Wellness Program Blog

What began more than a decade ago as a pilot program in two locations, has now developed into a global initiative for Motorola. The company’s Company Wellness is run by the Global Rewards group consisting of more than 50 workers and funded by an annual grant. Programs are consistently assessed on their ability to deliver a positive return on investment and benefit the collective Motorola community. central, the program reaches more than 30,000 workers, family members and retirees.

Company Wellness  Features:

• The company provides no cost membership for active workers to Wellness Centers located at 8 United States locations (retirees pay a small fee).
• Workers at locations without a Wellness Center receive $240 to help cover the cost of a membership at a qualifying fitness center.
• In 2003, the company provided flu immunizations to more than 11,000 workers, dependents and retirees at 70 onsite locations.
• Motorola holds hundreds of health education classes each year for workers.

Company Wellness  Determinations:

• Among workers who regularly used onsite Motorola Wellness Centers or an alternate fitness center the company saved $3.93 for every $1 it spent, according to data from 2000.
• Participating workers cost $6.5 million dollars less in lifestyle-related medical expenses than non-participants.
• Company Wellness  participants experienced annual Health Care cost rises of 2.5 percent, compared to 18 percent rises for non-participants.

Increasing Health Care costs show no signs of slowing in the near future. Hewitt projects Health Care costs will jump another 9.9 percent in 2006, amounting to more than $11,000 per family (of which the company will absorb more than 60 percent of costs).  Greater than nine of 10 members of management see increasing Health Care costs as a weighty company concern that their company needs to address.26

The current Health Care climate represents an ideal opportunity for employers to reevaluate their Company Wellness  offerings and consider the more systemic approach of a robust Company Wellness . Despite the big number of employers that claim to offer disease management or Company Wellness  activities, as of 2005 only 23 percent of workers were eligible for Company Wellness Programs and only 13 percent were provided access to a fitness center through work.27 This is despite evidence that nearly two-thirds of workers would be open to company-provided HRAs and enrolling in programs that encourage healthier lifestyles.28

Company Wellness Programs are a chance for employers to differentiate themselves from competitors by increasing productivity, cutting costs and establishing a healthier work environment that is valued by current and prospective workers. Nearly onethird of workers polled in a 2004 study by MetLife given benefi ts as an important reason why they decided to work for their company and 38 percent said it is among the top reasons they remain at their work.29 Gary Grates, global director of Edelman’s Change and Employee Engagement Group, notes, “The return on investment in a Company Wellness  extends well beyond monetary Health Care savings. These programs can play a essential role in creating a more engaged workplace environment where workers are aligned with company objectives. Company Wellness Programs can represent more than a human resources initiative, they can be a bold symbol of what you as a company stand for.”

To date, employers have viewed Company Wellness Programs as merely another benefit to be managed by the human resources department. However, executives, and their employers, would be better served by adopting a more strategic and integrated approach to Company Wellness Programs. Companies that are able to develop Company Wellness Programs based on sound measurement, work within existing regulations, and involve workers around initiatives, will reap valuable rewards in terms of cost savings and long-term strength.

Following cost, poor employee program engagement and inadequate talks and support are listed as the greatest challenges for employers administering any health benefi t program.22

By law, employers are required to explain any benefits or explicit conditions of employment to all workers – this is called “due process,” and it usually takes the form of a packet of information that new workers are asked to review and sign during orientation or, in the case of existing workers, a brief communication during open enrollment periods.

Companies that only engage in the minimally required due process communication of a Company Wellness , however, do a disservice to the initiative and the company.

Opinions about Health Care in employers represent one of the largest disjoins between management and workers. In discussing the need for savings, most employers (70 percent) believe their company effectively communicates about rising Health Care costs, while only 34 percent of workers feel rising Health Care costs effect their business’ ability to succeed.23 When it comes to conduct, 74 percent of employers believe their workers ought to be held largely accountable for improving, managing and maintaining health, yet only 4 percent of employers think that workers engage in these activities.

