6 ms·

Ask HN: Do wellness incentives help employers save money on taxes and insurance?

Trying to understand how wellness incentives work -- What's in it for employers, from a monetary benefit standpoint? Do they save up on taxes or insurance costs? (If yes, how does it work?)

aggronn 10y ago
Insurance companies usually offer benefits. Many plans offer reimbursements for gym memberships, discounts for companies that drug test, etc.. Moreover, the average cost of an group is a function of the health of its members--the healthier the company can get it's employees, the lower premiums are for everyone, because its less risky to insure.
- theforceawakens 10y ago
  Thanks. Do you have any specific advice in terms of how this "better incentives-better rates" thing works?
  - aggronn 10y ago
    Typically when you shop around for insurance, your agent will make you aware of whatever benefits/incentives are available to you through the specific plans. In terms of keeping overall cost of your plan down, just do whatever you can to make sure they don't get sick/go to do the doctor and use insurance. A high deductible would be beneficial, for example.
npace12 10y ago
I'm not necessarily an expert in this, but myself and my team just finished building a wellness product for a company that provides wellness portals for other companies. Yes, they save on insurance costs. A lot of big companies run their own insurance plans and are able to negotiate better rates and credits if they can simply show that: 1. They provide a way for their employees to build healthy habits 2. As a result, if their employees complete certain milestones, (such as filling out Personal Health Assessments or attending screening events) they can get discounts. I imagine this would become more sophisticated in the future, maybe providing better rates if a company can show that their employees are consistently improving their health year over year.
- theforceawakens 10y ago
  Thanks so much. Is there any documentation online that you know of which has more information?
  - npace12 10y ago
    I don't unfortunately. The discount/credit requirements can vary a lot from what I've seen though. Some companies require you to do certain things like track certain vitals, while others just want a PHA filled out. Those goals are usually passed on to employees in the form of gift cards/cash in order to incentivize them to actually do these things. The product we built was effectively a CMS that allows it to be customized for each client.
    - theforceawakens 10y ago
      Thanks. From your info, I was able to surface that there could be tax implications (if the incentives are offered as non-fringe/taxable benefits), from an employee standpoint.
OnlineCourage 10y ago
I will attempt to answer your question directly, rather than going off on a tangent or creating some nuanced, "deeper insights," response - since by my reading of the responses so far, I see people writing very emotionally toward what they perceive are the ills embedded in the system. Everyone already knows that healthcare is screwed up in the US, right? Take the case of an employer with 50,000+ employees. Why 50,000+? Because as of mid-2015 this is the only set of employers where the economics have shown that wellness programs create an ROI. Below that, accountants have not been able to demonstrate a clear economic investment across the board, it is much more on a case-by-case basis. So if you are below 50,000 employees, the answer to your question would be, "In general, there is nothing in it economically for employers, other than they feel good, their HR department is being hornswoggled by salespeople, or they have done some clear, good accounting with a record of wellness programs going back years which have demonstrated some positive correlation between better health and some indicator for the bottom line of their business." If you are talking about the 50,000+ employee category, then in general there are economic benefits which can be proven in the world of accounting. Health insurance companies (or more appropriately termed, Health Management Organizations, HMOs) quote out a given employer's rates based upon the risk pool made up of all of the employees. There is little to no leak of information between the HMO and an employer, because the information used is classified as Personal Health Information (PHI), which has very strict standards for how it is stored, the loss or misappropriation of which is a felony that can result in prison time. The employer does not see this PHI - that information is shared between healthcare providers (hospitals and clinics) and the HMOs. So when an employer goes to an HMO to get a quote, the HMO takes all of the PHI they have on the individuals within that employer's organization, and creates a quote based upon how they see that risk pool. If an employer with a large number of employees, let's say Nationwide Red Dot Retail Store, Inc. (NRDS Inc), partakes in a given wellness program, they will receive a discount on that underwriting based upon the types of wellness programs they provide for their employees. These discount offerings are determined by data scientists and project managers who work at the HMO, and are geared toward maximizing profit for the HMO. For example, those data scientists may find that by offering people $20 to all employees to participate in a health survey, the number of smokers within that pool of employees goes down by 0.5%, which means that the cost to cover them goes down by 1%, which means they would offer some discount less than 1% to NRDS Inc. However, the accountants and data scientists at NRDS Inc., are no dummies, so they may take a look and see that their employee turnover rate is X%, so that particular offering doesn't make sense of them economically, because by next quarter they will have a whole new set of smokers they will have to pay money to, as a part of the wellness program, only to have them leave 3-4 months later. Wellness programs are meant to use psychology to trick, not force, people into changing their health habits. People do not react well to being forced into things. Americans particularly, do not react well to being forced into things. You may read some other responses to this question giving you an impression that people are being penalized for their decisions and choices. Here's a straw-man argument for you: let's say there was a country called, "Amazing Programmerlandia Island," and you could hire the most incredible, genius, friendly programmers who know