with applicable state laws, particularly if employee participation in a wellness program is mandatory.
There are a number of steps employers should take when setting up a wellness program to make sure it will be effective. These include obtaining support from senior management, assessing the current level of wellness in the workplace, creating a customized operating plan, launching the wellness plan, and communicating with and educating employees about the plan. Finally, employers should continually measure and assess the effectiveness of the workplace wellness program, adjusting as necessary when needs are identified.
The critical first step in starting and running an effective wellness program is getting senior management on board. In fact, save for a few notable grassroots exceptions, most workplace wellness programs do not result in a positive return on investment (ROI) without the committed support of senior management. Of course, this is true for any workplace initiative that aims to change employee behavior, which should be the ultimate goal of every wellness program. According to management guru Peter Drucker, “major change initiatives must be actively led by senior management.” Other prominent organizations ranging from the U.S. Department of Health and Human Services’ Substance Abuse and Mental Health Services Administration (SAMHSA) to the Society for Human Resource Management (SHRM) to the Wellness Councils of America (WELCOA) agree: Senior-level support is imperative to get maximum employee acceptance of and participation in workplace wellness programs.
Senior executives are the people responsible for setting priorities and allocating resources. To secure the financial resources necessary to deliver effective programming or to have effective access to the rest of the organization, the senior staff must be committed to the effort. Moreover, senior executives can provide additional assistance to link health promotion objectives to business outcomes—thus, positioning health promotion as an integral part of the organization. Last, but certainly not least, senior executives can significantly increase the likelihood that an initiative will be ultimately successful by crafting and implementing supportive corporate policy.
Make the business case for a wellness program. Profit, or at least sound financial practice, is the bottom line of every business, and senior management absolutely needs to see the financial benefits of incorporating wellness into the workplace culture. Senior officers need to be convinced that wellness is not merely a “nice” thing to do for employees’ health but that it’s also a “necessary” thing to do for the bottom-line financial health of the business.
Management expects bad news when it comes time to renew health insurance contracts. Making the specific case requires gathering crucial numbers such as the number and cost of workers' compensation claims and disability claims, and the cost of lost productivity due to sick days and light duty. Added to the rising increase of health insurance, the financial case should be easy to make. Data are also available about the cost of obesity, sedentary lifestyles, smoking, and stress both in terms of healthcare costs and lost time at work.
This bad news should next be contrasted with the good news about how the financial side of an effective workplace wellness program works. A helpful step in gathering information is to research other workplaces in the industry or the local community to find wellness success stories close to home that will give senior management similar scenarios to compare. More good news is that it doesn't take much of an improvement (less than a 1 percent reduction in risk factors) to make wellness initiatives pay off. In general, employers can earn back the cost of programs over the course of 5 years if they can reduce risk factors by less than 0.2 percent, according to Ron Goetzel, PhD, of Cornell University. Finally, wellness should be treated as an integral part of the workplace organizational culture by referring to it with the same terminology and respect that is used for other workplace departments.
Important note. Once senior management is on board, it will be critical to keep them apprised of progress and results via formal reporting.
Assessment is required for any program to be successful. That’s why businesses do market research, politicians take polls, and producers show films to test audiences. Everyone who wants their project to succeed needs to research the market, the buyer, and the competition. “Know your audience” is the primary piece of advice for speakers, writers, politicians, businesspeople, anyone who has a message to present.
In the context of setting up a workplace wellness program, this means understanding the needs of the company and those of the employees and their families. For example:
• What wellness concerns are unique to the industry (e.g., ergonomic issues for processing plants)?
• What wellness concerns are unique to the workplace (e.g., areas with excessive noise or wet floors)?
• What wellness initiatives would most benefit employees (e.g., weight loss programs)?
• What wellness initiatives do employees want (e.g., gym membership discounts)?
• What potential barriers to success does the wellness program face (e.g., lack of participation, short-term commitments, or high employee turnover)?
