Workplace wellness programs have become an essential part of self-funding as they can help employers and plan sponsors reduce claim costs by encouraging healthy behaviors among employees.
To explain how things work, in a self-funded plan, there is constant incentive to improve health throughout the year because claims are paid as incurred on a month-to-month basis. A traditional, fully insured plan works differently in that companies must pay a pre-determined rate each month no matter the total claims cost.
Here’s an example of how participating in a wellness program can play a role in controlling claim costs with self-funding. Let’s say an employer provides coverage to an employee with a high-cost medical condition who requires regular medical appointments and treatment. Over time, he begins using the health coaching services offered through the company’s workplace wellness program and taking part in some educational sessions and activity challenges. His health begins to gradually improve, thereby reducing the frequency of office visits and treatments.
The results of this wellness-focused behavior have a direct effect in a self-funded plan – as this member’s monthly claim costs start to go down, the health plan pays out less money. In contrast, even though less care is now required and claim charges aren’t as much, the employers with traditional, fully insured plans must still pay the same monthly amount as before.
With self-funding, third party administrators (TPAs) work with employers to help them understand the value of workplace wellness. They explain how programs can be customized to each company and why they are most effective when incorporating:
By educating employees on ways to live a healthier lifestyle and providing tools that help them do so, employers often see higher participation rates and more active engagement. Some will structure their wellness programs to provide basic screenings and health assessments. Others will take a more comprehensive approach by adding action-oriented solutions like coaching, gym sponsorships and fitness tracking/activity challenges.
No matter how a program is set up or what tactics it includes, the more employees who participate in workplace wellness, the bigger the impact can be in improving health and reducing claim costs.
To learn more about implementing a workplace wellness program, check out this article: The Role of Wellness: Putting a Wellness Program in Place.