Wellness Initiatives Can Reduce Employer Health Care Costs

September 9, 2013 (PLANSPONSOR.com) – A recent study found that, in order to deal with rising health care costs, U.S. employers are increasingly making use of employee wellness programs, as well as benefits technology that can cost-effectively administer such initiatives.

The bswift “2013 Wellness and Benefits Administration Benchmarking Study” examined increasing employer investment in wellness initiatives, the need for automation and the impact on overall costs for employers.

The study found that:

  • Employers are increasingly investing in wellness incentives. In 2013, more employers have offered incentives to motivate employee participation in wellness programs. While large employers experienced only a slight increase, from 76% to 78%, the use of incentives by smaller employers increased from 52% to 69%.
  • Biometric testing emerged as the foundation of most wellness programs. This year, 77% of large employers said they have biometric testing in place for employees compared to last year’s 61%.
  • Premium adjustments are the most common incentive payment mechanism. Most large employers (64%, up from 59% in 2012), use health insurance premium discounts or surcharges to motivate employees.
  • The dollar value of wellness incentives continues to increase. More than half of large employers, 54%, reported spending more than $250 annually per employee on wellness incentives compared to 49% in 2012.
  • Employers remain only partially automated for benefits administration. Almost one-third (31%) of large employers do not offer online benefit enrollment for new hires. Similarly, 31% of large employers still manually adjust coverage amounts when employees turn 65 or 70. And 63% manually verify dependent eligibility for life events. These high numbers suggest a significant opportunity for administrative cost savings, especially given the availability of economically viable technology that automates these processes.

The study concluded that wellness programs, when carried out properly, can improve the overall health of employees and reduce employers’ outlay for health care. The emerging evidence from the study and insights from industry experts suggest that, in order to achieve a higher return on their wellness investment, employers need to shift from participation-based to outcomes-based programs to keep employees engaged.

In addition, the study found that as employers pursue these cost-containment strategies—wellness, defined contribution (DC) and consumerism/transparency—automation and technology can amplify the impact. By automating enrollment, premium adjustments, incentive payouts, life event changes, analysis and communication, employers can achieve significant efficiencies and cost savings. Given today’s fast changing world of health care and benefits, the study anticipates larger numbers of employers to invest in automation and technology.

The study was conducted online during March by Source Media, publisher of Employee Benefit News, and surveyed 380 benefit decisionmakers at organizations that offer health benefits. The firm of bswift offers software and services that streamline benefits, human resources and payroll administration for employers, and public and private exchanges.

A copy of the study can be found online at http://www.bswift.com