The Wall Street Journal reports that 90 percent of employers offer wellness incentives in the workplace. According to Aon Hewitt, two-thirds of other employers plan to offer incentives within the next year. As businesses try to offer benefits in the face of rising health care costs, they want to motivate employees to choose healthier lifestyles. On average, companies spend $521 on incentives per employee. The Affordable Care Act allows employers to use 30 percent of employee health care premiums on incentives programs.

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Students pursuing Masters of Public Health degrees, which you can discover when you click here, often partner with private organizations after graduation to find innovative behavior change ideas. Some employer incentives have worked well while others have been less successful.

Behaviors Targeted by Employers

Most employers focus incentive programs around obesity and tobacco usage. They may adopt some of these policies to discourage tobacco use and weight gain.

  • Strict no-tobacco policies both at home and at work
  • Gym membership reimbursements
  • Complimentary health coaching
  • Discounts for people who meet health metrics and surcharges to employees who don’t
  • Cash incentives and gift cards for meeting health goals

Educational Incentives

Employers offering educational incentives seek to teach employees about healthy behavior. They also want to gather data, through assessments completed by employees, to determine workers’ health care needs. For example, Caterpillar, Inc., gave employees 75 percent off of their premiums when they completed assessment screenings. While making employees aware of negative behavior isn’t always enough to motivate them to change, 61 percent of employers offer incentives in the form of premium discounts.

Action-Based Incentives

Employers sometimes give employees premium discounts or alternatively, penalties if they don’t implement key behavior changes. The city of Houston, for example, charges employees a $25 health insurance surcharge if they fail to complete three tasks, which can include signing up for Weight Watchers, completing a health screening assessment, taking a biometric screening, talking to a health coach or getting a mammogram. Most employees use combinations of rewards and penalties instead of using penalties alone. While surcharges or penalties can encourage some behavior change, the change doesn’t always last over the long term.

Basket of Incentives

Sometimes, employees prefer to pick from a large menu of incentives instead of completing just a few target behaviors. Many would rather follow their interests by taking a self-defense class or a spinning class, for example, instead of meeting with a nurse or following an employee-mandated health program. Sometimes, employers turn to analytics companies that mine employee claims, health assessments and other data to design a customized incentives basket for individual employers. Employees may receive cash, discounts or prizes for completing their activities. Employers should keep in mind that too many options may make employees feel overwhelmed, and companies may waste funds on programs that employees never use.

Goal-Based Incentives

For meeting health goals, employees may receive discounts or rewards. For example, when they reach a goal weight or a blood pressure benchmark, they may receive premium discounts or cash prizes. A survey by Fidelity Investments found that 41 percent of employees tie employee premium payments to their health metrics. Rewarding employees for meeting metrics doesn’t mean that they’ll actually become healthier. Also, some employees who have major obstacles, such as morbid obesity, may feel that reaching a number on a scale could be a hopeless effort.

Potential Problems

Organizations like the American Heart Association have expressed concern that incentives programs transfer the cost of health care to sicker individuals. The Obama Administration, to combat concern, supports excluding employees from penalties if employees receive exceptions from their doctors. For example, a doctor could excuse a patient if the employer’s weight loss goals were too extreme to achieve in a short amount of time.

Other advocates express concern about employee privacy. Many employers say that employee health data is kept private from the employer, but employees are skeptical. Some worry that they could be subject to retaliation on the job if they fail to meet health care goals.

Only time will tell whether employee incentives make a significant difference in worker health. However, with more employers adopting these programs, employees should prepare themselves for  potential non-compliance penalties.

About the Author: Sarah Guinness is a health coach who consults with a number of private sector employers.