Employee wellness or wellbeing has become a growing focal point of many organizations’ rewards programs, in an effort to help employees better maintain their physical, mental, emotional, and financial health. A new survey from Willis Towers Watson, however, suggests that most employees don’t think these programs are really encouraging them to live healthier lifestyles, with only 32 percent of employees agreeing that they were, compared to 56 percent of employers. David McCann recently covered the survey at CFO:
If you believe employers’ claims, they’re more concerned with their workers’ health than the workers are. While 87% of participating employers claimed that increasing employee engagement in health and well-being is a top priority, a substantially lower proportion (65%) of employee respondents rated managing their own health as a top priority.
Indeed, a majority (54%) of workers think their employer should financially reward them for living healthy lifestyles. And employees increasingly say they would participate in health and wellness programs only if offered incentives; 46% of them said so in 2017, compared with 35% in 2011.
Our own research at CEB, now Gartner, has also shown that employers are still working to achieve the right balance of features in their wellbeing programs and maximize their impact on employee engagement. In a peer benchmarking session at the CEB ReimagineHR summit in Washington, DC, last October, more rewards leaders said they expected wellness or wellbeing to be their number one area of change in 2018 than healthcare or retirement. Budgetary allocations for these programs are not growing, however, meaning HR leaders are being asked to do more with less.
While organizations have been using health and wellness programs to engage employees for decades, in recent years the rewards space has moved toward a more holistic view of employee wellbeing. Today, companies are feeling pressure from all sides to enhance their employee wellbeing programs. Employees are hearing more about the wellbeing benefits their friends are being offered at other organizations, our peers are innovating in this space, and vendors are constantly coming up with new services to differentiate themselves as they compete for our business.
Facing these combined pressures, companies have greatly expanded their wellbeing offerings in the past five years: Whereas in 2013, the average company had four wellbeing programs, by 2017 that number had quadrupled to 16. In a peer benchmarking session at the CEB ReimagineHR summit in Washington, DC, last Thursday, a plurality of rewards leaders said they expected wellness or wellbeing to be their number one area of change in 2018, more than healthcare or retirement.
Budgets for wellbeing, however, are not growing: Most companies we surveyed at CEB said their wellbeing expenditures were either remaining the same or decreasing from 2016 to 2017. As demand grows while budgets stagnate, many HR functions are being asked to do more with less in their employee wellbeing programs. Here are some facts for total rewards leaders to keep in mind as they try to get the most bang for their wellbeing buck.
Holistic Wellbeing Programs Have a Real Impact on Engagement
The shift in the conversation from wellness to wellbeing reflects a growing awareness that maximizing employee productivity and minimizing health care costs involves not just preventing or managing diseases, or even promoting physical fitness, but also helping to mitigate stress. That’s how psychological, emotional, and even financial wellbeing became part of the more holistic offerings we’re seeing today.
And there’s a good reason for this change, because organizations with well-designed holistic wellbeing programs see levels of employee engagement nearly 10 percent higher than average. Designing a progressive wellbeing program has as much positive impact on engagement as letting employees choose their own hours, and three times as much impact as providing dental and vision benefits.
In May 2016, the US Equal Employment Opportunity Commission adopted new rules that allowed organizations to incent employees to share their health information as part of a workplace wellness program, determining that wellness programs would still be considered voluntary as long as these incentives or discounts did not exceed 30 percent of the cost of an employee’s individual health coverage. This Tuesday, a court in Washington, DC, determined that these rules were arbitrary and ordered the EEOC to rewrite them, SHRM’s Allen Smith explains:
Rather than vacate the rules, the court sent them back to the agency for redrafting in an attempt to avoid business disruptions. But the decision still creates “confusion and uncertainty” about employer wellness programs, said Ilyse Schuman, an attorney with Littler in Washington, D.C., and co-chair of the firm’s government affairs branch, the Workplace Policy Institute. HR professionals should know that the decision threatens the viability of wellness programs, and an employee may push back on an employer that uses financial incentives or penalties to encourage wellness program participation, said Ann Caresani, an attorney with Tucker Ellis in Cleveland and Columbus, Ohio.
“The EEOC’s regulations were helpful to employers because they finally resolved the long-pending question of what EEOC would consider to be a permissible incentive under ADA [Americans with Disabilities Act] and GINA [Genetic Information Nondiscrimination Act],” said Frank Morris Jr., an attorney with Epstein Becker Green in Washington, D.C. “This permitted employers who wanted to use incentives to design [them] with reasonable certainty that they would be lawful under the two statutes.”
