Your Employees Health Has Huge Impact on Cost
Risk managers often look to their safety program, their return to work program, their medical management team and their claims adjusters to keep the cost of workers’ compensation under control. These are all good approaches, but they can be undermined by the physical fitness of the work force. Obesity is one of greatest drivers of the cost of workers’ compensation.
Duke University Study
The famous Duke University Medical Center Study published in the Archives of Internal Medicine in April, 2007 showed that obese employees with a body mass index (BMI) of 40 or greater have a major impact on the cost of workers compensation. The findings of the Duke University Medical Center included:
- Obese employee had work comp claims at twice the rate of non-obese employees
- Obese employees lost 13 times as many days from work as the non-obese employees
- Obese employees medical cost was nearly 7 times higher than the medical cost of the non-obese employees
- Obese employees work comp indemnity cost was 11 times higher than the indemnity cost of the non-obese employees
Obesity Related Costs Exceed $13 Billion Per Year
According to a recent article in Best’s Review, obesity related cost to businesses exceeds $13 billion per year. To control the workers’ compensation cost due to obesity, the risk manager should team up with the human resources manager to create a wellness program to improve the overall health of the employees, including the reduction in the level of obesity.
Wellness Program Can Reduce Obesity
There are numerous approaches an employer can incorporate into a wellness program to reduce obesity and the associated cost to both the health insurance program and workers’ compensation insurance. Some of the methods include:
- A fitness program that includes exercise classes, health assessments, smoking cessation, health seminars and company sponsored sport teams.
- A nutrition program that teaches healthy eating habits including foods to incorporate in their diet and proper serving sizes
- Providing wellness bonuses to employees who meet specific criteria (for example: BMI below 25, non-smoker, blood pressure within normal range)
- Subsidizing the cost of weight loss programs like Weight Watchers, Nutrisystem and Jenny Craig.
- Walking programs that reward the employees for the miles traveled or steps per day (measured by free pedometers supplied to the employee)
- Dietary assistance by both replacing junk foods in snack machines with healthy alternatives and improving the cafeteria plan to eliminate calorie laden foods
- Charging higher health insurance premiums to obese employees or health insurance premium discounts to employees who have a BMI of 25 or lower (one of the provisions of the Affordable Care Act passed in 2010 allows employers to charge obese employees more for their health insurance).
- Personalized motivational programs designed to assist and encourage the employee in their efforts to lose weight
- Web-based programs for employees to track their progress in their weight loss efforts
- On-site fitness centers or subsidizing the cost of gym memberships for employees
Not only will the wellness program reduce the cost of workers’ compensation, the reduction in obesity will reduce the health insurance program cost. The wellness program will significantly lower the impact chronic diseases have on the health insurance program cost. The health insurance program will see a reduction in the cost of obesity related high blood pressure, diabetes, stroke, heart attack and arthritis.
Reduce Absenteeism, Increase Productivity
A wellness program will also benefit the employer by cutting down on the absenteeism rate, resulting in an overall increase in productivity.
There are numerous state government websites and other free websites that provide information for employers to create low cost wellness programs. Our website includes articles on wellness programs. Please contact us if we can assist you with creating or improving your wellness program.
Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.
Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: firstname.lastname@example.org.
WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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