Insurers offering wellness programs can provide employers and employees substantial premium savings. But, as I briefly addressed in my last post, there are legal hurdles to address in order to implement a wellness program for your organization. Implementation of wellness programs may conflict with the Americans with Disabilities Act provisions and the non-discrimination provisions of HIPAA.

The National Constitution Center, a provider of online continuing education for attorneys, is holding an audio conference that addresses the most recent developments. "Legal Compliance for Wellness Programs: What You Need to Know in 2009" is an audio conference being offered on February 5, 2009. Although it is a continuing education seminar for attorneys, the topics addressed can be of assistance to any human resources manager or business owner looking to lower health insurance premiums for their employees.

My local National Public Radio station had an excellent set of guests on this morning. The discussion centered around obesity as a health problem and - more importantly, to business - as a productivity and health care insurance cost. The radio show corresponded with the release of a comprehensive report on obesity by the Centers for Disease Control.

Obesity statistics are staggering. Over 35% of adult men in the U.S. would be considered obese in 2007. Obesity-related health care costs totaled an estimated $117 billion in 2000 and have climbed steadily. Medical expenditures for obese workers, depending on severity of obesity and sex, are between 29%–117% greater than expenditures for workers with normal weight. To be clear, all of the physicians on the show recognized obesity as a disease with metabolic causes and results.

As staggering as the costs and the statistics, in many health insurance plans obesity programs, preventative care, counseling and other services are not covered under the policy. This is not true for all insurance plans. The local director for CIGNA health plans called the radio show this morning and discussed a number of programs and a commitment to preventative care for obesity by CIGNA. I am sure there are other plans out there that offer such coverage.

But, can an insurer offer wellness discounts? Can an employer offering a group plan offer wellness discounts? That can be a complicated question. This is because the Health Insurance Portability and Accountability Act (HIPPA) generally prevents "discrimination" among group policy holders based on wellness and other factors. In 2008 both the Department of Labor and IRS issued advisory statements providing specific regulations that must be addressed in order for certain discounted coverage to be exempt from the non-discriminatory provisions of HIPPA. Complicated? Yes.

The point is, with these regulations and guidance, employers can - working with insurers - provide tangible discounts to employees that participate in wellness programs or perhaps meet wellness goals such as reducing obesity. The CDC goal is to reduce adult obesity to less than 15% of the population and the childhood obesity rate to less than 5%. The health care cost savings of reaching such a goal is variously estimated at $150 to $200 billion.

The insurance industry suffered through a terrible 2008. A perfect storm of natural disaster losses, investment losses, and a psychological loss of confidence after the collapse of AIG contributed to drive down the value of insurers. As many of the readers of this site have pointed out, businesses insured by these insurers are not in any immediate danger of losing coverage or having claims rejected, because of state regulatory guidelines and solvency requirements, but 2009 could be a tough year for insurers.

Some of the numbers are staggering. The Dow Jones U.S. Select Insurance Index was at 5331 on January 4, 2008. One year later, the index value has fallen to 2645 (although, it should be noted it has risen steadily since November 2008). Another index, the KBW Insurance Index, stood at 153 one year ago and is now hovering in the 80's. Both indexes show a market loss of about 50% for 2008. Still, if there was a good thing to say about the insurance industry for 2008 it would be that insurance was stronger than financial stocks and banks.

Business owners will benefit in 2009 as insurers strive to keep current policyholders and to find new policyholders. This will mean lower premiums for the business owner. Policyholder retention and rebuilding confidence will be a focus of many insurers, while other insurers will seek to attract new policyholders by stressing and comparing financial performance. For example, in the same year The Hartford announced a $2.6 billion third quarter loss, Chubb's CEO announced "we were still able to generate over $300 million in operating income, reflecting the continuing underlying strength of all our business units in a challenging environment. In addition, we were especially pleased with the performance of our high-quality investment portfolio in a period of unprecedented financial market turmoil.”

Year end is a good time to accomplish many business goals. For example, reviewing your risk management and business insurance plan!

Reviewing your policies, schedules, endorsements and discussing your plans for next year with your insurance professional can save premium dollars. In this article about lowering premiums I discuss some areas to review. The three most immediate sources of potential premium savings are:

1. Review Your Schedules - Review your schedules of equipment, autos, buildings and property. Cancel insurance on those things no longer owned.
2. Review Your Employee List - Make sure former employees are removed from insurance. Employees are often left on commercial auto insurance as covered drivers, professionals often are "renewed" for liability insurance even if they do not work at the company.
3. Classify Workers Appropriately - For workers' compensation insurance, make sure all workers are classified appropriately. Iron workers cost much more than secretaries to insure; but, many construction companies are paying construction worker rates on all of their employees.

Finally, consider reviewing your health insurance plan. Fund your health insurance savings accounts, review deductibles, consider cafeteria-style plans or other plans for premium savings. EHealthInsurance has put together a quick video with some tips.