Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance > Health Insurance

Rethinking wellness incentives

Your article was successfully shared with the contacts you provided.

Voluminous studies have been conducted about the benefits of successful employee wellness programs.

However, determining the best way to motivate employees to make a long-term commitment to wellness is not always as easy as it sounds. While some employees are eager to participate in workplace changes, wellness incentives may cause negative effects — including resulting in only short-term success, isolating workers and decreasing morale, some industry insiders say.

“The traditional worksite wellness model incentivizes people to participate in one activity — for example, filling out a health-risk assessment — but there’s no incentive to continue after you’ve earned the initial reward,” says Alan Kohll, founder and CEO of TotalWellness in Omaha, Nebraska. His company provides corporate health and wellness services, including biometric screenings, flu shots and a wellness portal.

Traditional incentives work well to jumpstart a wellness program, he says, but they also may carry unforeseen consequences, which may include workers dropping too much weight or practicing unsafe dieting just so they can hit targets.

“Incentives can inadvertently punish workers who don’t participate in wellness activities and can ultimately damage morale,” Kohll says. “Some employees could also be penalized even though they are making progress, while others might practice unsafe dieting practices to hit a certain number and get a payout.”

“Employers should consider other ways to provide incentives that boost employee wellness long-term, like discounting gym memberships or subsidizing healthy options at the cafeteria,” he continues. “Companies can still keep money in their employees’ wallets, but in a more delicate way.”

Harriet Aaronson, associate vice president for Corporate Health & Wellness at The Hartford in Hartford, Conn., agrees with Kohll.

“While we believe self-motivation leads to the most sustained behavior change, we recognize that behavior change can be difficult,” she says. “External motivators can be helpful in getting employees to engage in programs. Many employees who sign up for programs due to an incentive with enough sustained engagement, embrace new, healthier habits long after those programs conclude.”

Upward trends

There is no debate about the fact that the number of businesses offering wellness and incentive programs is steadily increasing, according to the most recent study by BSwift, a benefits software firm in Chicago:

  • Eighty-three percent of large employers now provide wellness programs, up from just 52 percent in 2012.
  • Among small employers, participation increased from 52 percent two years ago to 78 percent today.
  • Twenty-four percent of large employers’ wellness programs now offer outcome-based incentives for employees who meet or exceed outcomes-based biometrics thresholds.

Health insurance premium discounts or credits are offered by 64 percent of large companies using incentives, followed by cash, gift cards and sweepstakes (56 percent).

Even with the cost of incentives, employers usually see a positive return on their wellness program investment. “When employees are healthy, they feel good,” Kohll said. “They’re more motivated and less stressed, which is great for the bottom line. Healthy employees translate into a variety of benefits for employers.”

The Wellness Councils of America, also in Omaha, estimates that wellness programs provide a 3-to-1 return on investment. However, many experts caution that the benefits may not show up for two or three years. Companies are more likely to see slower growth in health-care costs than actual reductions. The Patient Protection and Affordable Care Act adds another wrinkle.

“There are a variety of provisions in the ACA that encourage healthier lifestyles through wellness programs,” Kohll says. The reward may not exceed 30 percent of the total cost (whether paid by the employee or the employer) of employee-only coverage under the employer’s health care plan. For smoking cessation programs, the reward may not exceed 50 percent of the total cost.

Proper use of incentives

Kohll emphasizes that he supports wellness incentives, but only for the short term. Employees may be unlikely to stay with the program for the period that it takes for a business to show a positive ROI unless they find internal motivation.

“Instead of throwing more money into incentives, we need to work with individuals to tap into their values, help them understand why they want to change and then give them tools to succeed,” he says. “Focus on getting employees moving during the workday — promote lunch workouts, stretch breaks and walking meetings so employees can recharge their bodies and brains. Physical activity improves brainpower, creativity, concentration, memory and mood.”

Even successful wellness programs should be revisited regularly, Aaronson says.

“We are evaluating and investing in programs aimed at delivering an exceptional employee experience — that includes a commitment to promoting a healthy work environment and encouraging employees and their families to maintain healthy lifestyles,” she says. “Healthy employees translate into better business results and lower health-care costs for our employees and the company.

“With this in mind as we initially assessed the needs of our population, our resulting health and wellness programming focused on keeping healthy employees healthy, eliminating health risks and controlling the effects of chronic illness.”

Companies, just like their employees, develop their own identity and culture. Programs and incentives that work for one business may not be the best choice for another.

“All companies need to determine what it is they really need, what the desired outcome is (improving employee health, reducing health care costs, attracting talent) and what their employees perceive as added value,” Aaronson said. “That will inform management of the direction to take. It is important to assess the culture in the company and if wellness initiatives can be supported. And then find the right program for the problem you want to tackle — the best program doesn’t work if you can’t engage people, so the right program for the specific population is essential.”

The bottom line is that long-term commitment, not initial enthusiasm, is the key to ongoing benefits for both employers and employees.

“Incentives may spark engagement in a wellness program in the short-term,” Kohll says, “but in the long run, it’s creating a culture of wellness that will really improve health and productivity within an organization.”


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.