Insurance carriers may present barriers to ROI on wellness programs

Sunday, 24 July 2011 16:00

News - Corporate Wellness Programs

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When considering implementation of an employee wellness program, business administrators often research the return on investment (ROI) that their company is likely to see as a result of improved employee health.

Herein lies the problem for small businesses: Community rating in a small-group market can degrade ROI, since the insurers tend to blend a small employer's rate with that of the rest of their clients, according to BusinessInsurance.com.

For example, a 55-person company that achieved two to one ROI with their wellness program did not end up with significant employee health benefit savings until they became self-insured, the website reported.

"Their calculations were based on the assumption that they were 100 percent credible but, to the carrier, they were only 30 percent credible. So it only affected 30 percent of the renewal calculation,” said Chris Hogan, president of an Arizona benefit consulting firm, quoted by the news provider. “That's why more employers don't implement wellness programs.”

The Wall Street Journal has reported that wellness programs are often very beneficial for small businesses. Additionally, a small staff may be easier to reach, making the initiatives more effective.

The news provider recommended that these companies check their insurance claims data to determine what efforts may be most needed among a staff.