What is an EAP? A guide to employee assistance programs

In 2021, it may feel like COVID-19 is driving a lot of your employees’ unhappiness. But even before the pandemic, our research indicated that  55% of employees at any given time were languishing. They're not ill, but they're not well either—and they need help.

When employees aren't thriving, companies don't either. If a significant number of your employees are unmotivated and feeling lethargic, slips are bound to happen.

Employee assistance programs (EAPs) are one way companies try to support the well-being of team members. To the extent that they are used, good EAPs can contribute to employees’ productivity, personal wellness, and organizational success. In reality, they often see low utilization and don't move the needle on overall employee well-being or performance.

EAP stands for employee assistance program. It is an employee benefits program provided by a company to help employees resolve issues that could impact their life. The idea is to address personal issues before they interfere with work performance. The employee assistance program is one of the top benefits employers offer in North America—for a good reason.

Employers know that the organization benefits when employees aren't struggling with overwhelming personal stressors. Yet, EAPs are far less popular among the employees they are designed to assist. According to multiple studies, EAP usage is below 10%.

According to the American Institute of Stress, 48% of “people say stress has a negative impact on their personal and professional life.” This costs employers $300 billion annually in “stress-related healthcare and missed work.”  

Companies concerned by these numbers often add EAPs to their benefits package. These programs can help to reduce stress and, in turn, benefit the company as a whole. Employees may feel more supported just having these offerings available.

EAPs support employee wellness

New forms of EAPs don’t just help employees cope with workplace stress. They’re rapidly evolving into holistic well-being programs.

By providing EAPs, businesses can support employees through significant life and career events. This provides valuable resources to help them navigate stressors without letting work suffer. Examples of situations EAPs support include:

• Family situations, such as divorce, adoption assistance, or childcare.
• Social or professional relationships, like conflict resolution, networking, family issues, and relationship building.
• Recovery from substance abuse and traumatic events, like accidents or the loss of a loved one.
• Mental wellness support to help employees cope with stress or mental health issues. 
• Professional development. EAPs often provide education programs for building a variety of skills. NetApp partnered with BetterUp Coaching to offer leadership coaching for a high-performance culture. Similarly, Google offers up to $12,000 of tuition reimbursement to further careers.
• Career transitions, be it a lateral switch or a promotion. Employees get the support they need to smoothly settle into the responsibilities of the new role.
• Travel to help employees rest and recharge. Airbnb offers travel credit.

Boosting wellness can help employees be happier and more fulfilled at and away from work.

Wellness increases workplace productivity and performance

When employees are well, their performance improves. A 2018 study by the Federal Occupational Health (FOH) found companies with EAPs saw:

• A 69.2% decrease in absenteeism
• A 22.8% improvement in "work presenteeism"
• A 10% decrease in "workplace distress"

When employees are engaged at work, they’re more productive. Employee engagement helps facilitate collaboration with co-workers and reduce burnout. The data above reiterates the positive impact EAPs have on employee job performance.

EAPs can improve the company’s bottom line

Investing in employee well-being can result in greater returns for companies in the long run. As a result, EAPs, even with low utilization, generally show positive ROI regardless of company size.

The 2020 Workplace Outcome Suite (WOS) Report found that “with realistic variations in EAP price and employee compensation but other aspects being equal - the ROI ranged from 3:1 for small size employers, 5:1 for medium size employers, and to 9:1 for large size employers.” The study also reported savings of about $2,000 to $3,500 per employee through reduced work absenteeism and presenteeism. (Presenteeism is when employees show up but are distracted and unable to perform well.)

In addition, if an employee is happier, companies are more likely to retain them long-term. Improved employee retention results in reduced hiring, onboarding, and training expenses.

The EAP data only covers a part of the impact more broad-based investment in well-being can have on the bottom line. 

Employee assistance programs are usually offered by an organization to employees at little or no cost. Usually, employers work with external EAP providers to offer a range of services, but that's not always the case. 

Importantly, the range of offerings being included in the umbrella of EAPs is growing and changing. Some companies may still think of an EAP as just clinical care services, smoking cessation, and weight loss programs. Others include everything from the gym to financial counselors to the on-site food service.

In-house programs

When EAP programs are in-house, organizations directly employ service providers. Google has a fitness center, daycare, cafeteria, and other employee services on its premises. This is offered along with in-house masseuses at several locations. As an increasing number of employees leave jobs for mental health reasons, some companies even have an on-site therapist.

In-house programs are usually expensive, considering the infrastructure needed to scale the services. This type of model is generally suitable for large companies with sufficient funding to implement the program.

Peer support is a type of in-house EAP. A trained employee can serve as a kind of peer counselor. They can help navigate situations they've overcome, like substance abuse or quitting tobacco. These relationships can help employees regain control and reduce stress.

"We have increased our EAP utilization and have decreased our sick leave," Lyne Wilson, assistant vice president says about the nonprofit Nav Canada’s peer-support program. "There are employees who are at work today who [otherwise] would have gone out on sick leave, and we were able to prevent that."

Fixed partnership or contract

In a contract model, employers partner with an external, third-party organization or vendor. This could be an educational institution, a substance recovery network, or a mental fitness coaching platform like BetterUp. The third-party will offer services for a set fee, regardless of employee use.

Businesses can customize the EAP benefits to the organization's needs and budget. In mental health services, employers can cover a specific number of therapy sessions each year.

Or, say the EAP supports tuition for a university course that complements the employee's career growth. In that case, the organization can pay for it up-front or reimburse the tuition amount later. If the employer is partnered with an educational institution, employees can get a reduction in the tuition amount.

