The Power of Incentives in Workplace Wellness Programs to Reduce Employer Healthcare Costs
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The Power of Incentives in Workplace Wellness Programs to Reduce Employer Healthcare Costs

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Growing employer healthcare costs are forcing companies of all sizes to take a look at how wellness programs can help decrease their company's bottom line. We'll review the growth of employee wellness ...

Growing employer healthcare costs are forcing companies of all sizes to take a look at how wellness programs can help decrease their company's bottom line. We'll review the growth of employee wellness programs, reward-based wellness and what works, incentives as the solution, a government update and ROI studies from wellness programs.

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  • EmploEmployees’ share of premium costs increased 9.3% between 2011 and 2012, with the dollar burden rising from $2,529 to $2,764. In fact: Employees contribute nearly 40% more for health care than they did five years ago, compared with 34% for employers yers taking more aggressive steps to hold employees accountable while investing in new programs and technologies to reduce costs*
  • The most successful companies stand above their competitors by making significant strides in six core areas: Health improvement Engagement Accountability Linking provider strategies Technology Healthy environment
  • Wellness programs can be as simple as an employer-sponsored aerobics course or a company gym. Flu shots Health screenings Weight management programs Smoking cessation programs Walking/fitness challenges
  • To encourage employees to utilize these “participation” based systems, employers will start to offer incentives or rewards in order to “bait” employees to participate in wellness campaigns i.e. if you participate in the blood screening, we’ll give you $50, or if you utilize the gym membership, we’ll pay ½ the cost of your membership Often programs result in employee fraud Example: employees lying about weight loss to get a reward
  • Programs with highest participation rate Flu shot programs (50%) Health screenings (49%) Health risk assessments (48%) Health fairs (45%) Although only 10% of employers have outcome-based incentives, 23% are considering them for 2013
  • People inherently want to feel good and be healthy; incentives give the final push needed Workplace performance increases 22% with incentives 1 in 4 employees would not participate without incentives1 Cash incentives like gift cards and gym memberships are more effective than benefit-based perks2 Incentives have the greatest impact on participation, engagement and program completion2
  • Incentive Magazine reports that 8 out of 10 employees prefer gift cards over other incentives IRF AND Incentive Federation confirm that gift cards are a better buy than cash----discounts for bulk purchases Gift card brands offer choice and can be matched to demographics, Ex: a janitor in a hospital or a sales rep in high tech firm have the option of selecting different gift cards Gift cards help spread the incentive wealth; employees like to share by redeeming gift cards with colleagues, family, and friends Gift cards have “trophy value” and employees remember WHY they receive them
  • The Citibank Health Management Program reported an estimated savings of $4.50 in medical expenditures per dollar spent on the program1 Du Pont saw that each dollar invested in workplace health promotion yielded $1.42 over two years in lower absenteeism costs The Travelers Corporation claims a $3.40 return for every dollar invested in health promotion, yielding total corporate savings of $146 million in benefits costs Employees at Berk-Tec, a small manufacturing company in PA saved $21.67 per employee; nearly 18% reduction in costs2

The Power of Incentives in Workplace Wellness Programs to Reduce Employer Healthcare Costs The Power of Incentives in Workplace Wellness Programs to Reduce Employer Healthcare Costs Presentation Transcript

