Employees, don’t be surprised when your annual explanation of employer benefits includes not only the 401(k) plan and 10 paid holidays but also a financial incentive program to better manage your health. A survey of 453 large employers found that half currently use incentives to encourage their workers to participate in health improvement activities such as smoking cessation or weight management programs.

By 2009, however, that number is expected to reach 74 percent, according to Watson Wyatt Worldwide and the National Business Group on Health.

“Some employees need a little extra inspiration to address their own health and develop healthy habits,” says Ted Nussbaum, Watson Wyatt’s director of group and health care consulting in North America. “Financial incentives can be a valuable investment that provides the essential push.”

And, according to the survey, there’s a wide range of incentives that employers are using to motivate their employees, from cash to an equivalent reward as an incentive for participating in health improvement and disease management programs. Some employers now tailor their programs, matching desired rewards with a specific behavior or activity.

For example, premium or deductible credits are more effective than cash at boosting health risk appraisal (HRA) participation.

According to the survey, 73 percent of companies that offer health insurance premium credits and 67 percent of those that offer deductible credits have at least half of their workforce enrolled in an HRA, compared with 17 percent that offer cash and 12 percent that offer no incentive.

The next generation of incentives will be even more targeted, according to Nussbaum. “A second generation of incentive programs that rewards a new range of health care choices such as selective high-quality doctors and providers is around the corner,” he says.

Paying for healthy behaviors

Employee action/behavior

Large employers offering financial incentive (%)

Completion of health risk appraisal

Participation in health improvement or disease management program

Participation in smoking cessation program

Participation in weight management program

Management of cholesterol level and blood pressure

Completion of consumer education module

Maintaining a personal health record

Source: Watson Wyatt

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