Company Wellness Program ROI
Company 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 return on investment (ROI). And wellness ROI is tougher to calculate than, say, a 401(k).
Company Wellness ROI: The 18-month guideline
Recent studies have established some benchmark data on wellness ROI you can use as a guideline. It’s useful whether you already have a Company Wellness program or are thinking about beginning one.
It generally takes at least 18 months from the launch of a Company Wellness program to see any leads to your healthcare plan bottom line.
For a lot of firms, 18 months is the point at which workers’ bettering health begins to cancel out the cost of sponsoring and administering the Company Wellness program.
By and large, the long-term cost savings from a Company Wellness program will be driven by how much you’re willing to spend. Generally, businesses get what they pay for – both in time and money invested.
As a rule of thumb, the average cost to the business is about $3 to $5 per participating staff member per month. Within three years of launch, you ought to be seeing meaningful savings.
The typical ROI 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 company wellness programs budget-neutral
For many companies, the most effective way to manage the cost of a Company Wellness program in the start-up phase is to make it a budget-neutral expense.
In other words, the program neither adds to your healthcare costs at the outset, nor reduces them. Example – You plan to roll out a Company Wellness program effective Jan. 1. the program will cost the company $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 employees 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 Company Wellness programs pay off about the same – meaning staff members purchase in and participate at the same rate – whether they’re budget neutral or the company absorbs the cost.
But when staff members get clobbered by large-scale contribution hikes at the outset, they often resist the Company Wellness program. the long-term ROI for these programs is often disappointing.
If you’re faced with a situation where achieving a budget-neutral program would cause push-back, your firm is better off absorbing most or all the wellness costs. The largest hurdle is to get over the hump for those first 18 months or so.