Corporate Wellness Programs Can Help Reduce Workers Comp Claims
In the last two decades there have been many studies and discussions on the impact of effective company wellness programs in helping to reduce an organization’s healthcare costs. Most recently, many employers are incorporating performance-based healthcare plans that serve to reward employees that achieve positive health results through engagement in their company wellness plans. A healthy workforce is more productive and results in fewer claims and lower health insurance premiums. This trend is further underscored by the Affordable Care Act which includes a provision that allows employers to charge a 30% healthcare premium differential to employees based on participation or performance in health promotion; smokers can be charged up to a 50% difference.
Moreover, recent studies show the potential for wellness programs to help reduce a company’s workers compensation claims. In a recent report, “Wellness Programs: The Positive Impact on Workers’ Compensation Claims”, the role of comorbidities and workers compensation claims is examined along with the steps companies can take to realize a positive impact of their wellness programs. Comorbidity is defined as the “presence of one or more additional disorders (or diseases) co-occurring with a primary disease or disorder; or the effect of such additional disorders or diseases.”
The report cites a study conducted by the University of Michigan Health Management Research Center, which found that employees with high health risks tended to have the highest workers compensation costs. High health risks include smoking, physical inactivity, hypertension, high cholesterol, and life/job dissatisfaction. These findings are also backed by studies conducted by the National Council on Compensation Insurance (NCCI) through out the years.
For example, in a 2010 study entitled, “Comorbidities in Workers’ Compensation”, it was found that claims with an obesity comorbidity diagnosis incurred significantly higher medical costs than comparable claims without such a comorbidity diagnosis. Additionally, the study found that the share of workers compensation claims with a comorbidity diagnosis nearly tripled from 2000 to 2009, growing from a share of 2.4% to 6.6%. In a more recent NCCI project, “Indemnity Benefit Duration and Obesity,” it was found that obesity contributes in significant ways to the length of time during which claimants receive indemnity benefits. The study shows that, based on Temporary Total and Permanent Total indemnity benefit payments, the duration of obese claimants is more than five times the duration of non-obese claimants. When Permanent Partial benefits are counted toward indemnity benefit duration as well, this multiple climbs to more than six.
What’s more, in 2011 Gallup estimated that 86% of full-time employees in the U.S. are above normal weight or have at least one chronic condition. Together, these employees miss an estimated 450 million extra days of work each year, compared to healthy workers, costing at least $153 billion in lost productivity. Other studies indicate that lost productivity could be as high as $225 billion annually.
To help address this issue, the same approach used with wellness programs and healthcare can be applied to workers compensation. According to the “Wellness Programs” report, “effective corporate wellness initiatives have shown to be successful in not only reducing the duration of lost-time workers compensation claims, but also in promoting healthy behaviors that potentially inhibit unsafe or inattentive workplace behavior.” This means having a organization’s HR and Employee Benefits departments proactively engaged so that they have a better understanding of the scope and breadth of existing corporate wellness initiatives, as well as how the organization is tracking the effectiveness of those programs. It also means working with the employer’s workers comp carrier and/or third party administrator (TPA) to examine claims data to garner the information needed to effect change and employee behavior through a company’s wellness program. In addition, collaboration with internal safety, health, and environment professionals (if applicable) is needed to discover how best to integrate employee wellness with workplace safety.
Caitlin-Morgan provides companies of all sizes with Workers Compensation solutions, including strong risk management programs to help stem losses and reduce costs. Give us a call at 877.226.1027 to find out more about our programs.
Sources: NCCI, Lockton, Gallup