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Investing in Employee Health Pays Handsomely in Employee Health and Investor Returns

stock marketThree recent studies found that companies with award-winning wellness programs also have award-winning stock prices, outperforming the Standard and Poors (S&P) Index by 7-16% annually.

Previously, approximately 50 scientific, peer-reviewed studies confirm the effectiveness of robust corporate health strategies for reducing medical costs and other benefits.

The new studies link investment in employer health with financial performance.

According to one study appearing in the Journal of Occupational and Environmental Medicine, companies that have won the American College of Occupational and Environmental Medicine’s Corporate Health Achievement Award (CHAA) outperform S&P 500 companies at a ratio of nearly 2:1.

The Corporate Health Achievement Award is not the only award that indicates a business invests in the health and safety of its employees. Another award, the C. Everett Koop Award offer recognition to organizations that promote wellness programs that result in behavioral changes among employees that actually reduce health risks. Healthy Americans report that Koop winners outperformed S&P 500 businesses by 2.35 to 1.00, showing that the CHAA results were not an isolated instance.

Psychological Science also states that while companies receiving the Koop award also lost value during the stock market downturn, these companies were not hit as hard. Further, the Koop award winners improved performance faster than the rest of the market during growth periods.

Another study evaluated the stock performance of companies that achieved high marks on the Health Management Best Practices Scorecard from the Health Enhancement Research Organization (HERO). The American College of Environmental and Occupational Medicine reported that high scoring, publicly-traded companies appreciated by 76% more than the S&P 500 Index over a 6-year period.

Conclusion

Stock prices with award-winning health programs outperform the market.  The studies demonstrate correlation rather than causation. In other words, even if the programs did not cause the stock to rise,  emphasizing comprehensive employee health initiatives is associated with  high-performing companies.   An effective corporate health strategy is also a key operational strategy.

Unfortunately, the transformation to becoming an employee health-focused company that enjoys the types of results mentioned above isn’t an instant fix. In fact, it may take years, so consider this a long-term investment in your employees and your business.

Steps Businesses can Take for Positive Health Focus Content

In light of these insights, the challenge now is to shift the focus of your organization to take employee health into account in multiple areas, including these:

-Encourage use of covered preventive health benefits.
-Measure avoidable health conditions through a proven employee health risk assessment.
-Offer disease management programs.
-Provide behavioral health programs to address depression and anxiety.
-Support healthy lifestyles with corporate policies, environment and education.

The more changes you make as a business to get employees active and healthy, the better that investment will pay off for your business over time – in productivity, profit, and investor attention.

About

Scott is President of Wellco, based in Michigan. Scott is a frequently- invited expert and speaker regarding making sense of employer health care strategies and return on investment.     Scott and Wellco have developed award-winning, result-oriented systems to measurably improve employer health conditions and costs.  Contact Wellco.

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Wellness Incentives: Untangling the Controversies

 

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A 2014 study by Fidelity Investments and the National Business Group on Health reported that employers planned to increase incentive budgets for employee wellness programs by 15% compared with 2013. Moreover, the study reported that incentive spending more than doubled from 2009 to 2014. Corporations allocated $594 per employee on average in 2014.

Around 88% of employers with 500 or more workers offer wellness programs of some sort, offering incentives to employees who undergo screenings, and those who achieve certain health-related results, like progressing toward blood pressure or BMI targets. Ensuring that wellness incentives meet the requirements of the Affordable Care Act (ACA) and the Americans with Disabilities Act (ADA), however, presents challenges.

ACA Requirements for Wellness Programs

The ACA encourages employers to provide wellness incentives, including both penalties and rewards, including significant incentives for helping employees quit smoking. ACA-designated wellness programs may be outcome-based or activity-only.

Outcome-based programs offer wellness incentives to employees who meet goals like lowering their body mass index, quitting smoking, or lowering cholesterol levels. For those who don’t meet the outcome-based standard, programs must offer reasonable alternative standards to ensure programs are designed to improve health rather than simply reducing benefits based on health standards.

Activity-only programs reward individuals for completing activities related to a health factor, without a particular outcome requirement. Again, a reasonable alternative standard must be offered for those for whom the activity would be unreasonably difficult due to medical conditions.

Wellness Programs Targeted by EEOC

The Equal Employment Opportunities Commission (EEOC) has recently filed three lawsuits against companies for violating federal law with wellness incentives. In August 2014, the Commission charged Orion Energy Systems of Wisconsin with federal law violations under the ADA for requiring employees to submit to non-job-related medical exams and firing an employee who objected.

A second suit was filed by the EEOC in October against Flambeau, Inc. of Baraboo, Wisconsin. The suit alleges Flambeau unlawfully threatened insurance cancellation and discipline if an employee didn’t submit to medical testing as part of a wellness incentive program. Employees were required to undergo medical testing or face cancellation of insurance, though they could elect to pay the full premium themselves.

A third suit was filed in October against Honeywell International, Inc. The EEOC alleges that Honeywell’s incentives for biometric testing rendered the program involuntary, in violation of the ADA and the Genetic Information Non-discrimination Act (GINA). Honeywell countered that its incentives fall within specified ranges under the ACA.

EEOC: Significant Incentives Render Programs Involuntary

The EEOC says that when wellness incentives are significant (when they include loss of health insurance coverage, large premium surcharges, or loss of 100% employer-paid premiums), they are no longer voluntary. While the recent lawsuits give some indication of what the EEOC considers “significant” wellness incentives to be, the Commission has not specifically stated thresholds that render wellness incentives involuntary. The EEOC has said it plans to issue proposed regulations concerning wellness incentives, but those regulations have not yet been issued.

