Financial incentives have taken on greater importance in the drive to increase employee participation in health improvement programs, a new study by the nonprofit National Business Group on Health (NBGH) and Fidelity Investments shows.
The survey, which looked at the behaviors and offerings of U.S. companies in various industries, was a follow-up to research NBGH and Fidelity conducted in 2009. For the latest survey, data was collected by NBGH from Sept. 20 to Oct. 29, 2010. The sizes of the surveyed companies ranged from 1,000 to 100,000 employees.
Variety of Incentives
According to the study, employers used several different types of incentives in 2010 to encourage employees to participate in health improvement programs. These included offering cash and gift cards and making additional contributions to health savings accounts (HSAs) as well as more-punitive efforts such as reducing employer contributions to health plans if employees didn’t engage in any programs. Among other findings:
• Incentives provided by employers averaged a total of $430 per employee in 2010—a 65 percent increase from $260 in 2009.
• Incentives for employee participation were offered by 62 percent of employers in 2010, up from 57 percent in 2009.
• Incentives for dependents to participate in wellness programs, at an average value of $420 per participant, were offered by half of companies that provided employee incentives in 2010.
• Negative incentives to encourage participation—for example, reducing employer contributions to health plans for those not participating—were used by a small number of companies (12 percent).
“Employers know that a healthier workforce is more productive in the long term,” said Sunit Patel, senior vice president of Fidelity’s benefits consulting business, which commissioned the study with NBGH. “Wellness programs in the past have typically had modest impact because of low participation rates, but our study indicated that incentives are starting to make a real difference in employee interest and engagement.”
According to the research, the majority of employers surveyed (56 percent) agreed that incentive-based programs had a better-than-expected success rate at increasing employee participation in a variety of wellness programs.
Excluding incentives, which represented the largest increase in wellness program spending in 2010, the study found that employers spent on average $154 per employee on wellness programs vs. $108 in 2009. Specifically:
• Condition management programs, such as monitoring diabetes treatment and nurse phone lines, made up 41 percent of the $154 spent—a decline from 43 percent in 2009.
• Health-risk management programs, such as health fairs and on-site flu shots, increased to 20 percent of wellness spending excluding incentives in 2010, up from 15 percent in 2009.
• Lifestyle management programs, such as stress management and smoking cessation, received virtually the same spending (29 percent) in 2010 as the prior year (30 percent).
“Growing numbers of employers nationwide recognize the importance of having a healthy workforce and its link to improving productivity and reducing rising health care costs,” said Helen Darling, president and CEO of the National Business Group on Health. “We believe strongly that the various wellness initiatives that employers are undertaking will have long-lasting positive results for employers, workers and their families.”
According to the survey, 74 percent of employers offered 19 or more health improvement programs in 2010, and that number is expected to grow. In 2010, half of all employers added one new wellness program to their offerings, and 63 percent plan to do so in 2011.
The leading programs that employers are planning to add in 2011 are:
• Health-risk management programs such as biometric testing will experience the most growth (39 percent of employers plan to add such a program).
• Lifestyle management programs such as preventive care reminders (32 percent plan to add).
• Communication/education management programs such as company intranet wellness websites and health/wellness newsletters (30 percent plan to add).
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Participants in Wellness Programs Had Lower Health Care Costs, SHRM Online Benefits Discipline, January 2010
Size and Scope of Wellness Incentives Grow Larger, SHRM Online Benefits Discipline, August 2009
Wellness Incentives—Tips for an Effective Program, SHRM Online Benefits Discipline, May 2007
Wellness Incentives. 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.
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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