For a wellness program—as well as any other workplace project—to be effective, all facets must be defined. There must be a detailed operating plan that provides specific definitions of what “works” and doesn’t work for the workplace. The following items should be an integral part of the wellness program operating plan:
• Mission statement
• Objectives
• Specific initiatives
• Implementation timeline
• Evaluation plan
• Budget
In addition, it is important to consider and develop an organizational structure to support the initiatives, such as a wellness team and committees to run individual initiatives.
Mission statement. An effective wellness mission statement is broad enough to include the many aspects of wellness (i.e., including as many of the six dimensions of wellness discussed above as possible), and detailed enough to mention the specific wellness initiatives the program offers. Leave room for flexibility to add and delete initiatives as the program offerings change. The wellness mission should also support the company's mission statement and goals.
Objectives. Based on demographic and medical research, list the problem areas in the workforce. Once these are identified, set specific objectives in each health area using the so-called SMART system. SMART objectives are:
Specific. Goals are clearly defined.
Measurable. Goals are quantifiable with specific numbers.
Achievable (attainable or actionable). Goals are possible for employees to meet with the resources provided.
Relevant (realistic or results-oriented). Goals are appropriate to employees and the organization's mission statement.
Timed (time-framed or time-specific). Goals are to be achieved within a set time.
Goal-setting, both for the wellness program and for employees, is crucial. In order to change employee behavior, employees need SMART goals that inspire and motivate. When employees get specific targets to aim for that are challenging yet achievable, they are more likely to rise to the occasion. And when the wellness program has specific, targeted goals, results can be measured against those goals to demonstrate the effectiveness of the programs.
Identifying specific initiatives for achieving goals. Continue the process of integrating wellness into the workplace culture by including the wellness initiatives already in place, such as health insurance, dental insurance, employee assistance program (EAP), or health savings account (HSA). Perhaps some of the objectives will involve modifying existing plans. Describe the initiatives that will be used to achieve objectives. In choosing initiatives, decide whether external or internal resources will be used. For those programs kept in-house, create a leadership team and assign team members. Human Resources (HR) should take responsibility for the company health policies (insurance, benefits, leave, disability, and vacation, as well as ensuring that all federal and state regulations are followed). The HR manager should also act as a point of contact for any other portions of the wellness program (for example, a Weight Watchers® program, exercise program, or smoking cessation program), but it will be more effective for non-HR personnel to work as team leaders, mentors, and coaches on the wellness team. Having employees involved on wellness teams makes the team less intimidating to other employees and will encourage more participation.
Whether using in-house or outside resources, choose the initiatives that will best meet the organization's goals. If the workforce is a typical American workforce, weight loss programs and/or "get active" programs may be a good starting point. Regarding weight loss choices, there are several commercial weight loss programs available that include meetings and support groups. Consider partnering with one of these groups that has a local chapter, such as Weight Watchers. Meetings can be held in the workplace or off-site to include family members as well.
For "get active" programs, consider partnering with the local YMCA. The YMCA Healthier Communities Initiatives program can help employees and their dependents get involved in an active lifestyle. See http://www.ymca.net. In addition, many employers start a formal walking program by mapping out routes in and around the worksite, issuing pedometers, and counting steps.
At some point in the workplace wellness journey, a health fair at the worksite may be a good option. Some workplaces may choose to kick off their wellness program with a health fair; others may want to ease into their wellness program and help build momentum by promoting an upcoming health fair at which more wellness initiatives will be revealed, and/or prizes awarded.
Develop a communication plan. The wellness operating plan also needs to detail how the wellness message will be communicated. There are several options, including but certainly not limited to:
• Including a brief wellness tip in workplace meetings
• Sending a weekly wellness e-mail tip
• Including a wellness section in workplace newsletters
• Hanging wellness posters on cafeteria or break room bulletin boards
• Distributing a wellness newsletter monthly or quarterly
• Conducting monthly or quarterly lunch time wellness talks
• Regularly communicating wellness success stories
Develop the implementation timeline. Create a specific timeline for the wellness program. Outline when each step of each initiative will begin and end. Give ample time for each step to be completed.