The ADA and Wellness Incentives

Under the ADA, employers can’t ask employees disability-related questions or require employees to undergo medical exams unless the questions or exams are job-related and necessary to business. But the ADA does allow disability related questions and exams as part of wellness programs that are voluntary, and where the information obtained is kept confidential and not used to discriminate based on disability. Under the ADA, “voluntary” means the employer doesn’t require participation in a wellness program and doesn’t penalize employees for non-participation.

Federal Government Referee

As a result of EEOC lawsuits and confusion regarding overlap among the ADA, GINA and ACA, Congress recently sponsored a bill to guide employers. The Preserving Employee Wellness Programs Act (H.R. 1189, S. 620) would allow participation-based incentives for employees and spouses. The bill would also provide employees with 180 days to request reasonable alternative means for individuals where participation may be unreasonably difficult or inadvisable due to medical conditions. Sponsors of the Act, Rep. John Kline, R-MN and Sen. Lamar Alexander, R-TN, state the bill will reaffirm the existing law.

How Employers Can Stay on the Right Side of Regulations

What can employers do to provide wellness incentives while remaining in compliance with regulations under the ACA, the EEOC, GINA and the ADA? Employee Benefit Advisor recommends taking the following steps:

• Ensure incentives are covered by the ADA’s health plan safe harbor, which says the ADA can’t be construed to prohibit or restrict employers for creating or administering terms of a benefit plan based on underwriting or classifying risks. Generally, this means making wellness incentives as part of the employer’s group health plan.

• Making sure wellness incentives comply with HIPAA. HIPAA limits incentives offered under certain wellness programs. Limits are 30% of the cost of health plan coverage, or, for programs for preventing tobacco use, 50% of the cost of coverage.

• Structuring wellness programs as “carrots” rather than “sticks.” In other words, premium discounts for participants are preferable to premium surcharges for non-participants.

• Ensuring that employees who can’t obtain the benefits of wellness programs due to disabilities are offered reasonable accommodations like waivers, less stringent target incentives, or alternative programs that encourage healthy behavior.

Conclusion

Wellness incentives offered by employers are increasingly popular as healthcare costs continue to increase. However, some wellness incentives are stringent enough that the EEOC has taken notice, and in some cases filed suit, alleging the incentives are significant enough that the programs aren’t really “voluntary” at all. Ensuring that wellness incentives comply with regulations under the ACA and the ADA allows employers and employees to reap the benefits of wellness programs while minimizing litigation risk.

About

Scott Foster is President of Wellco. Wellco provides award-winning, results-oriented systems to measurably improve organizational health costs and conditions.

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Are You the Best and Brightest In Wellness?

spacerThe Search Is On For 2014!  Are You the Best and Brightest In Wellness?The Best and Brightest In Wellness recognizes and celebrates quality and excellence in worksite health promotion. The program highlights companies that promote a culture of wellness, and those that plan, implement, and evaluate efforts in employee wellness promotion.  This awards symposium celebrates the companies that are making their business, their employees and the community a healthy place to live and work.

Learn more and nominate by following this link.

Wellness Grant Update

White HouseThe Affordable Care Act (ACA) features wellness prominently and uses the word wellness 86 times. The most pertinent wellness issues are in the Prevention of Chronic Disease and Improving Public Health Section (Title IV). Section 10408 identifies $200M for small businesses to provide comprehensive wellness programs. Funding for wellness initiatives is primarily allocated through the Prevention and Public Health Fund.  Due to current budget debates, related wellness funds have yet to be appropriated.  Further, no funds are yet available for implementation of the Affordable Care Care Act, including the Prevention and Public Health Fund.  However, the fund remains despite 34 prior repeal attempts. Also, the Centers for Disease Control and Prevention (CDC) have committed to wellness funding with ongoing, incremental wellness grant opportunities. Once appropriated, funds and selection protocols are coordinated by the CDC and by the Secretary of Health and Human Services.  In the meantime, $358.8M has been awarded throughout the nation for health improvement initiatives.

Previously, about 100 employers across the nation are receiving comprehensive wellness programs as a result of a $9 million grant from the CDC. Companies of various sizes across 7 national regions are being provided with 2-years of support to develop or expand their workplace health programs. The programs are being facilitated by Viridian Health Management and evaluated for effectiveness by North Carolina’s Research Triangle Institute.

Future programs need to be comprehensive wellness programs that meet evidenced-based guidelines according to the Guide to Clinical Preventive Services, National Registry for Effective Programs and the Guide to Community Preventive Services. Develop your plan now to jumpstart opportunities and complement your existing efforts.

About Scott Foster and Wellco
Scott Foster is President of Wellco, based in Michigan. Scott is a frequently invited expert and speaker regarding wellness ROI and making sense of new health care strategies. Wellco is the nation’s leading wellness systems provider. Wellco provides award-winning, results-oriented systems to fix wellness programs and measurably improve organizational health costs and conditions. Wellco specializes in ROI and appraisal systems, corporate wellness programs, speaking, and consulting. For more information, visit www.wellcocorp.com or call 248-549-4247.

Permission to Reprint
You may reprint any items from Health Trends Blog in your own print or electronic newsletter. When you do, please include the following paragraph: Reprinted from “HealthTrendsBlog.com,” free, proven corporate wellness ROI strategies and market intelligence. Subscribe and receive a free market special report at www.wellcocorp.com. Copyright (c) by Wellco.

 

 

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