tons of languages to help you with your startup there for $10/hour. There's just one problem. About 50% of them love to do Crocodil, and it is illegal to check whether they are addicts before you hire them, and illegal to fire them just because they do Crocodil, and you have to pay for rehabs. Would you take any opportunity you could to, "hack," the system and try to lower the number of potential Crocodil addicts in your employee pool with some back-door system? Of course you would, this is Amazing Programmerlandia we're talking about here, tons of money to be made for just a tiny investment! This spurious example basically demonstrates the mindset of HR departments when they buy into wellness programs. The economics change based upon the size of the company, and the numbers a company may have - it is not an, "across the board thing." To find out more about the ROI of Wellness Programs, I recommend you Google individual companies names, and reports on the ROI from that particular company, from that company's point of view, not from the HMO's point of view, or from an independent paper (from a place like RAND) or from the Government. I could see the Federal Government funding studies which support wellness programs regardless of their true ROI, and asking the HMOs what they think is like askign the fox to guard the chicken coop. There is no real tax benefits that I am aware of for engaging in wellness programs, the potential returns are only based upon lowered underwriting costs - although if I am wrong on that, please correct me.
theforceawakens 10y ago
(Hope this helps someone like me.) Here is a link I was able to find that throws some light on Tax Benefits/Implications: https://www.shrm.org/legalissues/federalresources/pages/federal-tax-implications-wellness.aspx https://www.shrm.org/legalissues/federalresources/pages/fede... Still looking for info on Insurance Benefits. (That seems to be a murky area....any info would be very helpful.)
- radnam 10y ago
  I have been meaning to look into this area for a while so pleasant surprise to see this on HN. I don't have particular insight on this particular topic but I am working on startup to improve wellness and reducing friction to access of care. Feel free to shoot me an email (rahurkar@gmail.com) if you are interested in this area as well.
6stringmerc 10y ago
If you look a little deeper, the foundation of the concept of "Wellness Programs" is to raise all rates paid by employees across the board, then provide discounts for behaviors that are approved (basically sharing PMI data with a 3rd party). In the US this is because - to my understanding - laws prevent insurance companies and companies from 'discriminating' in their pricing. As in, they can't penalize most people for simply being unhealthy (vs. legal to penalize for tobacco use) so the way to soften the bottom line effect is to raise everything and give discounts. In my experience there is simply surface-level masking by calling it a "Wellness Program" instead of a data collection healthcare discount program, because a lot of lifestyle changes needed to promote genuine health aren't really incorporated. As in, healthier diet of fresh foods, better rest at night, free access to exercise facilities.
- robg 10y ago
  As in, healthier diet of fresh foods, better rest at night, free access to exercise facilities. And yet, a stressful work environment will lead to unhealthy eating habits, less restful sleep, and less exercise if not a dedicated routine to combat the stress. Amazing to me that stress is a still a bastard stepchild of health when it affects health and performance.
- OnlineCourage 10y ago
  Your understanding is incorrect, actually. HMOs do charge higher insurance rates for people who are less healthy on the aggregate. You are using the word, "penalize," but it has nothing to do with penalties, it has to do with market offerings, as HMOs offer insurance to employers based upon the risk pools. If we use your word, "penalty," to mean "higher pricing," - then less healthy workforces get penalized with higher rates for being unhealthy, sort of like group punishment. Of course using the word penalty or punishment makes it sound like there is some kind of unfair aggressor involved, like a parent punishing their kid for having cancer. In reality it's a cold, heartless, unfeeling robot assigning values based upon what it predicts will happen. See my other response for more explanation on that.
  - gergles 10y ago
feld 10y ago
It's a privacy invasion scam. At a previous employer they wanted to track our steps and our GPS location and also wanted us to record every glass of water we drink. It's a disgusting ruse. I don't care if they were going to give me $300/yr, my privacy is worth more than that.
- robg 10y ago
  With population analytics, it needn't invade your privacy at all. Companies are risk pools. Wellness companies don't need the private data and, worse, requiring it means less useful data (e.g., substances, mental health, etc). There's room here for innovation on privacy and population risk assessments.
- npace12 10y ago
  Your employer does not have access to this data. They buy the wellness site from other companies. These companies are not allowed to provide them with data such as gps location.
- superuser2 10y ago
  Would you expect someone to write you flood insurance on a house without knowing where that house is located? Should car insurance companies treat a 16 year old with a WRX and a 45 year old with a Camry as equivalent? It's really pretty bizarre that we expect people to underwrite our health without any insight into what risks we choose to take with it. We chose the free market as our approach to health insurance, we could at least make it efficient. Right now a lot of healthy, fit people are paying through the nose to subsidize the privacy of those with sedentary lifestyles.
  - emodendroket 10y ago
    Does your car insurance company require you to install a GPS tracker in your car so they can keep track of everywhere you go? Because that would be much more analogous to what the parent describes.
    - superuser2 10y ago
koolba 10y ago
I put this in the same category as that snooping device insurance companies want people to install in their cars (tracks speed, breaking, etc). It's optional till it's not. To put it another way, it's only optional till its prohibitively expensive to maintain your privacy. I think both of these should be banned at the Federal level before they become too pervasive. The slope is too slippery.