Under the proposed rules, the four requirements to be a bona fide Company Wellness  are:

- The total reward that may be given to an individual is limited. The departments invited comments on the appropriate level of the reward, suggesting that a limit of 10 percent to 20 percent of the total cost of employee-only coverage may be appropriate.
- The program must be reasonably designed to promote great health or prevent disease for people in the program.
- The reward must be available to all similarly situated people. More specifically, the program must allow any individual for whom it is unreasonably diffi cult due to a medical condition to meet the Company Wellness  standard (or for whom it is medically inadvisable to attempt to meet the Company Wellness  standard) an opportunity to satisfy a reasonable alternative standard.
- All plan materials describing the terms of the program must disclose the availability of a reasonable alternative standard.
Source: United States Department of Labor Employee Benefits Security Administration

As Northwestern Memorial’s Kathryn Krivy says, “The most fundamental failure in any Company Wellness  is not communicating. You need to tell people what you’re doing and why you’re doing it. You have to get workers engaged and teach them of what’s going on.”

A properly implemented Company Wellness  is designed to save a company more money with improved participation. However, a company must match its focus on program design with an equally strategic investment in efforts to engage workers in the initiatives.

Lay out your case – Despite widespread recognition of rising Health Care costs, workers remain skeptical that the concern affects company operations. In fact, only 53 percent of workers even believe what their company communicates about the subject.24 Companies need to be more candid and forthcoming about the amount they spend on Health Care and how that relates to larger budgetary constraints and potential investments.

Says Motorola’s Saenz: “We share with workers that we have been able to maintain Motorola’s Health Care spend trend below national average over the past several years due to their participation in our various Company Wellness Programs. This transparency is necessary to keep reminding people the reasons for our conduct.”

An effective strategy is to focus on the cost savings and central health benefi ts to the employee and not the company. By personalizing the information in this way, it creates a win-win scenario instead of presenting the program as a sacrifi ce on the part of the employee. Information ought to be presented through multiple channels, constructed in a way that makes sense to all levels of workers, and provided to workers, dependents and retirees.

Make it your own – Every Company Wellness  will be different, and ought to reflect the culture of a company. While program areas will be determined by analyzing employee health risks, the actual offerings ought to be shaped by the nature of the company. Younger, more active employee communities may be attracted by different programs than an older or technicaloriented employee. In Addition, a global company with mobile workers will have different needs than a company with one central location.

As noted earlier regarding PepsiCo’s HealthRoads, one strategy is for employers to brand their Company Wellness Programs. Union Pacifi c Railroad (HealthTracks), General Motors (LifeSteps) and Caterpillar (Healthy Balance) all adopted this approach to help create recognition and a larger meaning around their efforts. Having a branded initiative helps workers and other stakeholders see the larger objectives of the Company Wellness , instead of focusing on isolated offerings.

Say it loud, say it proud – As a potential cost-saving initiative, Company Wellness Programs ought to be given the same executive support and internal commitment as any comparable company effort. Companies ought to not approach wellness as simply a preventive, financially-motivated program, but rather as an opportunity for the company to distinguish itself and become more competitive.

Jeffrey Treem, analyst, Edelman Change and Employee Engagement Group, says that effective communication about Company Wellness Programs ought to be integrated into existing company communication channels and vehicles. “This comprises executive communication to external stakeholders,” he notes, “because this sends a powerful message back to workers about the significance of the programs. Company Wellness Programs ought to not be treated as merely an additional employee perk, but rather an innovative and strategic effort to decrease costs and create a healthier work environment.” Talk among yourselves – The most powerful champions of any Company Wellness  will be the participants.

Companies ought to discover ways to facilitate discussions about the program among workers. This could take the form of support groups, interactive media and the sharing of success stories.

However, since Company Wellness Programs touch on potentially private health issues, it is valuable communication remains positive and inclusive, while not pressuring workers. Discussion of wellness issues ought to be voluntary, though employers may consider providing incentives/rewards for those willing to contribute. Motivation and information from peers is likely to carry more credibility and significance than messages from management.

For many employers, a smoking ban would not even apply to all workers. That is because currently 30 states and the District of Columbia prevent employers from banning off-duty smoking.21 In Addition, 13 states prevent employers from banning alcohol use away from work. Only six states have broad statutes that prevent employers from prohibiting any lawful behavior. Michigan is the only state that expressly prohibits discrimination on the basis of weight, however the cities of San Francisco and Santa Cruz, Calif., also have this provision (San Francisco makes exceptions for police offi cers, fi refi ghters and the San Francisco 49ers football team). When designing Company Wellness Programs, employers ought to keep in mind local statutes as well as established common law.

