W2 Issues/Concerns


Check out our weekly blog posts and see the latest news and discussions happening in the HR world of business.

How To Control Runaway Health Care Costs

In recent years, the cost of providing healthcare to employees has continued to climb – you pay more to provide coverage, they pay more in co-pays and prescription costs, and no one is happy. However, there is one key way that you can reduce spending on health costs: wellness program offerings.

Wellness programs returned $3 in health care savings and $3 in reduced absenteeism cost for every $1 invested, according to a Harvard Business Review analysis.

Professionally administered wellness programs with a full-service Professional Employer Organization (PEO) like Abel HR can also boost productivity, engagement, morale while lowering stress levels while even offering some team-building for employees.

Cost savings are there, but very much dependent on the type of programs you offer, according to a RAND Corporation study. A PEO’s human resource professionals can help you determine what type of program will best fit your employees and bottom line.

RAND notes that most employer wellness programs include two components:

  • Lifestyle management program that focuses on employees with existing health risks, such as programming for smoking cessation or weight management for obese individuals. This program tends to lower costs in the long-term with improved lifestyles.
  • Disease management program is designed to help employees who have pre-existing chronic conditions. This program offers shorter-term gains as conditions are managed more effectively to hopefully prevent costlier complications. Chronic conditions can cost up to 50 percent of a company’s claim expenses.

The overall return on investment (ROI) for wellness programs was $1.50 for every $1 that the employer invested in the program, in RAND’s analysis. However, the ROI for disease management was $3.80, while the ROI for lifestyle management was just $0.50 for every employee dollar spent.

Additional Harvard Business Review analysis found that disease management supports 86 percent of the hard health care cost savings. This translates to $136 in savings per member, per month and a 30 percent reduction in hospital admissions.

It also suggests that a disease management program that preempts 25 unnecessary emergency department visits can easily save $50,000, while preventing four inpatient stays could save upwards of $100,000.

In terms of administering and promoting a formal wellness program that is tied to insurance cost incentives, there are rules in place that Abel HR can help manage. The general benchmark for regulation is determined when the employer offers incentives that amount to 30 percent of coverage costs. Health Insurance Portability and Accountability Act (HIPPA), Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) all have slightly different sets of rules for wellness programs. The Equal Employment Opportunity Commission (EEOC) is set to rule on revisions to the ADA’s incentive regulations issue later this year after a suit brought forth by AARP.

The courts indicated that the EEOC, which has had rules in place since 2017, hasn’t provided enough guidance to justify the 30 percent limit yet or addressed the differences between the laws set forth by different agencies.

Abel HR’s professionals will help you ensure compliance with whatever plan you determine.

Wellness plans don’t always have to be super complicated. Encouraging walking on breaks, offering healthier snacks in the break room and ensuring employees understand the depth of their health plans to address health concerns is a place to start.

Sometimes a big part of the puzzle is simply connecting your employees with the services that they need, such as linking them up with a mobile mammogram service or finding a local clinic that can perform regular blood pressure screenings on employees with hypertension.

Ask us how or call us at 800-400-1968.

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