Faced with rising health insurance premiums, an increasing number of contractors and subcontractors are embracing workplace wellness programs to promote healthier lifestyles and help reduce health-care costs.

"A lot of contractors are seeing the connection between safety and health on the job and realizing the benefits that wellness programs can have both for job performance and their bottom lines," says Kevin Cannon, director of safety and health services for the Associated General Contractors of America.

The rise of wellness programs among construction firms mirrors a national trend. According to a national health benefits survey released by the Kaiser Family Foundation in August, virtually all large employers (at least 200 workers) and many smaller employers (3 to 199 workers) offer at least one wellness program.

Such programs may include weight loss, tobacco reduction, flu shots, nutrition education, substance-abuse counseling, exercise and fitness instruction, stress management, chronic-condition management and blood-pressure checks. Some companies even offer "financial wellness" clinics to help employees manage their debt, a common source of stress and anxiety.

Wellness programs are voluntary and typically offer discounts on premium contributions if the employee meets certain health goals or participates in wellness activities. Other incentives—gift cards, gym memberships or company merchandise (e.g., hats or gym bags)—are also common. The value of a reward is treated as taxable wages and subject to payroll taxes.

"The idea is to motivate employees to do what they're supposed to do—go to the doctor, exercise, eat right, take their medications," says Lester Morales, chief growth officer with Willis Human Capital practice.

"Organizations are motivated to mitigate health-care costs, but they also see the benefits in taking care of their employees. A healthier employee is more engaged and more productive. They can handle more tasks, and they are less likely to call in sick. They're also more focused while at work because they're not as worried about their health and overall wellness," he adds.

Federal law prohibits health plans from charging different premiums to different employees based on a health factor, with an exception for wellness programs. The law allows "health-contingent" programs to vary health premiums by up to 20% (30% starting in 2014) and then offer discounts to employees who take steps to reduce risk factors (e.g., reduce cholesterol, lose weight or quit smoking). Starting in 2014, employers can charge up to 50% more on health care premiums for someone who smokes.

With guidance from its broker at Willis, Worcester, Pa.-based transportation contractor American Infrastructure has embraced a company-wide wellness culture, from "stretch and flex" huddles every morning and afternoon walks to vending machines stocked with healthy snacks. The company introduced a wellness program in 2005 to complement its long-standing safety program and in 2010 partnered with Onlife Health (then Gordian Health Solutions) to expand its offerings to include biometric screenings and health coaching. Within the year, the company saw a difference—lower claims costs for the first time in nearly a decade.

Employees at AI need only undergo the annual biometric screening to earn discounts on premiums—$15 per week in 2013, $20 starting in 2014. This year, 94% of the company's employees participated in the screenings, held at multiple jobsites and offices.

"The one thing we've learned in our years doing this is that wellness must be convenient. You must bring wellness to the people or they won't participate," says Bob Herbein, AI's senior vice president of corporate services.

From the Top

Building a wellness culture is essential, says Stephanie Pronk, senior vice president with Chicago-based insurance brokerage Aon, where she leads the firm's national team for clinical and health improvement and measurement.

"The most successful programs will have support from all levels of leadership within the organization, from the frontline supervisor to the CEO. If there's a breakdown at any point, then employees might not feel comfortable participating," she says.

"In this economy, it is natural for people to be nervous about bringing their personal issues to work. That is why it's important to build trust and confidence. Some of our employees were skeptical at first, but they now realize that we're not trying to dig into their private information—we're just trying to promote wellness and provide them with the best possible health care," adds Michelle Vincent, people services director at RK Mechanical in Denver.

In 2011, RK Mechanical switched from private insurance to self-funded insurance where the company provides health and disability benefits with its own funds. "Traditional insurance was showing a 12% to 18% increase each year. That was not sustainable for our employees or us as an employer. Our CFO ran the numbers and financially understood the benefits of investing in wellness," Vincent says.

Under the guidance of Occupational Medical Consulting (OMC), in Leeds, Maine, the company launched a variety of wellness activities and hired a full-time onsite wellness coach to work with employees and their families free of charge. In addition to consulting on health options and providing wellness education, the coach administers health assessments, including annual biometric screenings.

"Wellness is a bit tricky. It takes time to see the impact. At first, we saw an increase in claims as more employees began seeking treatment and seeing doctors, but now in our third year, we're seeing a reduction in claims. Our price per employee has gone down as well," Vincent says.