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The Business Case for Employee Wellness Programs

Businesses have historically considered employee wellness programs a “nice perk,” not a strategic must. That’s no longer the case.

Employers are increasingly turning to annual health screenings, gym memberships, employee assistance programs and other mainstays of corporate wellness to reign in the rising costs of health insurance. The return on their investment goes beyond the premium they pay for employee health benefits.

Lower health care costs

About 62 percent of American workers are covered by health insurance provided by their employer, according to the Kaiser Family Foundation. It’s no secret that the cost of that insurance has been on the rise in recent years.

A Wall Street Journal article notes that an average family health policy costs employers nearly $12,000 per year, up from only $4,200 in 1999. Chronic conditions, such as heart disease, diabetes and obesity account for 75 percent of those costs.

A Kaiser/HRNET study noted that 44 percent of employers believe their wellness programs help reduce their health insurance costs. Employers with more than 200 employees cited even better results, with 69 percent reporting cost reductions. But don’t take their word for it.

In 2014, RAND Corporation examined seven years of PepsiCo claims data. The results provide hard evidence of the ROI of wellness: For every dollar the company invested in wellness, it saved nearly $4 in health care costs.

Healthier workforce

Studies show that corporate wellness programs decrease employees’ risk of developing obesity, high cholesterol, high blood pressure and other chronic conditions. Wellness programs also have the potential to help employees stop smoking and abusing alcohol. In a study conducted by Kaiser/HRET, 59 percent of respondents that offered wellness programs stated that these programs improved employee health.

Increased productivity

It’s no surprise that healthier employees miss fewer days from work. A RAND Corporation study showed that 78 percent of employers reported that their wellness program contributed to lower absenteeism. Furthermore, 80 percent reported increased productivity.

A separate study from Duke University compared workers with high and recommended body mass indexes. The obese workers averaged twice as many claims – 11.65 compared with 5.8 per 100 full-time equivalents – and had almost a 10-fold increase in work days lost, medical claims costs and indemnity claims.

Often overlooked in the productivity discussion is presenteesim, that is, people going to work while sick. Presenteeism represents nearly two-thirds of the total cost of worker illness, according to The National Health Interview Survey. Employees who come to work sick cost employers $150 billion to $250 billion, according to the Harvard Business Review.

Intangibles

Some benefits of employee wellness programs are difficult to quantify. How can you put a number on improved employee morale, stronger employee loyalty and an enhanced corporate image? These intangibles may not manifest themselves in the bottom line, but they are crucial to any company striving for staying power in a competitive market.

Like anything worth achieving, wellness doesn’t happen overnight. It takes commitment on both sides of the employer/employee equation. If you’re overwhelmed by the myriad facets of employee wellness programs, use these free resources to jump-start your efforts:

A Kaiser/HRNET study noted that 44 percent of employers believe their wellness programs help reduce their health insurance costs.