Thoughts on Great Benefit Design
The evolution of employee benefit plans in the US has been an ebb and flow of many market dynamics, political interests, and social principles. Many may not know that some of the earliest forms of individual health coverage didn’t come from employers; they were direct-to-consumer offerings intended to help those struggling with financial difficulties around the time of the Great Depression. It was also around that time that employers, especially those in high-risk businesses such as logging and mining, realized the impact of employee wellness on their bottom line. These employers designed their plans to offer coverage for a monthly fee.
How times have changed…or have they? Due to the rise in healthcare costs, the past couple of decades have found employers passing along a more significant portion of the financial risk to their employees, most recently in the form of high-deductible health plans. Once again, we find individuals putting off care due to costs—even those with employer coverage. And that’s a problem for employers, especially those that have a large employee population with chronic conditions.
According to the Centers for Disease Control, chronic health conditions cost employers $36.4 billion a year in reduced productivity due to absenteeism.
The question then becomes how to design a benefits program that not only helps employees afford the care they need but that also helps them lead healthier lives—both of which can help significantly lower costs for employers.
Good Solution Design vs Great Solution Design
Clearly, employers have a vested interest in keeping employees as healthy as possible. Yet a recent survey by the US Bureau of Labor Statistics found that only 41% of workers in private industry have been offered a wellness program. This is a significant missed opportunity, but one you can’t completely blame on the employer. The reason likely stems from the way traditional wellness programs are designed. It’s not that they aren’t good programs; they just aren’t great programs. Unless employees find these programs effective and worth their effort, participation will lag. Employers are then left footing the bill without seeing any discernible financial returns.
What Makes a Benefit Program Great?
First, traditional programs are designed with a one-size-fits-all approach where every participant is given the same basic classroom-style curriculum in hopes that some part of it will resonate and cause the employee to take action. Great programs, on the other hand, are designed around the individual—a one-size-fits-one approach. This innovative approach takes into consideration each employee’s unique health needs and goals, as well as their personality traits, habits, lifestyle—and even genetics. This information is then used to design a program just for the employee. And this makes the program more meaningful, which can help employees be more successful. It also positions the employer as an advocate for employees who want to improve their well-being.
Another difference is that traditional programs are designed primarily around weight-loss. Yet multiple studies have shown that when individuals focus on the numbers on the scale as their sole motivation, they are less likely to be successful. An article published by Time analyzed multiple studies around weight loss programs, what worked, what didn’t, and why. Across the board, researchers found that when patients are focused more on becoming healthier than on weight loss alone, they achieved greater—and more importantly—long-lasting health improvements. Research also found that programs that take into account an individual’s motivations, lifestyle, and personality were more effective over programs that offer the same program for everyone. This is why great wellness solutions are designed around improving health and disease prevention over losing weight alone. They tap into each employee’s goals and motivations and work those elements into a broader health and well-being program.
A third difference, and one that should not be underscored, involves personal engagement with a health coach. Many traditional programs are primarily digital offerings that use AI to replace human contact. One such program, although direct to consumer, uses AI-based text messages to provide daily motivations. In general, AI-based chatbots quite often miss the mark when it comes to interpreting a consumer’s text questions or requests. For example, Facebook has experienced a 70% failure rate of the 100,000+ chatbots on its Messenger platform. The Information, a Silicon Valley blog, suggests only 30% of individual requests can be fulfilled without human interaction. That’s why great benefit programs are designed around person-to-person engagement. One of the best models is the use of health coaches that meet regularly with participants via phone or video to help keep them motivated and on track. Employees appreciate that they don’t have to go it alone, that they have someone to help keep them engaged and accountable. Great programs go even one step further by matching coaches to each participant based on personality and preferences.
Business Model Considerations for Great Benefit Design
One final difference between good program design and great benefit design has to do with the business model used by the benefits vendor. Traditional vendors sell a standard benefits program much the same way they would sell any stand-alone product. Once you sign the contract, they’re gone. While these options can be financially attractive at first glance, if they don’t deliver a positive ROI, the actual cost is much higher. On the other hand, vendors that offer great program designs are those that put skin in the game. They share the risk by only getting paid based on the program’s performance. These vendors understand the nuances that make up an effective program, such as a one-size-fits-one approach that focuses on disease prevention and coaching. And they have the industry expertise needed to ensure seamless integration into an employer’s other benefits programs.
The Bottom Line on Great Benefit Design
According to Newtopia research, a healthy employee costs an employer around $3,400 a year in medical costs. When that employee has one to two risk factors for metabolic syndrome, meaning out-of-range waist circumference (BMI), elevated blood glucose, elevated blood pressure, elevated triglycerides, or low HDL cholesterol, the cost increases to $4,400. For employees with three or more risk factors, the cost increases to $5,400 a year. Today, 35% of a typical company’s employees have at least one factor for metabolic syndrome. Taking steps to upgrade your good benefits program to a great benefits program can significantly mitigate these costs. And with the right vendor, you are assured a positive ROI.
Isn’t it time to take your program from good to great?
If you’re curious about how Newtopia can contribute to helping you build a great benefit design for your employees (and achieve 2x ROI in Year 1, email email@example.com.