Savings of Voluntary Company Wellness  = (number of participants x savings per participant) – (cost of program)
Savings of Incentive-based Company Wellness  = (number of participants x savings per participant) – (cost of program + cost of incentives/rewards)
Savings of Mandatory Company Wellness = (number of participants x savings per participant) – (cost of program + cost of policy-related turnover + cost of limited talent pool)

Constructing Company Wellness  policies in a company that employs unionized workers can pose unique challenges. Company Wellness Programs may be perceived by some unions as a condition of employment and therefore would be subject to collective bargaining between the parties. However this circumstance can represent an opportunity for both groups, as a policy agreed upon between union leadership and management is likely to be received more favorably by workers. The United Auto Workers and General Motors worked together to create and position a joint Company Wellness which has successfully reached more than 800,000 participants. (See Case Studies, UAWGeneral Motors LifeSteps Company Wellness , p.21).

Even in an at-will employment environment, people are still guarded from discrimination (including wrongful termination) by virtue of belonging to a protected class. Prior to starting a Company Wellness , employers need to be cognizant of the relevant legal restrictions and the potential affects these measures can have on benefi ts and employee behavior programs.

Title VII of the Civil Rights Act of 1964 – Prohibits employment discrimination based on race, color, religion, sex or national origin.

This means that standards and offerings need to be applied equally (or possibly proportionally) to all protected classes. In other words, if a company is offering access to gyms, it ought to be sure that men and women have equal access to facilities. Companies ought to also consider whether a person who may live in areas heavily populated by one race, religion or ethnicity also have access to facilities and programs. The easiest way to address this concern is to supply onsite Company Wellness Programs whenever possible. This not only ensures equal access, but according to Northwestern Memorial’s Krivy, also increases participation.

Companies must also be aware that particular health issues may disproportionately affect protected classes. Health Risk Assessments and any incentives/rewards put in place may must be customized to account for non-lifestyle related differences.

The Equal Pay Act of 1963 (EPA) – Protects men and women who perform substantially equal work in the same establishment from sex-based wage discrimination. Benefits, incentives/rewards and programs need to be applied equally to men and women. A company cannot set a weight goal for men and not for women, although a company can set health parameters by work function. The Age Discrimination in Employment Act of 1967 (ADEA) – Protects people who are 40 years of age or older from discrimination based on age.

Policies not only need to be available to people of all ages, but program objectives, restrictions and incentives/rewards need to be designed with age appropriateness. While older workers (or retirees and dependents) may inherently pose a higher health risk, their conduct ought to be assessed in terms of demographically appropriate measures.

Title I and Title V of the American citizens with Disabilities Act of 1990 (ADA) – Prohibits employment discrimination against qualified people with disabilities in the private sector, and in state and local governments. Similar to other workplace offerings, any Company Wellness Programs, such as a fitness center or health clinic, would have to make reasonable accommodations for workers with disabilities.

One area of equivocation is whether obese workers qualify as disabled. The concern is complicated because obesity is caused by several factors (genetics, environment, behavior), some of which may be out of the employee’s control. Generally, for workers to qualify for disability based on obesity, the condition must signifi cantly impair their physical or mental ability to perform their job. This determination would need to be made by a qualifi ed physician. Although this label may affect the types of incentives/rewards and program requirements provided, it likely would not affect the central implementation of behavioral-focused initiatives.

Civil Rights Act of 1991 – Provides monetary damages in cases of intentional employment discrimination.

This legislation allows people to sue employers for improper treatment. Compensation can be in the form of actual damages such as lost or expected wages, compensatory damages for a circumstance that causes public embarrassment, or even punitive damages meant to send a message to a company for egregious or habitual violations.

