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One life to live: employers extend retirees' wellness programs and benefits in order to trim rising health care costs.


Healthy lifestyles equal healthy seniors. That's an equation Johnson & Johnson is banking on. The pharmaceutical, medical devices and consumer packaged-goods manufacturer offers both its active employees and retirees a myriad of healthy lifestyle benefits--everything from use of the company's fitness centers to health information geared toward seniors.

The company isn't alone. More organizations now are jumping on the wellness bandwagon and extending those offerings beyond just their active workers into their retiree populations as part of their retiree medical benefits.

Employers are hopeful these benefits are a step in the right direction to cutting expenses with 76 million baby boomers set to soon leave the work force.

The graying of America is bringing added health care costs.

One-fourth of non-institutionalized persons age 65 or older are considered to be in fair or poor health, according to the Centers for Disease Control and Prevention's National Center for Health Statistics.

Added to that, 13% of men and 8% of women age 65 and over smoke; and 76% of men and 72% of women age 65 to 74 are overweight.

Costly medical conditions also add to the financial toll. More than 60% of Americans age 65 and older have two or more chronic conditions, according to the Partnership for Solutions, a national program funded by the Robert Wood Johnson Foundation and based at Johns Hopkins University.

Those numbers have companies scrambling for ways to create healthier lifestyles and make retirees more accountable for their health.

But while "wellness for retirees is weighing heavily on employers' minds," said Debi Heck, assistant vice president and national expert on wellness and population health management for Aon Consulting, "they're still trying to figure out the best way to do it."

Fit and Well

For some legacy companies, such as large automobile and Fortune 500 manufacturers, wellness programs specifically geared to their retirees is an ongoing area of interest and investment, said Dr. Ronald Leopold, vice president of MetLife Institutional Business.

Many other companies have already opted to extend the wellness benefits offered to actives into their retiree populations.

"Once an employer understands the business case for actives, it's pretty easy to extend benefits to their retiree populations," said Seth Serxner, principal and senior consultant for Mercer's health and productivity management specialty group.

So, what's the motivation behind this growing trend?

"Retirees stay healthy; that, in turn, helps companies lower their health care costs," said Cara Jareb, who heads up Watson Wyatt's retiree benefits consultancy group.

Also, there are fewer upfront expenses, she said. "Wellness benefits are relatively cheaper offerings for employers than other traditional benefits like dental coverage."

Healthy Choices

What are retirees looking for when it comes to wellness and healthy-lifestyle benefits?

According to Serxner, consumer information is in big demand.

"Retired populations also are looking for information on provider quality information, generics versus brand-name medications, second opinions ... they do lots of research on how to manage chronic conditions and they like to compare notes," he said.

Aetna recently added its "Healthy Lifestyles" program as a core offering to its group retiree benefit packages. In addition to coaches, retirees also can receive exercise home health kits in the mail, which include nutrition logs, pedometers and resistance bands. Plan sponsors also have a buy-up option to offer retirees free fitness club memberships and discounts.

Earlier this year, WellPoint launched its Anthem Entirety suite of products for large employers. It allows employers to provide comprehensive coverage with healthy lifestyle programs built in to reinforce healthy behaviors, said Jake Biscoglio, vice president of product development for WellPoint's commercial business unit. Those programs include everything from stress management education to its "360 Degree Health" program that combines care management, health care tools and incentives.

For post-65 retirees, Medicare Advantage offers its own set of wellness benefits. WellPoint specifically targets Medicare-eligibles with a suite of products designed to connect members with appropriate clinical resources to support their customized care plan.

Technology also has a hand in preventive care. At Kaiser Permanente, 42% of adults with Internet access already use the organization's secure online services. Not only does Kaiser Permanente offer retirees online wellness programs such as "HealthMedia Care for Your Health," a chronic conditions management program, and "HealthMedia Balance," a weight management program, but retirees also can access their personal health records online. They can view their personal health information and test results, request appointments, e-mail their physicians and renew prescriptions that can be sent directly to their home, said Christine Paige, senior vice president of marketing and Internet services.


Finding Rewards

"If wellness programs for retirees are effectively communicated and people understand and use them in the right circumstances, they're a great opportunity to reduce costs," said Leopold.

But that investment isn't always cut and dried, he said. "[Return on investment] can sometimes be difficult to measure. But employers should consider a leap of faith. Making an investment today will have a payoff if they're smart about how they invest, particularly in weight loss, smoking cessation and stress reduction programs that are highly utilized."

