At up to 10 per cent of total payroll costs, benefits plans represent a significant investment for organizations. But what does the employer get out of its investment? Are benefits plans helping employees to be healthy and more engaged? How does an investment in benefits affect workforce productivity?

Many employers, if asked those questions, may pause and respond that benefits are more of an incentive for attraction and retention.

The fact is that countless employers have no evidence of the impact of their investment in their benefits plans on workforce productivity. To make matters worse, employees have a tendency to view benefits programs as a form of entitlement.

Read: How to introduce a wellness spending account

In many benefits programs, employees receive credits they can allocate to either a taxable wellness account to offset spending on things such as gym memberships, sporting equipment or yoga classes, or a health-care spending account to help defray the cost of services not covered by the plan. The health-care spending account can allow employees to top up a maximum reimbursement for vision care or massage therapy, recoup an out-of-pocket drug copayment or put in a claim for a service not covered at all under the benefits plan but that’s eligible for the Canada Revenue Agency’s medical expense tax credit. Any reimbursement of costs through a health-care spending account wouldn’t be taxable to the employee.

Credits as an incentive

But with employers looking to ensure they’re getting results from their investment, they may consider options that would allow employees to obtain wellness credits in one of two ways: a base level of, for example, 500 credits or, in the spirit of rewards, allowing an employee to earn wellness credits through evidence-based activity.

Under the second approach, the employer allocates 100 credits to each employee and gives its staff access to a portal that promotes and measures wellness and workforce productivity. The portal provides coaching, evaluates and tracks the employee’s behavioural data (such as steps and sleeping patterns) and generates a weekly participation score that protects confidentiality.

Read: How Imax supports employee wellness through flexible funding

Employees can earn up to an additional 1,000 points (250 per quarter) for participating and focusing on their health.

Creativity gives employees permission to use their additional credits for activities that support their wellness and happiness by, for example, putting money towards airfare for a family vacation. Employees who participate in the programs provide evidence that they’re engaging in wellness, thus reducing their risk for chronic disease and productivity issues.

Such a model is easy to measure and provides evidence of its impact. Employees who earn 1,100 points and those at 500 points are in different groups. Using analytics, employers can study and compare the two groups to determine the value of the investment. The information will provide evidence of return on investment and the impact on workforce productivity.

The approach doesn’t need to require new spending on wellness credits. A strategic review of an employer’s current benefits plan design can identify opportunities to mitigate waste and inefficiencies, thereby creating funding capacity to try the concept.

Read: How to use analytics to improve your benefits plan

Ultimately, every employer needs to decide whether the cost of the benefits program is worth it, what it wants out of it and how much it wants to spend. With the rising prevalence of chronic disease and increased disability and drug costs, more employers will be looking for ways to influence workforce productivity.

Bill Howatt is chief of research and development for workforce productivity at Morneau Shepell Ltd. Greg Caines is total health index national lead and a partner at Morneau Shepell.

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Copyright © 2018 Transcontinental Media G.P. This article first appeared in Benefits Canada.
See all comments Recent Comments

Monica Gibbs:

Great article! I feel strongly about investing in employee wellness. Everyone wins!

Tuesday, July 18 at 3:37 pm | Reply

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