Wellness programs are a long-term investment. But how long should you wait for results?
Finance and the Chief Executive Officer (CEO) want hard numbers to show ROI. And wellness ROI is tougher to calculate than, say, a 401(k).
18-month guideline
Current studies have established some benchmark data on wellness Return On Investment (ROI) you can use as a guideline. It’s useful whether you already have a health promotion program or are thinking about starting one.
It usually takes at least 18 months from the launch of a health promotion program to see any results in your health care plan bottom line.
For a lot of firms, 18 months is the point at which workers’ improving health starts to cancel the cost of sponsoring and administering the health promotion program.
By and large, the long-term cost savings from a wellness program are going to be driven by how much you’re willing to spend. Normally, corporations get what they pay for – both in time and money invested.
As a rule of thumb, the typical cost to the employer is about $3 to $5 per participating employee per month. Within three years of launch, you ought to be seeing meaningful savings.
The average Return On Investment tends to be about $4 to $5 saved for every dollar spent. So how can you manage the costs in the short-term in order to achieve the long-term savings? and how can you maximize the long-term payoff?
Consider making wellness programs budget-neutral
For many companys, the most effective way to manage the cost of a wellness program in the start-up phase is to make it a budget-neutral expense.
In other words, the wellness program neither adds to your medical costs at the outset, nor lowers them. Example – You plan to roll out a wellness program effective Jan. 1. The wellness program will cost the organization $5 per staff member.
You can roll the $5 per month cost directly into the employee’s monthly share of their health care premium. In this age of continuous cost-shifting, most workers are used to seeing small increases in their monthly contributions each plan year.
Just make certain you’re not hitting folks with a big hike on top of that $5. Comparably designed health promotion programs pay off about the same – meaning staff purchase in and participate at the same rate – whether they’re budget neutral or the employer absorbs the cost.
But when employees get clobbered by large-scale contribution hikes at the outset, they often resist the health promotion program. The long-term Return On Investment for these health promotion programs is often disappointing.
If you’re faced with a situation where achieving a budget-neutral health promotion program would trigger push-back, your firm is better off absorbing most or all of the wellness costs.
The largest hurdle is to get over the hump for those first 18 months or so.
