By Shawn Radcliffe
If credit is the lifeblood of any business-as President Herbert Hoover once said-then employees are certainly the heart.
Which is why, in order for a business to survive for years -or even generations-that heart has to be strong and healthy. Many companies understand this and have long offered a wide range of benefits to keep their employees healthy and productive.
Probably the best known benefit is employer-provided health insurance. But companies have tried many other things beyond just picking up some of the cost of insurance premiums.
At KI, a Wisconsin-based contract furniture company, the wellness program includes Weight Watchers, a fitness club and health coaching-the last one either over the phone or face-to-face with a nurse.
“We have all these programs available to our employees that they can go through for free-to be able to better themselves and get up into that 'Gold' premium level,” says Jodi McWilliams, benefits manager at KI.
The 'Gold' level is part of KI's efforts to motivate its employees to stay healthy. Employees are given an annual health assessment. This includes measuring several risk factors for chronic diseases-blood pressure, cholesterol, blood glucose and body fat.
Employees are graded on these assessments, with 'A' being the healthiest score. This affects how much they have to pitch in for health insurance. Between C and D, there is not a huge difference in the cost of the premium.
But the price drops significantly when employees move up into the A or B range. They can save up to $1,000 a year on their premiums-simply by being healthier.
When it comes to this kind of 'biometric screening' as it's called, KI is no novice.
CEO Richard Resch “has been very aggressive, as far as wellness, for 20-plus years,” says McWilliams. “They were one of the first companies doing health risk assessments. Not just the survey health risk assessments, they were also doing the blood draws.”
For some KI employees, this kind of incentive is enough to motivate them to improve their health.
“We have had a lot of people where their goal every year is to get a little bit better and to move up into those different premium levels,” says McWilliams.
But as in school, not everyone is motivated by grades. And some people would rather not participate at all.
“For those that don't test, you're going to get an 'F' premium, which is what we basically call it,” says McWilliams. “You're going to pay a lot more for your premium.”
According to a 2015 Kaiser Family Foundation, 31 percent of large companies offering health benefits give employees some kind of incentive for completing a health risk assessment and 28 percent for completing a biometric screening.
New Jersey-based Honeywell International is one of those companies. Employees and spouses covered by the company's health insurance were penalized if they said no to the biometric screening-which checked blood pressure, cholesterol, signs of nicotine use and waist circumference.
However, Honeywell's disincentive, as it's called, was a little more than just a nudge in the right direction. Refusers could be penalized annually up to $4,000 each through lost health insurance contributions and surcharges.
The U.S. Equal Employment Opportunity Commission, an independent agency, objected. It sued Honeywell in 2014, claiming that the screening violated the Americans with Disabilities Act and Genetic Information Nondiscrimination Act. Honeywell stood behind its program.
Although the EEOC is a government agency, the Affordable Care Act-another government program-allows these kinds of incentives for wellness programs. It caps them, though, at 30 percent of the insurance premium-or 50 percent for tobacco-cessation programs. The ACA is less clear about disincentives.
Fast forward to late last year. A federal district judge ruled that employers can require its employees to undergo biometric screenings in order to receive health coverage provided by the employer.
This is likely not the end of the battle for the EEOC. But many employers are treading carefully when they 'encourage' employees to participate in wellness programs.
“We used to tie [the annual medical assessments] to our health savings account contribution,” says McWilliams. “If you didn't test, you didn't get that contribution. Now we can't do that, per the laws.”
Instead, KI offers employees who undergo the health assessment lower premiums, with bigger savings if you are healthier.
Companies that offer wellness programs often talk about wanting their employees to be healthier. But financial matters are also in the mix. Employees with chronic diseases like obesity, diabetes and heart disease cost companies big money.
According to the Centers for Disease Control and Prevention, in 2012 the medical costs for diabetes alone was $176 billion. On top of that, this one disease resulted in $69 billion in decreased productivity from missed workdays or employees working less effectively.
When companies invest in wellness programs, they are often hoping to save money by lowering healthcare costs and boosting their employees' productivity.
There are two basic types of wellness programs. The first is lifestyle management, designed to help employees live healthier lives-by exercising more, eating better, quitting smoking and other lifestyle changes. These activities are known to lower the risk of developing many chronic diseases.
Lifestyle management is much more common among businesses than health risk assessments and biometric screenings. According to the Kaiser Family Foundation survey, 81 percent of large companies and 49 percent of small ones offered employees these kinds of programs.
The other type of wellness program is aimed at helping employees manage their existing conditions. According to a 2014 study by the RAND Corporation, these efforts give companies a much higher return on their investment.
The RAND study included 600,000 employees at seven employers. On average, wellness programs saved those employers about $30 per month for each participating employee. However, the lifestyle management component accounted for only a small part of the savings.
Helping employees keep their health conditions under control-such as encouraging them to monitor their glucose levels, take their medications regularly and attend follow-up doctor visits-was responsible for 87 percent of the savings. And that's with only 13 percent of employees participating in this component.
The reason? Hospitalizations for chronic diseases like heart disease and diabetes cost a lot of money, expenses that are passed onto companies through health insurance premiums.
Although helping employees control their existing conditions may save companies more money, building a culture of wellness in a company can keep employees happier over the long run.
And over time, the results will pay off-as KI has discovered during the decades that it has been offering wellness programs to its employees.
“We track the scores every year. We want to better ourselves as a company,” says McWilliams. “When we first started these assessments-that was 20-plus years ago-our average score was below 50 [out of 100], and now we're well over 77 as an average score.”
At KI, the company's lifestyle management offerings also give employees a chance to improve their health, and save money by moving up to the A-level insurance premium.
“That's a huge part of our wellness program now,” says McWilliams. “These programs are mandated, but if anyone is below the 'Gold' level in our premium level, they're eligible for this wellness program-and it's free to them.”
Free, though, doesn't mean widely used.
Out of KI's just under 2,000 employees, only 114 people completed this quarterly program last year. McWilliams says more people signed up this year, but not everyone makes it through each session.
Motivating people to take charge of their health can be as challenging for companies as it is for public health agencies.
“If anybody has that magic answer, I would love to hear it,” says McWilliams.