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Ask HN: Do wellness incentives help employers save money on taxes and insurance?
26 points by theforceawakens on Apr 25, 2016 | hide | past | web | favorite | 49 comments
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?)

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.

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.

> As in, healthier diet of fresh foods, better rest at night, free access to exercise facilities.

Well of course not; it might cost the company money to make those things available.

Actually, that's the point of discussion - Is the ratio of (money spent on incentives):(money saved in insurance costs), high or low?

Not really; a lot of the initiatives don't require your employer to do many things differently (for instance, newsletters).

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.

OP is talking on an individual person level, not a group level. "Wellness programs" exist to penalize individuals doing things that make the group's price more expensive.

If you read my other comment on this thread, you will understand more about where I'm coming from. Sorry...I didn't want to repeat a huge wall of text.

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)?

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.

Thanks. Makes sense.

A genuine wellness program would, for instance, give employees discounts on commercial fitness gym memberships or certain categories of foods, offer compensatory time off for hours worked in excess of 40 in any given week, sponsor moderated team obesity reduction contests, sponsor smoking cessation support efforts, sponsor athletic clubs and events for employees, give vitamin D reminders throughout the cold, dark winter months, etc.

The typical "wellness program" gives you a $X discount over the plan year in exchange for a 3rd-party call center company to collect your health information and nag you to not be so unhealthy over the phone at regular intervals. They have to tiptoe around ADA and anti-discrimination laws. The insurance discount is wholly insufficient to pay for any measure that would genuinely impact health. Given the choice between giving employees a direct $120 a year benefit for gym membership and splitting $50 discount to the employee and $70 expense to a professional call center nag, the group insurer invariably picks the latter.

You see, if you just give away the fitness gym membership, there's no leverage to make the employee actually go there and work out.

My current company invites people to get free blood pressure checks from staff of the local hospital system. I am not fooled by this. This is not motivated by concern for my health, but as a means to monitor the blood pressure of employees who already feel they must do so. The measurement is free, during business hours. Any intervention that might improve health, such as counseling or medication, has to come from the employee's own pocket, on their own time.

Thanks for going into detail, as this is my view - developed over several instances of observing such programs, and, in actuality, having worked in a back-office support role for a firm that actually sold these programs. Your write up is essentially what I was alluding to, and I appreciate you sharing your perspective so I don't feel, well, uselessly paranoid or underwhelmed by the "offer" in the grand scheme of things. Now that you mention it, I wonder if dropping some information on the 'Wellness Caller' about my ADA-protected disability and then asking if they're HIPAA compliant would be a fun little wrinkle to explore...

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.

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?)

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.

>not my insurance company's business to know these details about my healthcare.

What exactly do you imagine a health insurance company is? Dealing with the details of your healthcare is the entire reason it exists.

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.)

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

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?

Well, it surely is a health insurer's 'business' to know about your health-related data. Whether you are willing to provide access, presumably for a better rate, is another question.

It is in their interest to snoop on your personal life and habits, but it's not their right

Yeah but how? There aren't enough primary care doctors and the work is being farmed out to nurse practitioners and physician's assistants (and anyone who says the quality of care is just the same hasn't experienced it)

> There aren't enough primary care doctors and the work is being farmed out to nurse practitioners and physician's assistants

Thanks for the insight, but is there any empirical evidence here?

There is quite a bit and that this phenomenon is happening is not controversial. I turned this up quickly; you could probably find better sources with more careful research: http://kff.org/medicaid/issue-brief/tapping-nurse-practition...

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.

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.

No, but many of them give you a discount for installing an accelerometer/gps speed sensor.

Aren't auto insurance (your choice of provider) and employer provided health insurance (no choice) tangential things?

Are they?

Edit: Even if you decide not to opt-out of employer provided coverage, you don't have to participate in the wellness program, just as you don't have to participate in the gps tracking.

Personally my concern (with both things) is that they are going to normalize it so that it's first an option with an incentive, then it's the default and you have to opt out and pay some sort of penalty for doing so, and then before you know it there is no choice at all.

Insurers these days offer a discount for safe driving based on a device in the OBD-II port, yes. There are also some nontraditional insurance companies that charge per mile based on such a device.

Some offer them; I do not choose to use one.

Just as you can choose not to participate in a wellness program.

My employer isn't trying to cram the GPS system down my throat

Agreed. The state of my health is between me, my doctor, and maybe my fiancee. AND NO ONE ELSE. Certainly not my employer, or anyone connected to them.

They may claim they protect the privacy of your information, but recent history has shown that those claims generally aren't worth the electrons they're written with. There will be leaks, and hacks, and all manner of subterfuge.

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.

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.

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.

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

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.

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.

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.

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

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.

(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...

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

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.

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.

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.

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