Plan for the ongoing evaluation of wellness initiatives. Effective wellness operating plans need to have a clear evaluation plan. This is the only way to know definitively whether the initiatives have “worked.” In the evaluation plan, describe how each initiative will be measured. Design pre- and post-assessment forms for the overall wellness program and for individual initiatives.
Develop a budget for the wellness program. Even if the company does not intend on investing a significant amount of money initially on the wellness program, an itemized budget is still important. Follow the process and format for budgeting used by other departments in the company. This will continue the process of integrating wellness into the organizational structure and give it the same level of importance as other departments.
When developing a budget, first consider the scope of the program. How many employees will be involved? If it is a program where employees have to elect not to participate, 80 percent of employees are likely to participate. How many dependents and retirees will be involved? Will there be paid guest speakers? Will the company plan on buying equipment, such as pedometers? What kind of incentives will be offered?
This is a good time to consider what kinds of incentives the company would consider offering for participation in the wellness program. Financial incentives can be great motivators. According to some studies, the most effective monetary values run from $300 to $1,000. If this expense is too great, consider smaller incentives, such as discounts to sports or health food stores, gym memberships, or extra vacation time.
Gather figures for outside speakers, equipment, incentives, and other expenses. With these factors in mind, estimate what the program will cost. Next, consider who will pay for the wellness program. Will the employer pay all expenses? Will employees pay for the initiatives they participate in? Will they share the expenses?
To help make the wellness program as effective as possible, make sure the program launch includes these three elements:
Get senior management involved. As noted above, a wellness program will succeed only if senior management is part of the process and supports the initiative. Have senior management speak at a kickoff event, or perhaps even challenge employees to a contest to see if they can reach certain goals before senior managers meet those goals.
Play to the audience. Remember that effective wellness programs are aimed at the vast middle ground of the employee population, those employees who are generally healthy but who have one or two problem areas and are considered a medium risk. For most workplaces, that encompasses approximately 80 percent of the workforce. Also be sure to keep in mind and address the health needs of employees’ family members and dependents.
Make it fun. Generate excitement for wellness by making the launch activities enjoyable. Some workplaces choose to launch their wellness programs with a health fair. If a health fair is the kickoff activity, make sure it is well-organized so that it will run smoothly.
Once the program is launched, it is important to continuously communicate with employees. The real benefit to the company of a wellness program is the long-term reduction in healthcare costs and healthier, more productive employees. Therefore, maintain an ongoing effort to communicate, educate, motivate, and empower employees with the goal of changing behavior. The wellness program, initiatives, and goals should be a regular part of employee communication.
Measuring the results of the overall wellness program is vital to assess and adjust the program based on what works best with a particular group at a particular location. Execute this step in the same way as employee performance reviews, annual budgeting, or other formal, annual, continual improvement efforts. Doing so provides yet another way to ensure the wellness program is integrated into the organizational culture. In other words, think of wellness performance reviews as an (at least) annual time to report the progress and problems in the wellness program, to make adjustments, and to set new goals.
Assessments should not measure only dollars and cents. A financial ROI is critical and it is important to have positive numbers to report to senior management to continue or even enlarge the scope of your wellness program and perhaps receive a bigger budget. But it is also important to measure health changes and employee satisfaction.
Employee satisfaction. Because the success of the workplace wellness program depends on employee participation, this is an important measurement. Some key indicators include employee morale, absenteeism, and retention and turnover. An annual employee survey is a good tool for gathering information that will help assess employee satisfaction before and after the implementation of a wellness program. In addition, statistics on who is participating in the program and to what extent they are participating will provide important data for measuring employee satisfaction.
