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Wellness Programs


Wellness Programs in Business
Actor Jack Nicholson smokes a cigarette as he leaves Claridge's hotel in London Feb. 2, 2004. A major goal of wellness programs is to get participants to quit smoking.
Actor Jack Nicholson smokes a cigarette as he leaves Claridge's hotel in London Feb. 2, 2004. A major goal of wellness programs is to get participants to quit smoking.
Gareth Cattermole/Getty Images

While wellness programs sound great to most employees, companies can spend millions of dollars on them. Despite this, more than 80 percent of American businesses with more than 50 employees have some sort of wellness program [source: The Wellness Councils of America]. So why do they spend all this money? The answer is simple: They do it because it's good business. Employees with poor health can cost a company a lot more than healthy employees do. In fact, many companies spend half of their corporate profits, or more, on medical costs for employees in poor health. However, most companies with successful wellness programs enjoy less absenteeism, higher productivity, lower incidences of job injuries, less employee turnover and fewer medical claims.

According to the National Safety Council, nearly one million workers a day are absent due to stress, costing American companies nearly $300 billion a year in loss of productivity and the cost of temporary help [source: Risk & Insurance]. Therefore, a wellness program that includes stress management services could potentially save a company a lot of money. Likewise, helping an employee quit smoking not only improves his health but also can increase productivity by eliminating frequent smoke breaks. Smoking-related health complications would also be reduced, cutting down on doctor visits. In fact, the use of tobacco, alcohol and other drugs costs American companies approximately $100 billion annually [source: The Wellness Councils of America]. Therefore, any wellness program that includes cessation of these vices makes good medical sense for the employee and good financial sense for the employer.

One of the best incentives for businesses is that more healthy employees can mean less monthly premiums for health insurance benefits. This is because health insurance companies charge a company premiums based on the amount of health claims they receive from that company. Because healthy employees visit the doctor less, health claims are reduced, and so are premiums. In 2006, employer insurance premiums increased 7.7 percent -- that's twice the rate of inflation [source: National Coalition on Health Care]. With a wellness program in place, many companies have reduced this premium increase to a mere 2 percent to 3 percent [source: Microsoft].

Clearly there are huge advantages for businesses to have wellness programs, but why do insurance companies offer them? Find out in the next section.