Trying to understand how wellness incentives work -- What's in it for employers, from a monetary benefit standpoint? Do they save up on taxes or insurance costs? (If yes, how does it work?)

aggronn 10y ago

Insurance companies usually offer benefits. Many plans offer reimbursements for gym memberships, discounts for companies that drug test, etc.. Moreover, the average cost of an group is a function of the health of its members--the healthier the company can get it's employees, the lower premiums are for everyone, because its less risky to insure.

theforceawakens 10y ago
Thanks. Do you have any specific advice in terms of how this "better incentives-better rates" thing works?
- aggronn 10y ago
  Typically when you shop around for insurance, your agent will make you aware of whatever benefits/incentives are available to you through the specific plans. In terms of keeping overall cost of your plan down, just do whatever you can to make sure they don't get sick/go to do the doctor and use insurance. A high deductible would be beneficial, for example.

npace12 10y ago

I'm not necessarily an expert in this, but myself and my team just finished building a wellness product for a company that provides wellness portals for other companies. Yes, they save on insurance costs. A lot of big companies run their own insurance plans and are able to negotiate better rates and credits if they can simply show that: 1. They provide a way for their employees to build healthy habits 2. As a result, if their employees complete certain milestones, (such as filling out Personal Health Assessments or attending screening events) they can get discounts. I imagine this would become more sophisticated in the future, maybe providing better rates if a company can show that their employees are consistently improving their health year over year.

theforceawakens 10y ago
Thanks so much. Is there any documentation online that you know of which has more information?
- npace12 10y ago
  I don't unfortunately. The discount/credit requirements can vary a lot from what I've seen though. Some companies require you to do certain things like track certain vitals, while others just want a PHA filled out. Those goals are usually passed on to employees in the form of gift cards/cash in order to incentivize them to actually do these things. The product we built was effectively a CMS that allows it to be customized for each client.
  - theforceawakens 10y ago
    Thanks. From your info, I was able to surface that there could be tax implications (if the incentives are offered as non-fringe/taxable benefits), from an employee standpoint.