While these laws govern all company activities, there are even more stringent restrictions with regard to Health Care issues. Most policies, communications and data collection regarding employee health are governed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Under HIPAA employers cannot deny eligibility for benefits or charge a higher premium on the basis of:

• Health status
• Health condition (including both physical and mental ailments)
• Claims experience
• Receipt of medical care
• Health history
• Genetic information
• Evidence of insurability (comprises activities such as riding a motorcycle, skiing, snowmobiling and other similar pursuits)
• Disability

However, because wellness programs may not involve medical treatment or be insurance related, and may instead be confined to behavioral initiatives, HIPAA’s nondiscrimination provisions do not totally apply. To address this, in 2001 the United States Department of Labor, the Internal Revenue Service and the United States Department of Health and Human Services jointly issued a proposed regulation to help clarify the lawful provisions of a “bona fi de Wellness Program” in the context of HIPAA’s existing language (See Box p. 14). Although the regulation is not yet final, employers that comply with the measure will be viewed by the government as making a good-faith effort to avoid discrimination in wellness programs.

Complete Company Wellness Programs are still relatively new to corporate America and the legal implications of implementation and enforcement are not totally known. By their very nature, these programs potentially expose employers to discrimination lawsuits, disengaged workers and detrimental public relations. However, employers that make a good-faith effort to comply with current Health Care-related laws, discover ways to involve workers, and communicate strategically, will be able to minimize these risks while finding plenty of room to develop a creative and effective Company Wellness .

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 workers 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 traditional benefit structure focused on managed healthcare.

In recent years, as Health Care costs have spiraled out of control, employers have explored the potential of Company Wellness Programs as a cost-saving strategy. Companies 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). Company Wellness Programs can help decrease the costs associated with:

Health Care premiums – The cost a company pays for health care insurance: According to a 2005 study by Hewitt, the Health Care cost per employee in the United States in 2006 will average $8,046, with employers absorbing nearly two-thirds of that cost.

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

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

Rates of Absenteeism — The cost of missed work: Rates of Absenteeism cost employers $660 per employee in 2004, with nearly one-third of employers characterizing the trend as a weighty concern.

Presenteeism — The cost associated with workers who work at decreased productivity levels: Sixty percent of the total cost of employee illnesses 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 Wellness Programs can decrease both direct and indirect Health Care costs. A 2004 review of Company Wellness Programs revealed that, in total, an investment of $1 by a company in Wellness Programming returned a median cost savings of $2.05 to $4.64.

Employee Engagement is the level at which workers are aligned with and working toward company objectives. Employee Engagement is altered by a wide range of factors that comprise of internal talks, company structure, benefits and recognition.

Companies that have high levels of employee program engagement benefit from improved productivity, retention and achievement than peers with disengaged workers.  Levels of engagement among workers in the U.S. have been declining over the past several years as individuals have become disillusioned with the treatment of workers by employers. The inability to involve workers is one of the reasons why, despite steady rises in hours worked, America lags behind several other nations in terms of employee productivity per hours worked.

Company Wellness Programs may increase employee program engagement in several ways. First, when communicated properly, they show to workers that the company cares about their wellness. This can improve retention and turnover as well as supply a greater discretionary effort from workers. During a period of significant downsizing, Motorola found more of an interest in its Company Wellness Programs as managers recognized the value of providing for the health and wellness of workers.

In addition, the health improvements will lower absenteeism and presenteeism (when workers continue to work despite decreased productivity), allowing for more time spent at full productivity. Lastly, healthier workers are more likely to have increased morale, which translates into a more enjoyable and more effective work environment.

The President’s Council on Physical Fitness and Sports defines wellness as “a multidimensional state of being describing the existence of positive health in an individual as exemplified by quality of life and a sense of wellness.” Wellness looks beyond the current guide of treating disease and focuses on preventive conduct and healthier lifestyles. Company Wellness Programs, also usually referred to as Company Wellness Programs, serve as a complement to existing insurance-based health benefit programs and can take many forms and address a myriad different potential health conditions. They are a powerful strategy to promote positive lifestyle changes that can result in significant cost savings for employers.