The court ruled that the EEOC had failed to provide a well-reasoned justification for setting the limit for incentives at 30 percent of the cost of a health insurance plan, a figure it had simply borrowed from Health Insurance Portability and Accountability Act (HIPAA) regulations. Furthermore, the rules address information protected by the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act, but did not consider the potential for employers to stack incentives for disclosing their own ADA-protected information and their spouses’ GINA-protected information.
In recent years, behavioral economists have become increasingly enthusiastic about the concept of “nudging”—prodding people toward more beneficial behaviors by making them the default option in some of the many choices individuals make about their health or finances. An example of nudging with which employers will be familiar is auto-enrollment in 401(k) plans, which past research has shown results in much higher participation rates than an opt-in system: When the default option is to participate, employees are more likely to do so because it takes more effort not to. Employers have also experimented with nudging strategies to encourage employees toward healthy choices like getting their yearly flu shot.
The latest research The Association for Psychological Science highlights a new study published last week that “compared the effectiveness of nudge-type strategies with more standard policy interventions” and found that nudges are substantially more effective at encouraging both financial and physical wellness:
In the case of retirement savings, for example, a nudge that prompted new employees to indicate their preferred contribution rate to a workplace retirement-savings plan yielded a $100 increase in employee contributions per $1 spent on implementing the program; the next most cost-effective strategy, offering monetary incentives for employees who attended a benefits fair, yielded only a $14.58 increase in employee contributions per $1 spent on the program.
At Personnel Today, occupational physician Dr. Paul J. Nicholson offers a detailed criticism of research purporting to show a return on investment from workplace wellness programs. These studies, Nicholson argues, are seldom rigorous and often appear designed to “show what people wish to demonstrate”—i.e., a direct financial benefit from wellness or wellbeing programs, when the real benefits may be less tangible:
A systematic review of the methodological quality of 34 economic evaluations of occupational health interventions reported that less than half of the studies satisfied more than 50% of methodological quality criteria, and only three studies met more than 75% of the criteria. After all, workplace wellbeing programmes are conducted at work sites and not in controlled environments, hence several intervening factors might explain, to some extent, the results of an evaluation. …
Taking note of the small, diverse body of evidence with many methodological limitations and risk of publication bias, the most that we may be able to say currently is that studies graded as having low strength of evidence support the effectiveness of wellbeing interventions for improving some health behaviours (reduced tobacco use, improved diet and reduced sedentary work behaviour); evidence is insufficient or lacking for other outcomes of interest.
The methodological problems with these studies range from selection and attrition biases, to the absence of a control group, to limited timeframes and subjective metrics. Nicholson points out these flaws not to disparage employee wellbeing as a goal of management, but rather to stress that “cost-effectiveness is not the only driving force for providing access to occupational health and wellbeing services”:
A major emerging area of employment law and policy concerns employers’ right to collect employee health data or genetic testing data as part of a workplace wellness program, and to compel employees to participate in these programs by offering incentives. Although overshadowed by their plan to repeal and replace the Affordable Care Act, a bill advanced by Republicans in the US House of Representatives last week would significantly expand employers’ rights in this regard by legislating that the genetic privacy protections of the Genetic Information Nondiscrimination Act of 2008 (GINA) don’t apply to genetic tests conducted as part of a wellness program, according to Sharon Begley at Stat News:
The bill, HR 1313, was approved by a House committee on Wednesday, with all 22 Republicans supporting it and all 17 Democrats opposed. It has been overshadowed by the debate over the House GOP proposal to repeal and replace the Affordable Care Act, but the genetic testing bill is expected to be folded into a second ACA-related measure containing a grab-bag of provisions that do not affect federal spending, as the main bill does.
“What this bill would do is completely take away the protections of existing laws,” said Jennifer Mathis, director of policy and legal advocacy at the Bazelon Center for Mental Health Law, a civil rights group. In particular, privacy and other protections for genetic and health information in GINA and the 1990 Americans with Disabilities Act “would be pretty much eviscerated,” she said.
Both the American Benefits Council and the Society for Human Resource Management are backing the bill, Richard Stolz explains at Employee Benefit News:
Last May, the US Equal Employment Opportunity Commission issued new rules allowing employers to provide employees incentives to share their health data as part of a corporate wellness program, deciding that a program is still considered “voluntary” as long as any such incentives or discounts do not exceed 30 percent of the cost of the employee’s individual health insurance coverage. In October, however, the AARP, a group that advocates for older Americans, sued the EEOC in federal court to stop those rules from coming into effect, arguing that these incentives constituted coercion and violated non-discrimination laws.
Just before the new year, Judge John Bates of the federal district court for the District of Columbia rejected the AARP’s complaint. Health Affairs reported on the details of the ruling:
The judge concluded that information privacy interests are in fact important, but that the threat to these interests in the case was not irreparable. The AARP members could pay higher premiums while the case was pending, and if they prevailed in the end they could recover the money they had paid.