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Are Health and Wellness Programs Worth the Investment?

If you think back to New Year’s Day, a recurring resolution for many people is to improve their health. No one will deny the advantages of living a healthy lifestyle, but often, people need help putting that into action. Many companies offer health and wellness programs for their employees. According to an Aflac WorkForces Report published in 2018, approximately 50% of the companies surveyed offered some type of workplace wellness program. In 2012 that number was only 30%. So these programs are becoming more popular and something that employees may come to expect. But are they effective?

According to the International Foundation of Employee Benefit Plans (IFEBP), only 28% of companies are measuring the return on investment of these programs. There are really two variables to look at when determining the return on a health and wellness program, the financial return on investment (ROI) and the value of investment (VOI).

Return on Investment: The Rand Corp., a nonprofit research institute, examined 10 years’ worth of data from a Fortune 100 employer regarding their wellness program. They found that when there were programs in place to help employees manage chronic illnesses, the company saved $3.78 in medical costs for each dollar invested. The lifestyle management portion (helping people stay healthy or become healthier through diet and exercise) showed an estimated return of about $1.50 per dollar invested. These are some of the areas where you can monitor your ROI.

  • Lower Health Coverage Costs: By encouraging healthy behaviors and helping those manage chronic illnesses, you can track expenditures spent on healthcare. A study done by the Kaiser Family Foundation found that after four years, a large school district was spending less on healthcare costs then they did before their program began.

  • Improved Productivity: A University of California Riverside study showed that companies offering wellness programs saw participating employees increase their productivity an average of one additional workday per month. How productivity is measured can be different for various industries. It may be in units/products produced, products sold, customers or clients served, or new accounts opened.

  • Reduced Absenteeism: Healthier employees take fewer sick days. You’ll also have reduced “presenteeism”, where employees come to work because they don’t want to take a sick day, but essentially, they are not working to their full potential.

  • Reduced Workers’ Comp and Disability Claims: Employees who are living a healthy lifestyle have a lower chance of workplace injury, illness, or disability. Studies have also shown that if a claim is filed, healthier workers claims are usually for a shorter period of time.

Value on Investment: What the Rand study failed to account for was the VOI. Determining the VOI can be a little harder to do, but you also want to evaluate your program on these measures as well since they tend to focus on the overall well-being of employees. And, in the long term, they eventually may translate into a financial ROI.

  • Improved Job Satisfaction: The IFEBP study reports that 67% of employers revealed that employee satisfaction with their job had increased when they participated in a wellness program.

  • Improved Morale: More than half of benefits professionals say that employee morale is the most improved metric from their wellness program (HUB International). Improved morale also leads to an overall improved work atmosphere and feeling of comradery among coworkers.

  • Attract and Retain Valuable Employees: A well run wellness program can be an attractive soft benefit in a competitive market for talent.

There is more to consider than just the dollars when evaluating the success of company health and wellness programs. The best evaluation will include both the ROI and VOI as this gives a more comprehensive picture of the program’s results.

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