Small Business: Health care challenges

What's the top challenge most employers face in managing health care costs? Their workers' poor health habits.

That was the answer given by 61 percent of employers in a recent survey by Towers Watson/National Business Group on Health.

Encouraging employees to maintain better health can be a great way to decrease absenteeism, increase productivity and in many cases reduce overall health care costs, experts say.

Tom Billet, senior consultant at Towers Watson, a human resources consultancy in Manhattan, explains companies can realize direct savings via reduced insurance premiums as a result of fewer claims over time.

Generally, bigger companies that institute wellness programs can see these direct cost reductions, while smaller companies will see indirect benefits, says Bob Nystrom, a former Islanders right wing and executive vice president at Kinloch Consulting in Melville, an employee benefits consulting firm.

That's because in New York, companies with fewer than 50 employees are pooled into community-rated plans, where rates are set by the state and insurance carriers and offer little or no room for negotiation, he explains.

As company size increases, particularly for those with more than 100 employees, rates are based on "claims-based underwriting," and reduced claims can impact rates, he says.

Though smaller companies may not see direct savings from a wellness program, their employees can benefit because their plans often subject them to higher out-of-pocket costs such as deductibles and co-insurance, and being healthier would reduce some of those costs, Nystrom says.

The total employee share of health care costs, including premiums and out-of-pocket expenses, climbed from 33.2 percent in 2011 to 34.4 percent in 2012, Towers Watson says.

Getting started. Each year, Action Long Island and the American Heart Association hold a corporate wellness challenge. Companies join in a free wellness program and compete in various categories on a points-based system, says ALI chairman Sheldon Sackstein, managing partner of Melville accounting firm Sackstein & Co. Llp.

The challenge runs from March through December, and this year 18 companies with about 17,000 employees are participating. (For info see action longisland.org/ALICWC.html.)

The challenge runs from March through December, and this year 18 companies with about 17,000 employees are participating. (For info see actionlongisland.org/ALICWC.html.)Overseas Military Sales Group in Woodbury, an auto distributor for U.S. military personnel overseas, says keeping employees healthy and informed, as well as controlling rising health care costs, helped motivate it to participate in this year's challenge.

The 180-employee company took some wellness initiatives last year such as offering "lunch and learns" on topics including diabetes awareness, says Fran Prager, benefits committee chairwoman.

OMSG recognizes "healthy employees are more productive and help us in our mission to provide outstanding value and service," she says. If there are fewer claims, "hopefully it translates into reduced costs," she adds. The company spends about $1.5 million a year on health care costs.

Tap into resources. When crafting a corporate wellness program, it pays to tap into local nonprofit groups and free community resources, Billet says. For example, the American Heart Association offers free resources including an online program, StartWalkingNow.org, where you can create your own company walking path, track your diet, etc., says Michele Gervat, a special events director at the AHA office in Plainview. The AHA also provides speakers for lunch programs.

It all starts with making wellness a priority, she says.

Fast Fact

$11,664: What average total health care costs per employee are expected to reach in 2012, up from $10,982 in 2011.

Source: Towers Watson/NBGH