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What health reform means for the people of Illinois

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Thursday, July 2, 2015

Small Employers: Take Another Look at Wellness Programs

Small employers want a healthy workforce but wonder how and if they should promote healthy
behaviors among their employees.  Trends show that larger employers, who typically self-fund their health insurance programs, find a direct link between the benefits of wellness programs and their health insurance bottom line.  This provides clear motivation for internal programming and incentives to keep employees fit, eating healthy and smoke-free.  For small employers who traditionally provide fully insured health insurance programs, the direct return on investment from implementing a wellness program may be less obvious.

The Return on Investment

Research has consistently shown that unhealthy employees are less productive and take more sick days. In 2010, The Harvard Business Review made a compelling argument in favor of worksite wellness programs. In the programs they highlighted, they found improved health status, fewer sick days and workers' compensation premiums declining by as much as 50%.  Even though small employers are faced with a highly regulated premium environment because of the Affordable Care Act (ACA), wellness programs might allow small businesses a solution for lowering workers' compensation costs.

Healthy Employees, Happy Employees

The Centers for Disease Control and Prevention (CDC) identifies several ways that both employers and employees can benefit from work-based health programs.  At the top of their list for employees: increased well-being, self-image and self esteem.   This kind of indirect impact on the employee psyche can boost morale, reduce turnover and ultimately improve productivity. Calculating the cost of employee turnover can be tricky for a small business, but some estimate it to be between 150 – 175% of the annual salary depending on the job level.

The question for small employers comes down to the bottom line.  The actual cost of employer wellness programs can vary greatly. Questions to consider as you begin exploring the feasibility include:

Will the program be run in house or using an external vendor?
How extensive will the health interventions be?
Will you include health screenings?
What type of employee incentives will be provided?

In addition, small businesses may not be aware that the ACA has created new tax-based incentives for qualified employer wellness programs.   There are rules to comply with, as plans must be reasonably designed to “promote health or prevent disease.”  Additionally they must be made available to all “similarly situated” employees.  For more details see this Department of Labor Fact Sheet.

Small Scale Ideas Make a Big Difference

Still unsure about incorporating a more comprehensive wellness initiative into your business model? Some small scale initiatives can make a big difference.  Even something as simple as extending lunch hours can give employees time to make lunchtime fitness practical and possible.   Rather than allowing employees 30 minutes to grab a burger and fries, 90 minute lunch slots offer employees time to hit the gym. Small changes like this can give a boost to employees and the small business as a whole.

Worth the Time to Investigate

Small employers have a lot to consider when it comes to how to allocate their health related workforce dollars.  Finding a little room in the budget now as well as spending some time re-thinking a few basic workplace rules could ultimately pay off.   Proven reductions in workers' compensation premiums, employee turnover rates and new ACA tax incentives make it the perfect time for small employers to give worksite wellness programs a closer look.

Michele Thornton MBA
Insurance and Benefits Consultant



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