News & Commentary

Wellness Programs Increasingly Use Incentives and Penalties

Employer commitment to wellness programs increased greatly this year, with more companies using reward and punishment to encourage workers to live healthily. This is according to a survey of 335 human resource and health benefit managers in the United States (248) and Canada (87) in companies with at least 1,000 employees. Towers Watson and the National Business Group on Health collaborated. 

In 2009, 36 percent of respondents used financial rewards to encourage wellness; that increased to 54 percent by this year. By next year, 4 in 5 companies plan to offer some type of financial reward to people who participate in health management programs.

The use of penalties also increased between 2009 and 2011, rising from 8 to 19 percent and, according to the survey, is expected to double again by 2012 when 38 percent of respondents plan to have penalties in place.

“Employers today view health and productivity programs as integral to their overall health benefit strategy and efforts to control health care cost inflation,” says Shelly Wolff, senior health care consultant at Towers Watson. “As companies strive to maximize employee participation in these programs, they are opting for both rewards and penalties. And many are finding these approaches are producing significant results.”

To implement these programs, employers often turn to medical directors at health insurance plans and pharmacy benefit managers, says LuAnn Heinen, a vice president at the NBGH. “In this environment, health plan and PBM expertise in areas such as changing behavior, increasing engagement, and targeted messaging can be especially valuable to employers that provide wellness programs,” says Heinen, who works closely with the NBGH members on their corporate wellness programs.

The people whom health insurance medical directors often deal with — corporate medical directors — are also, as could be imagined, intensely involved.

“Whether or not prevention, screening, or other health services are available on site, medical directors are trusted channels of employee communication and counseling,” says Heinen. “In addition, their leadership of wellness and prevention initiatives and advocacy of related corporate policies — such as tobacco-free environment; healthy dining, vending, and catering; physical fitness opportunities at work, and stress management interventions — helps employees reach success in achieving and sustaining healthier lifestyles.”

While just 12 percent of U.S. respondents report that they reward or penalize based on outcomes such as target BMI or cholesterol levels, an additional 16 percent are planning this approach next year.

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