OnlineCourage 10y ago

I will attempt to answer your question directly, rather than going off on a tangent or creating some nuanced, "deeper insights," response - since by my reading of the responses so far, I see people writing very emotionally toward what they perceive are the ills embedded in the system. Everyone already knows that healthcare is screwed up in the US, right? Take the case of an employer with 50,000+ employees. Why 50,000+? Because as of mid-2015 this is the only set of employers where the economics have shown that wellness programs create an ROI. Below that, accountants have not been able to demonstrate a clear economic investment across the board, it is much more on a case-by-case basis. So if you are below 50,000 employees, the answer to your question would be, "In general, there is nothing in it economically for employers, other than they feel good, their HR department is being hornswoggled by salespeople, or they have done some clear, good accounting with a record of wellness programs going back years which have demonstrated some positive correlation between better health and some indicator for the bottom line of their business." If you are talking about the 50,000+ employee category, then in general there are economic benefits which can be proven in the world of accounting. Health insurance companies (or more appropriately termed, Health Management Organizations, HMOs) quote out a given employer's rates based upon the risk pool made up of all of the employees. There is little to no leak of information between the HMO and an employer, because the information used is classified as Personal Health Information (PHI), which has very strict standards for how it is stored, the loss or misappropriation of which is a felony that can result in prison time. The employer does not see this PHI - that information is shared between healthcare providers (hospitals and clinics) and the HMOs. So when an employer goes to an HMO to get a quote, the HMO takes all of the PHI they have on the individuals within that employer's organization, and creates a quote based upon how they see that risk pool. If an employer with a large number of employees, let's say Nationwide Red Dot Retail Store, Inc. (NRDS Inc), partakes in a given wellness program, they will receive a discount on that underwriting based upon the types of wellness programs they provide for their employees. These discount offerings are determined by data scientists and project managers who work at the HMO, and are geared toward maximizing profit for the HMO. For example, those data scientists may find that by offering people $20 to all employees to participate in a health survey, the number of smokers within that pool of employees goes down by 0.5%, which means that the cost to cover them goes down by 1%, which means they would offer some discount less than 1% to NRDS Inc. However, the accountants and data scientists at NRDS Inc., are no dummies, so they may take a look and see that their employee turnover rate is X%, so that particular offering doesn't make sense of them economically, because by next quarter they will have a whole new set of smokers they will have to pay money to, as a part of the wellness program, only to have them leave 3-4 months later. Wellness programs are meant to use psychology to trick, not force, people into changing their health habits. People do not react well to being forced into things. Americans particularly, do not react well to being forced into things. You may read some other responses to this question giving you an impression that people are being penalized for their decisions and choices. Here's a straw-man argument for you: let's say there was a country called, "Amazing Programmerlandia Island," and you could hire the most incredible, genius, friendly programmers who know tons of languages to help you with your startup there for $10/hour. There's just one problem. About 50% of them love to do Crocodil, and it is illegal to check whether they are addicts before you hire them, and illegal to fire them just because they do Crocodil, and you have to pay for rehabs. Would you take any opportunity you could to, "hack," the system and try to lower the number of potential Crocodil addicts in your employee pool with some back-door system? Of course you would, this is Amazing Programmerlandia we're talking about here, tons of money to be made for just a tiny investment! This spurious example basically demonstrates the mindset of HR departments when they buy into wellness programs. The economics change based upon the size of the company, and the numbers a company may have - it is not an, "across the board thing." To find out more about the ROI of Wellness Programs, I recommend you Google individual companies names, and reports on the ROI from that particular company, from that company's point of view, not from the HMO's point of view, or from an independent paper (from a place like RAND) or from the Government. I could see the Federal Government funding studies which support wellness programs regardless of their true ROI, and asking the HMOs what they think is like askign the fox to guard the chicken coop. There is no real tax benefits that I am aware of for engaging in wellness programs, the potential returns are only based upon lowered underwriting costs - although if I am wrong on that, please correct me.