  • Presents:The Power of Incentives to ReduceEmployer Healthcare Costs1
  • Agenda Growth of Health Care Costs Decreasing Costs Through Wellness Programs The Growth of Employee Wellness Programs Reward-Based Wellness…..What Works? Incentives as the Solution Government Update ROI From Wellness Programs2012 GiftCard Partners, Inc. All Rights Reserved 2
  • of Health Care CostsGROWTHEmployers and Employees alike are havingtrouble keeping up with rising costs2012 GiftCard Partners, Inc. All Rights Reserved 3
  • Healthcare Costs Continue to Grow• 5.9% increase per year is expected• Average health care costs per employee areexpected to reach $11,664 in 2012 from$10,982 in 2011• 61% of employers view employee poor health habitsas the single biggest challenge to maintainingaffordable benefit coverage** 2012 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care2012 GiftCard Partners, Inc. All Rights Reserved 4
  • DECREASINGCosts through Wellness Programs2012 GiftCard Partners, Inc. All Rights Reserved 5
  • Companies Who Support and Optimize Healthcare ObjectivesHave a Clear Competitive Advantage•TowersWatson 2012 17th Annual Towers Watson/National Business Group on Health62012 GiftCard Partners, Inc. All Rights Reserved
  • The Growth of EmployeeWellness Programs72012 GiftCard Partners, Inc. All Rights Reserved
  • What is a Wellness Program?• In their most basic form, employee wellness programs provideemployees with incentives to participate in activities thatpromote their health• 70% of U.S. Employers Offer Wellness Initiatives2012 GiftCard Partners, Inc. All Rights Reserved 8
  • Wellness Programs Growth• 24% of the 70% overallhave started offering themsince 2010• 60% of American employershave implemented new oradditional wellness programssince 2008• In the past year, only 46% ofthose with access to a wellnessprogram have participated2012 GiftCard Partners, Inc. All Rights Reserved 9Source: Wellness Programs and Value-Based Health Care, ThirdEdition, International Foundation of Employee Benefit Plans, 2012.
  • Source: Wellness Programs and Value-Based Health Care, Third Edition, International Foundation of Employee Benefit Plans, 2012.2012 GiftCard Partners, Inc. All Rights Reserved 10
  • Reward-Based Wellness…What Works?2012 GiftCard Partners, Inc. All Rights Reserved 11
  • Two Types of Reward-BasedProgramsParticipation-Based Outcome-Based2012 GiftCard Partners, Inc. All Rights Reserved 12
  • Participation-Based Programs• Engage the employee with the simple goal ofparticipation• Wellness engagements entice employees toshow up for wellness events and programsBut…..no guarantee of changing behavior2012 GiftCard Partners, Inc. All Rights Reserved 13
  • Outcome-Based Programs• Outcome-Based programs are wellness programsthat focus on tangible measurements such asblood tests, weight loss documentation, smokingcessation, etc. with accurate and provable results Focused on specific and measurable outcomes Incentives for biometric results vs. rewards forparticipation Improve at-risk employees with rewards Participants are not rewarded for unhealthy outcomes2012 GiftCard Partners, Inc. All Rights Reserved 14
  • Outcome-Based Examples• 4 Basic biometric targets outlined by theDept. of Labor as reasonable & modifiable Weight Total cholesterol Blood pressure Tobacco use• Reward for making progress and positive results*http://blog.wgains.com/2012/08/13/wellness-2-0-outcome-based-financial-incentives-for-getting-healthier2012 GiftCard Partners, Inc. All Rights Reserved 15
  • The Next Generation ofHealth and Wellness ProgramsOutcome-Based Programs are the next generation• Companies are also rethinking their current incentivedesigns and imposing tougher, more specificrequirements, including some that are outcome-based• More than 33% of companies use rewards (or penalties)to discourage tobacco use, a trend that could rise tomore than half by 2013 Shift from aggregating data & encouraging healthyoutcomes to long term changes in wellness Long-term healthcare cost savings for employers andemployees2012 GiftCard Partners, Inc. All Rights Reserved 16
  • Incentives as the SolutionThe winning component in Driving Engagement Delivering Outcomes Lowering Costs2012 GiftCard Partners, Inc. All Rights Reserved 17
  • Incentives on the Rise• Approximately 75% of all companies who implement awellness program use some sort of incentive to do it 43% provide incentives specifically to encourageparticipation in biometric screenings 30% offer incentives to engage in healthy lifestyle activitiesin the workplaceThe combination of wellness and incentive programs helpscompanies achieve unprecedented benefits for theemployees and the businessSource: 2012 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care2012 GiftCard Partners, Inc. All Rights Reserved 18
  • Which Incentives Work Best?Gift Cards are ratedthe most effective Incentive1Wellness Programs and Value-Based Health Care, Third Edition, International Foundation of Employee Benefit Plans, 2012.1: 2012 Towers Watson2012 GiftCard Partners, Inc. All Rights Reserved 19
  • ROI From Wellness Programs2012 GiftCard Partners, Inc. All Rights Reserved 20