A 2006 Thomson Medstat study offers some promising results. It found that wellness programs aimed at retirees can reduce yearly individual health care costs from $101 to $648 for Medicare recipients who participated in employer-sponsored wellness programs that involved the use of a health risk assessment. Those who participated in the health risk assessment plus one other program element, such as telephone-based lifestyle management counseling or on-site medical screenings, had an average annual savings of $442.


Kaiser Permanente's Healthy Lifestyles Programs are proving successful for both active employees and retirees. As of September, members used the various programs more than 358,000 times. More than 75% of members enrolled in the pain management program cited improvement within 30 days; 55% of individuals using the weight management program experienced weight loss after six months; and 52% of members who participated in the smoking cessation program remained tobacco-free six months later.

One of the hurdles employers may face along the way is that those who most need these benefits often aren't the ones using them.

That's where financial incentives to engage and reward retirees may help. "Many of those are fairly consistent with what's being offered to actives," said Serxner.

"Incentives are especially important for retirees who would like to receive $100 off their premium or money for their health care account. That can be a lot more potent than when you're active and receiving a regular paycheck," Serxner said.

One of Heck's clients recently designed what she calls "a cutting edge" incentive program. Retirees' premium contributions are waived if they participate in a designated set of wellness initiatives.

Serxner said it's also important for employers to use different modes of communication to reach retirees. Because some in the demographic may not yet be braving the digital divide, offering "a combination of high-touch, low-tech approaches is ideal," he said.

While there are some distinctions between the sectors, Heck said all in all she hasn't noticed a real differentiation of services for retirees from what employers are offering their active employees. "They're creating a single-source program and providing that to everyone they deem eligible."

Ongoing Regimen

When it comes to healthy lifestyle benefits, Jareb said the bottom line is that "if employers aren't offering them to retirees, it's probably costing them more in the long run.

"As long as these offerings are done effectively, show a good ROI and positive results, we'll likely see them continue. But, if the benefits and programs aren't effectively communicated or don't glean much participation, companies will need to restructure or redesign them or we could see some of them going by the wayside," she said.

One thing that likely won't fade is the need for these benefits, added Aon Consulting's Heck. "Over the years, these programs went from being instituted as 'feel good' initiatives to necessity. I don't see that necessity going away. Plan redesign and cost-shifting tactics are all but worn out; employers are looking to other solutions like wellness to help maintain their costs."


* The Situation: Health care costs are rising as the American population grows older.

* The Upshot: Large percentages of medical costs are related to lifestyle choices such as exercise, stress, smoking and diet.

* The Bottom Line: Wellness programs and healthy-lifestyles benefits help reduce medical costs.

Learn More

Aetna Health and Life Insurance Co. (Aetna Group)

A.M. Best Company # 70202

Distribution: Brokers, consultants, retail networks (pharmacy products)

Kaiser Foundation

A.M. Best Company # 64585

Distribution: National consulting houses, regional brokers and brokerage firms, membership exchanges, direct

Metropolitan Life Insurance Co.

A.M. Best Company # 06704

Distribution: Independent and career agents, wirehouses, banks

WellPoint Inc.

A.M. Best Company # 58180

Distribution: Agents, brokers, in-house sales

For ratings and other financial strength information visit

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By the Numbers: Wellness Incentive Programs

Four out of five employers that have wellness programs are providing incentives to encourage participation.

40% provide gym/fitness center discounts

38% offer gifts and prizes

27% provide a reduction in employee contributions to medical plans

17% To waive medical plan deductibles

14% offer a credit toward their benefits purchases

2% offer cash or bonuses

Source: MetLife's "Sixth Annual Employee Benefits Trend Study"


Declining Health?

The overall health of retiree medical benefits remains unclear.

That's got some in the industry wondering what impact that will have on healthy-lifestyle benefits and wellness programs sponsored by employers for their retirees.

A number of companies are starting to scale back on retiree medical benefits because of rising health care costs. Today only 35% of large employers offer these benefits, down from 66% two decades ago, according to the Kaiser Family Foundation.

Rick McGill, a principal ha Hewitt Associate's health-management consulting practice, fears that "with erosion of the sponsorship of the benefits as a whole, it's somewhat hard to believe that organizations would be stepping up healthy-lifestyle benefits [for retirees]."

But Dr. Ronald Leopold, vice president of MetLife Institutional Business, said while some companies, especially more industrial-age organizations, struggle to continue to offer retiree medical benefits, "we're seeing many looking for new solutions where they hit a ceiling and commit to a flat dollar value that they can offer employees in accounts earmarked for health care coverage."
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Title Annotation:Health/Employee Benefits: Wellness Programs
Author:Chordas, Lori
Publication:Best's Review
Date:Dec 1, 2008
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