Pay-per-use contract

In this type of EAP model, organizations partner with service providers on a per-use basis. This means that the employer only pays for the services used by employees. A company might get a reduced rate for its employees by partnering with a mental health provider. In that case, employees have access to the service, but the organization only pays for the number of sessions booked by employees. The billing process is simple, assuming the EAP can be easily measured in a quantifiable way.

The ownership, liability, and responsibility still fall on the service provider. The employer's primary intention is just to provide counseling services or support to workers. Generally, small businesses adopt this or a similar model.

Combination EAP

There’s no need to choose between in-house and outsourced EAP services. Use a mix of both types to suit your company's unique needs.

For example, your organization may not have the infrastructure to build an on-site fitness center. You could partner with a local fitness center instead. If you have the resources, you might hire a therapist or launch a peer support program in-house.

A combination program provides tailored services that address their employees' primary concerns. The plan can target the impact while making the most of the company's allocated budget.

The cost of implementing an EAP varies based on multiple factors. These might include the organization's size, the agreement with the provider, and the type of support you want to introduce. You can also decide whether to introduce a single initiative or a comprehensive program.

Because of this variability, research on EAPs tends to show different figures. According to Katie Lynch, Founder and CEO of Apiary Life, EAPs cost anywhere from $30-$50 per employee per year. A recent study by the University of Maryland in Baltimore found the cost for large companies to buy well-rounded EAP services from an external vendor to be around $1.08 per employee each month.

The study also found cost differences based on company size. "An employer with 2,000 + employees was paying around $0.96 PEPM," and a smaller employer was paying around $1.58 PEPM.

When it comes to payment structure, organizations can come to an agreement with providers about pricing. According to a study by the University of Maryland in Baltimore, some of the pricing models for EAPS include the following:

• "Value-based reimbursement" where service providers are paid based on employees achieving pre-determined outcomes. An example of a goal includes a reduction in absenteeism or improvement in mental health. Human resources can measure the result, or employees could self-report their progress.
• "Budgeted utilization" where employers pay the provider based on expected use or allocated budget. If the employer has a fixed budget for EAP, the provider agrees to offer services within that budget, which may be less comprehensive.
• "Bundled payments" where the total cost of a fixed number of sessions is lower than the price per session. Employers pay the vendor the bundled fee. Providers will offer this model to build a long-lasting work relationship with the organization and retain them as a client.

It’s important to know there’s a lot of flexibility with EAPs—find the right provider, and you can work out the details. Although some organizations may worry about the expense, the return on investment can be considerable.

The first step to launching an EAP in your organization is identifying what your employees need. Understand what’s working and what’s not, so you can support them effectively. Moreover, every organization and its employees are unique. The industry, pace of work, resources available, etc., all play a role in shaping the experiences of the workforce.

Finally, recognize that many benefits programs are not loved by employees. Employees today have higher expectations for support that meets their specific needs and preferences than they might have in the past. Employees expect the same level of personalization, ease-of-use, and experience that they get as consumers in the benefits they access as employees. A "one-size-fits-all" approach is unlikely to deliver a well, engaged, happy workforce. 

With that in mind, the following steps can help you get started with implementing an EAP in your company:

Ask employees what kind of support they need the most

Your employees' needs can help you determine EAP priorities. 

Say employee turnover is high at your company. Understand the underlying reasons by sending a company-wide survey. It may reveal concerns like heavy workload, poor work-life balance, or communication barriers. If employees are short on time, send a quick pulse survey that takes a minute or less to answer.

Analyze the responses to identify common themes and needs you’ll want to address with your EAP. If many employees cite mental health in a survey, it might make sense to invest in counseling sessions or coaching as an EAP service. Rather than seeking the common denominator across the workforce, look for options that will let you meet each employee where they are in terms of needs, priorities, and preferences for support. And know that those will likely change over time.

Determine how you want to offer your EAP

First, think about whether it makes sense to work with an external vendor or hire an in-house service provider. Next, consider if you want EAP services to be provided on-premises or at the provider's location.

Hiring a provider in-house means you have more control to shape the EAP. The provider will adapt to the company culture and offer services that are closely aligned with the organization’s goals. You may not have the same level of access or influence with an external provider, as they have their own structure and processes in place.

On-premise services have similar benefits. The company can track the services, progress, and impact closely. The downside is that employees may not feel comfortable accessing services on-site even if they need help (e.g. mental health services). Off-site providers may not be as conveniently accessible to some employees, and it can be hard to monitor usage and progress.

In both cases, the organization's budget, priorities, and employees' needs can help you determine what type of EAP makes the most sense.

Research potential providers/vendors

Once you know which type of EAP you're looking to implement, look into vendors that offer services.

Request potential providers send you a proposal with references. Be sure to inform the potential providers about your company’s EAP budget and preferences. That way, you'll avoid wasting time reviewing proposals that aren't a good fit.

When reviewing the proposals, pay attention to the provider’s:

• Previous client list and experiences
• Cost estimate 
• Location flexibility
• Scope of services
• Payment process

A few of these factors might help you quickly narrow the list of vendors. Weigh the pros and cons of alternate options before making the decision.

You’ve identified what your employees need from an EAP, and you’ve invested in a number of service providers—great! But your EAP work isn’t quite over. Organizations need to find out if their EAP referrals actually help the employees and adjust the program as needed.

One way you could measure the effectiveness of an EAP is by setting KPIs and tracking progress every month. You can do this through metrics or frequent check-ins with employees through surveys.

One way you could measure the effectiveness of an EAP is by setting KPIs and tracking progress every month. You can do this through metrics or frequent check-ins with employees through surveys.

The right employee assistance programs can be a cost-effective way to add value and improve employee retention. When offered alongside a health insurance plan, they offer more comprehensive support for wellness. Employees that have resources to manage stressors, personal problems, and work-related issues are often happier and more productive. It's a win-win strategy for long-term growth.