  • Decrease Health Care CostsThrough ROI• 83% of employers researched indicated a positive return• For every dollar spent on wellness initiatives, mostorganizations see between $1 to $3 decreases in theiroverall health care costs=Source: Wellness Programs and Value-Based Health Care, Third Edition, International Foundation of Employee Benefit Plans, 20122012 GiftCard Partners, Inc. All Rights Reserved 21
  • Let’s Recap• 70% of employers now offer wellness programs to reduce risinghealthcare costs…..Are you??• Payback is BIG and ROI is strong! Companies who activelyencourage engagement will have $7,000 more per employeeannually by 2018 to spend on other aspects…like attracting greattalent• Incentives Work. Productivity increases 22%• Reward employees for participation….but reward MORE forPositive Outcomes• Gift cards are the reward of choice. 80% of employees prefergift cards over other incentives2012 GiftCard Partners, Inc. All Rights Reserved 22
  • Government Update2012 GiftCard Partners, Inc. All Rights Reserved 23
  • Some Help From The Government• Provisions in the new reform law offer aid,and even some cash, to small businessesthat run wellness and prevention programsfor their employees.• Companies with fewer than 100 employeeswho work more than 25 hours a week whodo not currently have a wellness programcan apply for a grant which will be administered by the Department ofHealth and Human Services, during a 5-year program.• Only new wellness initiatives -- those launched after March 23, 2010,the date the health reform bill was enacted -- are eligible.Beginning in 2011, the Patient Protection and Affordable Care Act madeavailable $200 million over five years in grants for smallbusiness wellness programs.2012 GiftCard Partners, Inc. All Rights Reserved 24
  • Government Sponsored Incentives• Starting Jan. 1, 2014, employers can offer discounts of up to 30% toemployees who participate in employer-sponsored wellness programs,an increase from the current 20% (This reward could increase to 50% at the discretion of the Secretaries of theDepartments of Health and Human Services, Labor or Treasury.)• Rewards for all goal-based wellness programs cannot exceed more than30% of the cost of employee-only or family coverage through the plan The Kaiser Family Foundation’s 2009 Employer Health Benefits nationwidesurvey found that the average 2009 total premium for employer-sponsoredhealth insurance was $13,375 for family coverageo This means that the additional 10 % incentive increase calculates out to a credit of$1,337 per employee per year.o The same survey found the single person coverage average for an employer in 2009was $4,824, which would translate into a $483 additional tax credit in 2014Source: Can Reform Changes in Wellness Programs Impact Growing Obesity Problems Long Term? By Holly Wright, R.D.2012 GiftCard Partners, Inc. All Rights Reserved 25
  • Compliance Concerns• HIPAA regulations require that wellness programs satisfy five nondiscriminationrequirements The program must be reasonably designed to promote health and prevent disease. The program must give individuals eligible to participate the opportunity to qualify for the reward at leastonce per year. The reward must be available to all similarly situated individuals. The program must allow a reasonable alternative standard (or waiver of initial standard) for obtaining thereward to any individual for whom it is unreasonably difficult due to a medical condition, or medicallyinadvisable, to satisfy the initial standard. The plan must disclose in all materials describing the terms of the program the availability of a reasonablealternative standard (or the possibility of a waiver of the initial standard).• Americans with Disabilities Act (ADA) Prohibits an employer from discriminating against qualified individuals because of a disability. Limits disability-related inquiries or required medical examinations before and after an employment offer, aswell as during employment. Requires equal benefits for employees with disabilities. A plan’s limitations and exclusions could raise issuesunder the ADA, particularly with regard to wellness programs.• Genetic Information Nondiscrimination Act of 2008 (GINA) Restricts the ability of employers and insurers to collect and disclose genetic information, including familymedical history. If there is a financial incentive offered for HRA completion, then the HRA is not allowed to contain questionsabout family medical history.• State Law Concerns State laws may protect certain lifestyle choicesSource: Excerpts from the U.S. Department of Labor’s FAQs about the HIPAA Nondiscrimination Requirements at www.dol.gov/ebsa/faqs/faq_hipaa_2012 GiftCard Partners, Inc. All Rights Reserved 26
  • Union OppositionUnions typically oppose rewards that are based onoutcomes rather than participation because ofconcerns about the privacy of employee-providedhealth information and about potentially unequaltreatment of union members by employers.2012 GiftCard Partners, Inc. All Rights Reserved 27
  • Who is GiftCard Partners?• GiftCard Partners is one of thenations largest developers ofcorporate B2B Gift Card programs• We work with companies to helpreduce their healthcare costs byoffering a variety of gift cardincentives to increase programparticipation and engagement inwellness programs2012 GiftCard Partners, Inc. All Rights Reserved 28
  • We Are Proud to Represent These Market Leaders2012 GiftCard Partners, Inc. All Rights Reserved 29