
Ask HN: Do wellness incentives help employers save money on taxes and insurance? - theforceawakens
Trying to understand how wellness incentives work -- What&#x27;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?)
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6stringmerc
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.

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theforceawakens
Thanks for the insight. I think you bring a very good perspective to this.

Although I am not very sure, what you really mean by saying "a lot of
lifestyle changes needed to promote genuine health aren't really
incorporated"...do you mean the employers don't promote them? Or the
incentives you are relating to don't fall under the "wellness program"
benefits in general to receive a credit/discount (from the standpoint of
insurance companies)?

~~~
Pitarou
I think he means that they promote the aspects of wellness that are easily
observable, because these are the things that an insurer pays attention to
when setting a price.

For instance, an insurer won't take any interest in your diet, because that's
hard to measure, but they will take a keen interest in your BMI and
cardiovascular fitness.

~~~
theforceawakens
Thanks. Makes sense.

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feld
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.

~~~
theforceawakens
Orthogonal issue but here is what I think -- While I agree that privacy is of
great concern, I do think the way to approach this would be with more frequent
health checkups. Our body is the best marker at the end of the day to measure
our healthiness. Everything else doesn't matter, which is also the reason the
allure of wearables is wearing out. (It's great, but what do you do now that
you have all this data that you have gathered?)

~~~
feld
They also gave "points" in this reward system for recording visits to doctor,
dentist, proving you had an annual physical, etc.

I'm sorry but while it's great to encourage that behavior it's not my
employer's not my insurance company's business to know these details about my
healthcare.

~~~
theforceawakens
Agreed. In your case, it looks the ratio of info/value is really high.
Honestly, this is the first time I have heard such an exploitation of personal
health related data from an employer. Was this a large org? (Would understand
if a small startup did this..perhaps lack of know-how. Still very alarming
though.)

~~~
feld
Yes, a large org; an electrical and gas utility company.

~~~
theforceawakens
Oh man, that sucks to hear. I'm not sure if it's even legal for the employer
to collect personal medical info (if you have a family covered under the
insurance, potentially exposing theirs as well)...insurance companies might
want that kinda info to determine the premiums. Do you know?

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npace12
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
Thanks so much. Is there any documentation online that you know of which has
more information?

~~~
npace12
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
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.

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aggronn
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
Thanks. Do you have any specific advice in terms of how this "better
incentives-better rates" thing works?

~~~
aggronn
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.

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theforceawakens
(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/fede...](https://www.shrm.org/legalissues/federalresources/pages/federal-
tax-implications-wellness.aspx)

Still looking for info on Insurance Benefits. (That seems to be a murky
area....any info would be very helpful.)

~~~
radnam
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.

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koolba
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.

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OnlineCourage
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.

