Do Workplace Wellness Programs Save Employers Money?

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5 September 2023

Do Workplace Wellness Programs Save Employers Money?

Can a wellness program actually reduce the heavy burden of medical care costs in your company?

It depends. First, a little background.

With healthcare costs continuing to soar, companies are seeking ways to reduce expenses from hefty insurance premiums, absenteeism, and low productivity. Investing in a wellness program can provide surprising benefits beyond lower healthcare costs, including increased job satisfaction and decreased voluntary attrition. It can even be a recruiting tool.

The Start of Workplace Wellness

Workplace wellness programs have been around since the late 1970s when corporations began to provide on-site workout facilities for their top executives. Boeing took a bold step in 1984 when it became the largest U.S. company to ban smoking in the workplace. Today, wellness programs are commonplace. A RAND Corporation study tells us that 85% of U.S. companies with 1,000 employees or more offer some kind of wellness program. A meta-analysis of research literature done by three Harvard professors found that overall medical costs decline $3.27 for every dollar spent on wellness programs and costs from absenteeism fall about $2.73 for each dollar.

What is a Wellness Program?

What exactly is a wellness program? There is no standard definition or set of standards. Each employer determines what its company wellness program means and how it will function. Leonard Berry, a professor at the Mays Business School at Texas A&M University, offers this definition: "An organized, employer-sponsored program that is designed to support employees (and sometimes, their families) as they adopt and sustain behaviors that reduce health risks, improve quality of life, enhance personal effectiveness, and benefit the organization’s bottom line."

The spectrum of wellness programs is broad. A company can declare it has a wellness program by simply distributing a Health Assessment Questionnaire that asks about an employee’s body mass index (BMI) or habits such as smoking, exercising, or diet. Or, as a step up, the company can distribute self-help information about healthy lifestyles and how to find local resources. (Learn more in The Negative Health Implications Of Sitting All Day And What To Do About It). Another option to maximize outcomes is for the company to make a long-term investment in its employees by offering on-site activities such as smoking cessation and weight-loss programs, yoga classes, and stress management workshops.

What Are Some Examples of Successful Wellness Programs?

Here are some companies who are considered to have outstanding wellness program models:

  • Johnson & Johnson’s program has reduced the number of employees who smoke by 67% since 1995. Savings on health care costs is $250 million over ten years. For every dollar spent on the wellness program, the return was $2.71.
  • When MD Anderson Cancer Center added a worker's compensation and injury care unit to its workplace wellness program in 2001, the result was an 80% drop in lost work days and a 64% decline in modified-duty days within six years—a savings of $1.5 million. Bonus: worker's compensation insurance premiums were reduced by 50%.
  • Citibank Health Management Program has reported a savings of about $4.50 in medical costs for every dollar spent on its program.

Requirements of a Successful Wellness Program

By now, you may be convinced that your company should implement a wellness program. Or perhaps you already have a wellness initiative, but it’s not meeting corporate goals. There are no strict rules about what to include or how to run a program. One thing is certain; putting up posters about how to stop smoking or why exercise is important will not be enough. Dr. Berry and his colleagues examined successful wellness programs and found some common themes:

Get leaders involved too

Participation in a wellness program is always voluntary, but when employees see their leaders on a treadmill getting active and attending workshops on healthy eating, it has an impact on the overall workplace. Managers and supervisors may also include a health goal as part of their department’s strategy.

Keep the wellness program on the radar

Long after the initial launch, employee health should remain a priority. Just as a garden requires time and tending after planting before harvest, the wellness program needs patience and attention in order to yield results. Monthly topics, an annual Wellness Day, and regular “Lunch & Learn” presentations remind everyone that the wellness program is here to stay.

Make the offering relevant

A wellness program includes more than physical aspects. Look to other important issues, such as depression, caregiver stress, or even financial fears. When employees complete a Health Risk Assessment (HRA), the company can offer specific information on the things that are most relevant. Also, make the services high-quality to demonstrate that employees are the most valuable asset.

Eliminate the barriers

Making the wellness program accessible to everyone is one of the keys to success. The onsite workout facilities should be open during non-business hours and on weekends. The cafeteria should serve healthy food. Use online sources to deliver information. Include screenings, such as cholesterol and blood glucose, at an annual Health Fair or during the year. (Learn more in 11 Tips For A Successful Company Health Fair). Invite fire and police departments to come and talk about safety in the home and community.

Communicate effectively

Keep in mind that people prefer to receive information in different ways. Every company has a unique culture and employee diversity. Not everyone can access email updates, and not everyone has high-level reading skills. Posters, flyers, videos, podcasts…use methods that correspond with the company’s demographics. Keep communication fresh and forthcoming; everyone should look forward to the next announcements.

Consider incentives

What about offering incentives? While not necessary, many companies like to reinforce healthy behaviors. Discounts on insurance premiums, cash rewards, and even public acknowledgement can motivate employees to participate in a wellness program. The focus is on reinforcing positive habits, not punishing habits that are negative or unhealthy. (Learn more in 5 Ways To Increase Participation and Engagement in Workplace Wellness Programs).

Benefits of Wellness Programs Beyond Monetary Savings

If all this seems like a lot of effort, consider other benefits beyond lower medical expenditures:

  • Improved productivity: When employees come to work feeling sick or stressed, they can’t work effectively. In fact, low productivity can actually cost a company more than twice the expense of absenteeism.
  • Better morale: A strong wellness program can make employees feel appreciated. They become proud of their company and want to do their best. The result is a reduction in turnover.
  • Better candidates: Job candidates often seek a company with a robust wellness program. It indicates a company culture that values its employees and is willing to invest in their health and well-being.

Outsourcing for Help

Many corporations choose to outsource their wellness programs to companies that specialize in designing and implementing a made-to-order program. The costs of maintaining an in-house staff, as well as the necessary resources and supplies, can be more than the cost of simply handing the project to a wellness company. A quick Internet search will bring up a list of wellness companies in your area. These sites usually provide an Return on Investment (ROI) Calculator to help estimate the health care savings by establishing a workplace wellness program. Click here to see an example of an ROI Calculator. Consider contacting several companies to compare services and pricing.


Let’s return to the question: Can a wellness program actually reduce the heavy burden of medical care in your company? It depends on whether your organization can commit to the long-term investment of developing a program that matches the culture and then keeping it front and center for all employees. Give it time, reward healthy practices, and your company will join those who have succeeded both in saving money and in building a better workplace.