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Healthier Employees: Some employers offer rewards for results

By Dan Shaw, Courier & Press - September 21, 2008

Although most people think good health should be considered an end in itself, many Evansville companies still prod their workers toward it with a variety of incentives.

At Koch Enterprises, the means used is a little extra money slipped into the paychecks of those who meet certain goals, which may include losing weight, stopping smoking or reducing their cholesterol. At the Royal Crown Bottling Corp. and Anchor Industries, employees will see their contributions to their health insurance reduced if they take similar steps.

Nancy Hodge, president of Royal Crown in Evansville, said the company has seen some good results from the incentives, which were adopted in 2004.

Between 2002 and 2003, the cost of employees' contributions to their health care had risen by 17.5 percent. Four years later, the increase was only 5 percent.

"We think it is working," Hodge said. "We also think this is a long-term process that can make a real difference to our employees and in the lives of their families."

Royal Crown pays about 75 percent of the cost of health insurance for its full-time employees, a proportion that has held steady for many years. Though the rise in its health-care costs has been slowed, the company has seen its costs double in the past seven years.
Royal Crown, like most companies, recognizes health benefits, though expensive, are needed to retain good workers and has no intention of giving them up. It has instead tried to control its costs through encouraging healthy behavior.

Royal Crown estimates that around 80 percent of its nearly 300 employees have taken advantage of the incentives. Those begin with an examination at the start of the year. For taking part and agreeing to shoot for a number of health goals, employees receive a $15 gift certificate. If those goals are met by October, the employees will see their payments for health insurance reduced by 10 percent the following year. Their names will be added to a drawing at the annual Christmas party, where they can win a $1,000 prize.

As a final incentive, the company will pay a portion of the cost of a physical examination at a doctor's office.

At Koch Enterprises, employees' progress toward health goals is measured several times a year at wellness fairs the company holds at its campus off the Lloyd Expressway. For each goal met, employees receive a $50 bonus in their paychecks. The most that can be earned is $250.

At the same time, Koch recognizes that many people cannot be expected to make great progress in so short of a time. For them, eating better and exercising more is enough.

At Anchor Industries, the reward for meeting health goals is seeing the cost of their health insurance reduced by 5 percent. Nurses test employees' vital signs at wellness fairs held several times a year. "If their spouse is on our insurance, they also must participate in the screening," said Jeannie Davis, a member of the human resources department.

And the company — a manufacturer of tents, awnings and similar products — has made special efforts to discourage employees from smoking. To that end, smokers can earn as much as $500 by signing a pledge to give up the habit. The money will come to them in installments: $150 after they have quit for six months, $250 after a year and the remainder after two years.

Those who complete the program may be tested from time to time, allowing the company to know if they have abided by the agreement.

The reason for the incentive is simple, she said: Anchor Industries estimates a smoker's health insurance costs around $1,000 more a year than a nonsmoker's. The cost of the habit is so great that some companies try to actively discourage it.

The Whirlpool factory in Evansville, for instance, charges smokers more for insurance because they are far more likely to submit claims.
Koch Enterprises has no intentions of using similar disincentives, said Cheryl Giesman, Koch senior human resource generalist. Nor have Anchor or Royal Crown adopted disincentives, although Anchor may use them in the future.

Anchor and Koch also have held competitions to encourage healthy behavior, and Royal Crown pays half the cost of attending classes held by Weight Watchers.

"One of our main issues has been weight," Hodge said. "We are overweight just like statistically the rest of the population is."

The companies believe the incentives are saving money, while conceding that it is difficult to measure how much.

Jennifer Slade, marketing director with Koch Enterprises, said Koch has seen indications that the cost of claims filed by those with chronic conditions — diabetes, high blood pressure, asthma — has fallen by 8 percent since December 2006. Still, Koch spends more on health insurance than what is spent by companies in the Evansville area on average.

One reason Koch may not have seen great savings is that its workers are older than those at many other companies and are thus more likely to suffer from health troubles.

"And over the years that these employees may have been smoking or not eating right, the effects of that may be showing (up) now," said Giesman.

Koch gives incentives out of a belief that they will lead to benefits, rather than proof that they do. For instance, employees who join a gym and go there three times a week can get half of the membership fees back from the company.

Of course, no one at Koch stands by the exercise room to make sure employees are faithfully attending. So the incentive must be awarded on the "honor system," although the regular physical examinations will help to reveal dishonesty.

"Your results will show if you are not eating healthy," said Giesman.