More Employers Link Premiums to Wellness

By Stephen Miller, CEBS Apr 24, 2013

More employers are following the lead of companies such as CVS Caremark, which recently made news by requiring its employees to receive health screenings that include measuring weight, cholesterol, blood sugar and blood pressure, or face a $50-per-month penalty on their health insurance premiums.

These measures are becoming increasingly common for businesses that are looking to combat the rising cost of health care. For instance, Compdata Surveys’ Benefits USA 2012/2013 survey found that 34 percent of U.S. employers that offer wellness programs either provide health insurance discounts for employees who participate in wellness programs or impose penalties on workers with risk factors who aren’t taking action—up from 25.4 percent in 2009.

The survey, which collected data from more than 4,500 U.S. benefit plans covering more than 13 million employees, further revealed that:

  • Medical-premium contributions for employees who participate in wellness programs were made by 28 percent of employers, up from 16.7 percent reported three years earlier.

  • Contributions to health savings accounts (HSAs) and health reimbursement arrangements (HRAs) were made by 27.6 percent of employers to reward workers for participating in wellness programs.

  • Gift cards were offered by 42 percent of employers.

  • Tobacco-cessation programs and flu shots/immunizations are wellness options at 62.7 percent and 90.9 percent of organizations surveyed, respectively.

The average premium increase on employer-sponsored preferred provider organization (PPO) plans has been between 9 percent and 11 percent each year since 2009, according to Compdata Surveys. The findings were reported in April 2013.

Shifting Employer Approach to Incentives

Similarly, HR consultancy Aon Hewitt recently surveyed nearly 800 large and midsize U.S. organizations, representing more than 7 million U.S. employees. The March 2013 survey report showed that 83 percent of employers offer their workers incentives for participating in wellness-improvement programs, including filling out a health-risk assessment and undergoing biometric screenings.

The findings also revealed that:

  • Monetary incentives of between $50 and $500 were offered by almost two-thirds (64 percent) of employers.

  • Monetary incentives of more than $500 were provided by nearly one in five (18 percent).

Tying Incentives to Positive Results

A growing number of employers are linking incentives to sustainable actions and results, Aon Hewitt found:

  • Employees were required to actively participate in health programs, comply with medications or take part in activities like health coaching at 56 percent of companies that offer incentives.

  • Incentives for progress toward or attainment of acceptable ranges for biometric measures such as blood pressure, body mass index, blood sugar and cholesterol were offered at 24 percent.

The survey data indicate a potential shift in how employers are thinking about designing their incentive programs in the future:

  • Imposing consequences on participants who do not take appropriate actions to improve their health is planned by a majority of organizations (58 percent).

  • Interest in tying incentives to program designs that require a continuing focus on health (for example, incentives for completing a progressive physical-activity program that builds up to the recommended cardiovascular physical activity of 150 minutes per week) was expressed by 34 percent.

According to a separate, recent Aon Hewitt survey conducted in partnership with the National Business Group on Health and The Futures Co., of the workers who were offered a health-risk assessment and were given suggested actions based on their results, four out of five (86 percent) took some action. Further, nearly two-thirds (65 percent) of those who received suggested actions reported that they made at least one lifestyle improvement.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related Articles:

Wellness Incentive Spending Doubles over Four Years, SHRM Online Benefits, March 2013

Regulating Wellness, SHRM Online Benefits, January 2013

Incentivizing Good Health: A Success Story, SHRM Online Benefits, October 2012

Use of Monetary Incentives to Promote Wellness Grows, SHRM Online Benefits Discipline, August 2012

11th Circuit Upholds Wellness Program's Premium Incentive, SHRM Online Benefits Discipline, August 2012

Groups Issue Guidance for Outcomes-Based Wellness Incentives, SHRM Online Benefits, July 2012

Quick Links:

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SHRM Online Health Care Reform Resource Page

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