Employee wellness. The goal of the wellness program is to help employees stay well. When a program is developed, first assess the current level of wellness. Based on the health risks identified during the assessment, the wellness program will focus on specific areas and goals, and established timelines for achieving goals. Because the program targets key health concerns, measuring related changes in employee health is important. Measurements might include changes in body mass index (BMI), blood pressure, cholesterol level, blood sugar, smoking habits, and prescription usage. In addition, it is important to measure individual activity level.
ROI. A wellness program requires a long-term commitment to improving employee health and, over time, a company should realize financial benefits such as reduced healthcare costs and greater employee productivity. However, it is important to manage expectations in the short-term. So, while it is important to immediately track and measure the return on a wellness investment, it is important remember that most financial benefits will be long term.
ROI analysis deals strictly with the financial impact of the wellness program and is fast becoming an essential evaluation method for workplaces that invest in wellness. ROI analysis answers the question, “For every dollar invested in wellness, how many dollars does the employer get back?” Calculating ROI is critical to the long-term success of a wellness program because it:
• Is a concrete way to validate the wellness program as a business tool
• Can be used to justify the cost of the wellness program to senior management
• Can be a useful tool for choosing future wellness initiatives
Using the following formula when measuring the ROI provides the percentage of return earned for every wellness dollar spent.
ROI percent = ((Monetary Benefits minus Wellness Costs) divided by Wellness Costs) multiplied by 100
To get the figures for this formula, keep track of wellness costs, including: design and development (outside consultants for health risk assessments, outside partnerships); promotion (newsletter and poster printing); administration; delivery (staff, technology, outside consultant); materials (pedometers, health fair supplies); facilities (on-site exercise equipment, walking paths, outside gym memberships); employee wages (wellness team members); and evaluation (outside evaluation consultants). After wellness program implementation, keep track of monetary benefits, including health insurance savings; productivity increases through presenteeism reductions; absenteeism reductions; lower workers' compensation costs; and lower turnover costs.
Two other measurements to consider are cost-effectiveness analysis (CEA) and cost-benefit analysis (CBA). CBA works hand in hand with ROI and monetizes all costs and all benefits. Results are then presented in a ratio of benefit-to-cost and ROI. A 3-to-1 ROI means $3 were saved for every dollar that was spent. Cost-effective analysis is helpful when trying different programs to achieve the same wellness initiative, such as smoking cessation or weight loss. The cost effectiveness of Program A can be compared to the cost effectiveness of Program B by looking at the cost for each employee who achieved a goal to stop smoking or to reach goal weight. Costs include program discounts, group rates, and inflation adjustments. Results are reported as an incremental cost per unit of effectiveness for each respective program.
Ideas that employers can use in their wellness programs are as varied as the employees in an employer's workforce. It may take some trial and error to find the ones that create an enthusiastic response and achieve high levels of participation. Some successful programs have included one or more of the following:
• Voluntary screening to check blood pressure, cholesterol levels, and other risk factors
• Personal finance education and counseling
• Smoking cessation program
• Financial incentives for voluntary participation in healthcare assessment
• Reduced copayments for drugs that treat asthma, diabetes, hypertension, and other chronic conditions
• Health insurance discounts for nonsmokers
• Health insurance surcharges for smokers
• Discounted gym memberships
• Partnering with local restaurants to provide healthy lunch options
• Reimbursement for membership in Weight Watchers or other weight management programs
• Healthy food options in company cafeteria or vending machines
• On-site medical facility, fitness center, and pharmacy for employees' use
• No out-of-pocket cost to employee for preventive care, e.g., annual physical exam, well-child exams, mammograms
• Flu vaccinations
• Newsletters, e-mail notices, bulletin board postings, and other awareness strategies to increase participation in wellness initiatives
Both large and small employers can implement wellness programs that help reduce the cost of health care and improve the health of employees. Careful assessment of workforce needs, tailoring of programs to meet those needs, and a comprehensive health management strategy are all components that will help an employer's wellness program succeed.
Last reviewed September 2017.
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