Stay Connected with Industry News, Emerging Risks

Caitlin Morgan through our blog and newsletter is committed to keeping our agency partners and insureds abreast of trends, emerging trends and developments as they relate to the segments we serve. We invite you to connect and engage with us.

Survey: Companies Looking to Lower Costs with Wellness Incentives

Posted on: March 14, 2013 by Caitlin Morgan

Survey Companies Looking to Lower Costs with Wellness Incentives

Survey: Companies Looking to Lower Costs with Wellness Incentives

With increased Workers Compensation premiums, rising healthcare costs and the provisions of the Affordable Health Care for America Act kicking in, many employers are looking for ways to lower their insurance costs. Part of this involves a move away from a traditional “managed trend” approach to one that requires employees to take a more active role in their healthcare planning. Why the move towards an approach where employees take more of the responsibility for their health and their healthcare? Just look at the numbers.

In a recent survey by Aon Hewitt, the amount employers spend on healthcare has increased by 40% in the past six years to approximately $8,800 per employee. Over this same period, employee premium and out-of-pocket costs have increased 64% to almost $5,000 per year. Moreover, Aon Hewitt estimates that healthcare costs for both employers and employees will continue to rise 8% to 9% annually for the foreseeable future. Worsening population health issues, including obesity, smoking and failure to comply with medications, are expected to significantly contribute to the rapid rise in health care costs, says Aon Hewitt.

Move to performance-based healthcare

The Aon Hewitt survey found that in the next three to five years, almost 40% of employers expect to migrate toward a “house money/house rules” approach. “Under this model, employers may reserve a portion of their healthcare dollars for those employees who exhibit good health behaviors or who can show measurable progress toward their health goals. For example, participants who take health risk questionnaires and biometric screenings may be rewarded in the form of lower premiums or access to broader health coverage. Other employers may waive prescription drug co-pays if an employee demonstrates they are following their doctor’s orders with regard to a chronic condition,” according to Aon Hewitt.

Wellness-based incentives part of plans

In addition, wellness programs among companies are on the rise. We first touched upon this in our January blog. Since then, additional information has been released substantiating the increase in wellness incentives among companies. A survey conducted by Fidelity Investments and the National Business Group on Health found that corporate employers plan to spend an average of $521 per employee on wellness-based incentives within corporate healthcare programs. This marks an increase of 13% from the average of $460 reported for 2011, and is double the per-employee average of $260 reported in 2009. These wellness programs typically consist of condition-management services (e.g., managing insulin treatments), lifestyle-management services (e.g., weight loss advice), health-risk management services (e.g., on-site flu shots), and environmental enhancements (e.g., bike racks, walking paths).

What’s more, the Fidelity survey also found that the overall use of wellness-based incentives among corporate employers continues to increase. Nearly nine out of 10 employers in the survey indicated that they currently offer wellness-based incentives (86%), an increase from 73% from 2011 and 57% from 2009. Even most interesting is that the survey results illustrated significant growth in the mid-market, where 77% of employers plan to offer wellness-based incentives in 2013 – that’s more than double the 38% of those that offered wellness-based incentives in 2010. In addition, almost half of employers in the mid-market (45%) plan to offer average incentives of more than $500 per employee.

“As the cost of providing health care continues to increase, employers recognize one of the key ways to manage their company’s costs is to incent their workforce to lead a healthier lifestyle,” said Adam Stavisky, senior vice president of Fidelity’s Benefits Consulting business. “Employers of all sizes have embraced wellness-based incentives to help control costs, and companies are now looking at ways to design and optimize their programs to maximize their positive impact on health for both the organization and employees.”

These programs if properly implemented will not only help in reducing healthcare costs but also in helping to prevent on-the-job accidents and injuries. A healthier workforce is a more productive one, which can ultimately serve to reduce the costs involved with Workers Compensation in addition to health insurance.

Caitlin-Morgan provides insurance programs, risk management and other solutions to meet your clients’ needs. Whether you are looking for markets unavailable to your clientele or complete alternative risk solutions for your clients, we can help. Contact the experts at Caitlin-Morgan today at 877.226.1027

Sources: Aon, Fidelity Investments

Please follow and like us:

Posted in: Wellness Program Workers Comp Workers Compensation