Examples of potential elements of a Company Wellness  comprise of:

Health Risk Assessments / Employee Wellness Screenings – Health Risk Assessments (aka Health Risk Appraisals), evaluate the most prevalent lifestyle-related risks of an individual. HRAs often comprise of screenings for Blood Pressure (BP), cholesterol, glucose levels and other health indicators. These analyses supply valuable benchmarking measures that ideally will allow workers to prevent or decrease their risk of illnesses. Finding Wealth Through Wellness, As noted by Kathryn Krivy, director of Northwestern Memorial Hospital’s Wellness Institute in Chicago, “Medically based Health Risk Assessments are a necessity because in order to affect change in your company, you need to know what the problems are, and you just do not know until you get the data.”

Physical Activity and Weight Management – One of the most popular Company Wellness Programs is for employers to supply access to a fitness center, often onsite. Other potential measures include offering healthier vending machines and cafeteria options, weight management support groups and fitness challenge programs. Some employers, like hospital group Baptist Health South Florida, will even pay for workers to attend weight-loss classes such as Weight Watchers.

Awareness and Education Programs – Most  employers have events approaching the benefits of nutrition, safety or physical fitness, among other topics. Other options are to host a health fair or conduct a disease-awareness campaign.

Behavior Modification – This covers issues like smoking, wearing seat belts, and alcohol use. While many employers will supply assistance for workers looking to modify behavior, some employers, like medical benefits administrator Weyco, Inc., mandate modifications, such as quitting smoking, as a condition of employment.

Alternative Treatments – Other Company Wellness Programs can comprise of absorbing some or all of the costs for massages, stress-reduction activities like yoga or even herbal medicines.

A more modern and systemic solution may involve employers starting Company Wellness Programs, which allow employers to be proactive in preventing disease and promoting healthier lifestyles for workers. When implemented effectively, this approach can drive to decreased direct costs from claims, a reduction in Health Care premiums and increased employee productivity.

Yet while Company Wellness Programs potentially offer employers substantial cost savings, the success of the programming is dependent upon the ability to involve workers in them. In Addition, employers must navigate the legal and cultural challenges posed by Company Wellness Programs: Companies must be careful that initiatives respect protected classes and the privacy of workers. Additionally, employers must battle resistance from workers wary of their company regulating off-the-clock conduct.

Over the next 6-12 posts we’ll layout the case for Company Wellness Programs in today’s employment environment, arguing that the cost savings and raised employee program engagement outweigh potential restrictions. We will analyze the considerations a company must make before starting a Company Wellness  and the communication necessary to create successful engagement from workers. Finally, we will discuss several successful Company Wellness Programs and supply a list of resources that employers can use for guidance.

Over the past several years health care insurance premiums have risen at a steady pace. This is taking a toll on the bottom-line of employers, cutting into profits, limiting growth and forcing a reevaluation of a once sacred employee benefit system. According to a projection by McKinsey & Co., at the present rate, by 2008 health benefits will eclipse profits at the average Fortune 500 company.

Companies, through private health care insurance employers, are the leading provider of medical services in the U.S.. In 2004, 59.8 percent of American citizens were covered by a company-based health care insurance program, accounting for 88 percent of all private health care insurance. Yet the increasing costs of Health Care, ever-increasing drug prices and a steady rise in chronic illnesses have brought the corporate world to a breaking point.

For many employers the increasing burden has become too difficult to carry. Over the past five years health care insurance premiums have raised an average of 11.6 percent each year, more than four times the average rate of inflation and employee earnings over that time.3 Not surprisingly, this exponential growth in premiums has caused the number of employers offering Health Care services during that time to drop from 69 percent to 60 percent.4 In addition, in 2005,  health care insurance premiums jumped 9.2 percent, more than three times the rate of inflation – and that was the lowest increase in the past five years.

In this environment employers need to discover innovative ways to mitigate the rising costs of Health Care coverage. Seemingly, the easiest strategies to accomplish this goal would be to reduce benefits coverage or pass on agrowing burden to workers and retirees. Greater than 80 percent of employers have chosen one or both of these cost saving measures in the past several years and almost half of all big employers are likely to increase the amount workers pay in 2007.5

However, these approaches do nothing to address the fundamental causes of rising premiums, one of which is a population that requires increased healthcare. To make a lasting and meaningful effect on premiums and central health, employers need to look beyond a traditional reactive-based approach.