Employers Association of New Jersey
A nonprofit association helping employers create exceptional workplaces since 1916.

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Focus on Employee Wellness in the New Year

Dec 2011

The cost of employee health insurance coverage is expected to rise again in 2012, as employers adopt new cost-saving strategies, including employee wellness and engagement programs.

New reports indicate that health insurance costs have risen sharply in 2011 and are expected to continue climbing in 2012 by an average 9 percent. Over the past five years, health benefit increases have risen an average of 9 percent annually so next year represents more of the same.

To cope with future cost increases, 33 percent of employers plan to raise contributions for employee-only coverage, 36 percent plan to raise contributions for dependent coverage, 33 percent plan to increase deductibles, co-pays and out-of-pocket maximums, 7 percent plan to increase cost-sharing some other way and 39 percent are not planning to ask employees to pay a greater share of the cost, according to a report issued by Mercer.

But according to John Sarno, president of the Employers Association of New Jersey (EANJ),  “after nearly three years of doing more with less and minimal wage increases, the more cost shifting [onto employees] is punishing,” says Sarno. 

An alternative for many employers is the focus on employee wellness.

According to the Cornell University Institute for Health and Productivity Studies, a company investment of $100 to $150 per employee each year can save employers $300 to $450 for each employee per year.  On the high-end, the Wellness Councils of America reported a $24 return on every one dollar spent on a company wellness program for small business. In a 2005 survey by The Art of Health Promotion, employers that instituted employee health and wellness programs realized a 30% reduction in absentee costs.

According to health care experts, at least 25 percent of health care costs incurred by working adults are directly attributable to health risks that can be modified (e.g., diet, exercise, tobacco use, moderate alcohol consumption, etc.).  Moreover, the lost productivity due to absenteeism would substantially increase if the costs of “presenteeism” were also included.

“Presenteeism” is when employees report to work but are less productive in their jobs because of poor health or wellbeing.

Sarno says that smaller employers face obstacles in developing employee wellness programs. “They often lack the resources and think of it as a legal hassle. But the direct and indirect costs add up,” he says.
For example, Gallup estimates that 450 million days of work a year are missed because of health problems, resulting in an estimated cost of $153 billion in lost productivity. Statistically, even if there are only 50 employees within a company:

•    30 sit all day to do their work,
•    25 experience moderate to severe stress,
•    17 are overweigh by 20% or more,
•    12 smoke,
•    12 suffer from some form of cardiovascular or other disease,
•    25 have high cholesterol (over 200 mg/dl),
•    8 take a prescription drug for depression, anxiety or other mental disorder,
•    5 are heavy drinkers,
•    5 have high blood pressure,
•    3 are diagnosed with diabetes,
•    5 use marijuana, and
•    1 uses cocaine

Employer sponsored wellness programs can be as simple as bringing baskets of fresh fruit into break rooms to encourage better eating. For a smaller employer, a typical wellness program may include a health assessment, “lunch and learns” and incentives for healthy behavior.

For employers that want to focus on productivity, employee engagement and wellness, EANJ has launched a free, web based program with the help of the Robert Wood Johnson Foundation.

The website provides easy to understand guidance and explains the relevant law in plain language.

For EANJ’s comprehensive online resource, click here.

EANJ is a nonprofit trade association dedicated to improving employer-employee relations and facilitating the exchange of information among employers. It does not render legal services, offer legal opinion or engage in the practice of law.