theforceawakens 10y ago

(Hope this helps someone like me.) Here is a link I was able to find that throws some light on Tax Benefits/Implications: https://www.shrm.org/legalissues/federalresources/pages/federal-tax-implications-wellness.aspx https://www.shrm.org/legalissues/federalresources/pages/fede... Still looking for info on Insurance Benefits. (That seems to be a murky area....any info would be very helpful.)

radnam 10y ago
I have been meaning to look into this area for a while so pleasant surprise to see this on HN. I don't have particular insight on this particular topic but I am working on startup to improve wellness and reducing friction to access of care. Feel free to shoot me an email (rahurkar@gmail.com) if you are interested in this area as well.

6stringmerc 10y ago

If you look a little deeper, the foundation of the concept of "Wellness Programs" is to raise all rates paid by employees across the board, then provide discounts for behaviors that are approved (basically sharing PMI data with a 3rd party). In the US this is because - to my understanding - laws prevent insurance companies and companies from 'discriminating' in their pricing. As in, they can't penalize most people for simply being unhealthy (vs. legal to penalize for tobacco use) so the way to soften the bottom line effect is to raise everything and give discounts. In my experience there is simply surface-level masking by calling it a "Wellness Program" instead of a data collection healthcare discount program, because a lot of lifestyle changes needed to promote genuine health aren't really incorporated. As in, healthier diet of fresh foods, better rest at night, free access to exercise facilities.

robg 10y ago
As in, healthier diet of fresh foods, better rest at night, free access to exercise facilities. And yet, a stressful work environment will lead to unhealthy eating habits, less restful sleep, and less exercise if not a dedicated routine to combat the stress. Amazing to me that stress is a still a bastard stepchild of health when it affects health and performance.
OnlineCourage 10y ago
Your understanding is incorrect, actually. HMOs do charge higher insurance rates for people who are less healthy on the aggregate. You are using the word, "penalize," but it has nothing to do with penalties, it has to do with market offerings, as HMOs offer insurance to employers based upon the risk pools. If we use your word, "penalty," to mean "higher pricing," - then less healthy workforces get penalized with higher rates for being unhealthy, sort of like group punishment. Of course using the word penalty or punishment makes it sound like there is some kind of unfair aggressor involved, like a parent punishing their kid for having cancer. In reality it's a cold, heartless, unfeeling robot assigning values based upon what it predicts will happen. See my other response for more explanation on that.
- gergles 10y ago

feld 10y ago

It's a privacy invasion scam. At a previous employer they wanted to track our steps and our GPS location and also wanted us to record every glass of water we drink. It's a disgusting ruse. I don't care if they were going to give me $300/yr, my privacy is worth more than that.

robg 10y ago
With population analytics, it needn't invade your privacy at all. Companies are risk pools. Wellness companies don't need the private data and, worse, requiring it means less useful data (e.g., substances, mental health, etc). There's room here for innovation on privacy and population risk assessments.
npace12 10y ago
Your employer does not have access to this data. They buy the wellness site from other companies. These companies are not allowed to provide them with data such as gps location.
superuser2 10y ago
Would you expect someone to write you flood insurance on a house without knowing where that house is located? Should car insurance companies treat a 16 year old with a WRX and a 45 year old with a Camry as equivalent? It's really pretty bizarre that we expect people to underwrite our health without any insight into what risks we choose to take with it. We chose the free market as our approach to health insurance, we could at least make it efficient. Right now a lot of healthy, fit people are paying through the nose to subsidize the privacy of those with sedentary lifestyles.
- emodendroket 10y ago
  Does your car insurance company require you to install a GPS tracker in your car so they can keep track of everywhere you go? Because that would be much more analogous to what the parent describes.
  - superuser2 10y ago

koolba 10y ago

I put this in the same category as that snooping device insurance companies want people to install in their cars (tracks speed, breaking, etc). It's optional till it's not. To put it another way, it's only optional till its prohibitively expensive to maintain your privacy. I think both of these should be banned at the Federal level before they become too pervasive. The slope is too slippery.