Most U.S. companies plan to increase the dollar value of the incentives they offer employees to participate in health improvement programs in 2012, according to an employer survey conducted by Fidelity Investments and the not-for-profit National Business Group on Health.
The survey was fielded Nov. 1-Dec. 30, 2011, among a national sample of U.S. companies ranging in size from 1,000 to 100,000 employees. It is the latest in a series of studies Fidelity and the Business Group have conducted since 2009 to analyze the growth of health improvement programs in the workplace. These programs typically consist of condition-management services (such as managing insulin treatments), lifestyle management services (such as weight loss advice) and health risk management services (such as on-site flu shots).
Among the top findings from the survey:
• Almost three out of four companies (73 percent) used incentives to engage employees in health improvement programs.
• The average incentive value was $460. That figure has increased steadily from an average of $430 in 2010 and $260 in 2009.
• Employers used different types of incentives, including cash, gift cards and contributions to health savings accounts.
• Incentive-based programs had a better-than-expected success rate at increasing employee participation, the majority (57 percent) agreed.
"Incentives have come a long way from a free T-shirt and a water bottle," said Adam Stavisky, senior vice president of Fidelity's benefits consulting business, which commissioned the study with the Business Group. "As companies have increased their commitment and investment in health improvement programs, they have made their incentives more enticing. They have also learned which programs resonate best with their workforce, whether that involves on-site flu shots or weight loss challenges. Now employers are starting to see results from their efforts."
'Incentives have come a long way from
a free T-shirt and a water bottle.'
More Tie Wellness Participation to Health Coverage
A small but growing number of companies are requiring employees to participate in health improvement programs in order to be eligible for medical benefits. The survey found that:
• Biometric testing. In 2011, 5 percent of companies required their workers to complete biometric testing (such as cholesterol screening) or be excluded from coverage. That number was expected to nearly double in 2012 to 9 percent.
• Health risk assessments. Likewise, 7 percent of companies required completion of a health risk assessment in 2011. In 2012, 10 percent of companies will require it.
"Employers are increasingly expecting employees to take steps to improve their health, conditioning even access to health benefits on meeting certain requirements," said Helen Darling, president and CEO of the Business Group. "This isn't surprising given how much control employees can have over their own health and how much poor health habits cost employers."
Funding for Programs Holds Steady
Among other highlighted findings:
• Program costs. Incentives aside, employers spent on average $169 per employee on health improvement programs in 2011, up from $154 in 2010 and $108 in 2009.
• Most popular offerings. While smoking cessation and employee assistance programs (EAPs) are the most prevalent lifestyle management offerings in the workplace, 51 percent of companies offered healthy cafeteria food options in 2011 and 16 percent were expected to introduce such choices in 2012.
• Health care advocates. Among health risk management programs, 11 percent of companies are planning to introduce health care advocates (who help employees find medical specialists and navigate the health care system), up from 46 percent of companies in 2011.
• Disease management. Condition management programs are expected to remain unchanged from 2011, with companies investing the most in managing conditions related to diabetes and asthma.
Actions to Improve Program Effectiveness
The majority (76 percent) of companies surveyed reported they do not know the return on their investment in health improvement programs. To help employers maximize the impact and effectiveness of their offerings, Fidelity and the Business Group offer five suggestions.
• Secure commitment from senior management. Employees are more likely to engage when there is encouragement from senior executives.
• Align programs with the health risks and challenges of the workforce. Determine what the pressing health issues are (such as high blood pressure) and offer solutions. Don't offer diabetes management services if that illness is not a significant health risk for most workers.
• Set realistic goals and measure results. Define what the desired behavior is (e.g., weight loss) and track it.
• Offer incentives that appeal to the workforce. Collect feedback from employees on what is appealing and discontinue incentives that aren't working.
• Manage vendors by establishing performance requirements. Employers should consolidate employee data collected from multiple vendors and measure the results. Vendors should be held accountable if the results fall short of objectives.
Another View of Incentives and Penalties
Companies are continuing to expand their use of financial rewards to engage employees and their spouses to manage their health better, according to the 2012 Employer Survey on Purchasing Value in Health Care by consultancy Towers Watson and the National Business Group on Health.
The 17th annual survey, completed by U.S. employers with at least 1,000 employees in December 2011 and January 2012, found that 68 percent of employers offered cash, premium credits and account contributions to their employees to encourage participation in healthy lifestyle activities in 2012—up from 58 percent in 2011. For the typical company that offered incentives, the maximum amount of cash employees can earn for meeting health targets is $300.
Among companies that provided incentives, 53 percent offered them to spouses and dependents in 2012, up from 46 percent in 2011 and 39 percent in 2010. The highest cash award that can be earned for meeting health targets by an employee and family combined increased by $100 over each of the last three years to $700 in 2012.
Respondents also indicated that they had become more willing to use penalties, such as increased premiums and deductibles for those not completing required health management programs or activities. Penalties were used by 20 percent of respondents in 2012, roughly double the number of companies that used penalties in 2009.
Some (10 percent) of companies had adopted achievement standards for incentive awards, and achievement standards will likely continue to grow in use as companies increasingly hold employees accountable for unhealthy life choices. Nearly all companies with an achievement-based program said they included weight goals as a requirement under the program, and three-quarters of companies included blood pressure, cholesterol and tobacco use as metrics.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Fitness Center Discount Is Most-Wanted Wellness Benefit, SHRM Online Benefits Discipline, January 2012
Behavioral Economics Improves Health Decisions, SHRM Online Benefits Discipline, January 2012
Finding Success with Progress-Based Health Incentives, SHRM Online Benefits Discipline, December 2011
Getting Results-Based Wellness Communications Right, SHRM Online Benefits Discipline, November 2011
Health Assessment Incentives
Monetary incentives that promote health assessments become more effective when paired with a corporate culture of health, says Vic Strecher, professor at the University of Michigan.
Wellness Incentive at Lowes Corp.
Alan Momeyer, VP of HR for Loews Corp., says the rewards are worth the risk of initially overpaying for wellness incentives—especially if you plan to modify payments at a later date.
Wellness Incentives at Union Pacific
Union Pacific Corp. offers several rewards that encourage employees to take steps to improve their health, says Barbara Schaefer, senior VP of HR.
Points-Based Wellness Programs
Awarding incentive points can boost participation in wellness programs and achieve lasting behavioral change, says Mindy McGrath, a VP with Maritz Inc.
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