Are Wellness Program Incentives Worth the Investment?

As health care costs rise, employers have looked to wellness programs to improve employee health and keep expenses down. But enrollment rates and overall effectiveness vary widely by organization.

To help, nearly three-quarters of businesses have begun offering their employees incentives to get healthy as part of a workplace wellness program, according to Anthem’s Trends in Health Benefits 2018 report. But are wellness program incentives the answer?

A Wellness Program Incentives Overview

A study of more than 1.4 million employees reported in the American Journal of Managed Care found that financial incentives had the greatest positive effect on the number of people who received preventive care services. Topping the list of such services were cholesteral tests, annual checkups and blood sugar tests, all of which increased by rates considered “significant improvements.” The study found that financial incentives were less effective at increasing rates of cancer screenings, from mammograms and colorectal cancer screenings, which showed modest improvements, to cervical cancer screenings, which showed no improvement at all.

While preventive services like health assessments and biometric screenings also showed the highest employee participation rates among all the incentivized wellness programs and behaviors in Anthem’s report — 53 and 46 percent, respectively — physical activity programs or challenges were also relatively popular (29 percent). Other common options included smoking cessation, weight loss, disease management and lifestyle management programs. Closer to the bottom of the list were mental health programs — from stress management to resiliency traning, mindfulness classes and happiness programs — and options devoted to financial wellness.

The average value of incentives was $742 per person per year, with smoking cessation programs bringing the highest median reward ($250), followed by disease management ($175) and physical activity challenges ($150). But keep in mind that incentives don’t have to be cash. Other options could include discounts on insurance premiums, gift cards and reimbursements for gym memberships.

Of the companies that offered employer wellness programs, 69 percent offered incentives not only to employees themselves but also to their spouses and dependents. A small percentage of companies also instituted penalties for certain behaviors — premium surcharges for smoking, for example, or skipping biometric screenings — but this choice may not align with your company culture or the way you’re positioning the value of a healthy lifestyle to your employees.

How to Offer Wellness Program Incentives

First, decide what behaviors you want to incentivize. Would your employees benefit most from getting biometric screenings, losing weight, lowering their blood pressure or something entirely different? Come up with clear goals and choose rewards that both fit your budget and appeal to your employees.

If you’re on a limited budget, you may want to stick with incentives that have been shown to produce a return on investment, namely preventive wellness and perhaps also fitness challenges. Before deciding on any particulars, get familiar with the relevant rules under the Affordable Care Act to ensure that your incentives are implemented equitably across all employees.

From there, take the time communicate your incentive scheme clearly. Especially if you’re considering levying penalties, it’s important to feel confident that everyone’s expectations are the same before moving forward. Later, decide how best to present or announce rewards. Doing so at a special event or all-company meeting could be a simple way to sweeten the deal and motivate more participants.

An employer wellness program can be a smart, fun way to lower health costs, reduce sick days and make your workforce healthier. It may take some trial and error to find the right balance of incentives that will give you the highest return on investment, but providing some type of reward for healthy behaviors can be a winning arrangement for both your employees and your company.

Stay up to date on the latest health care regulations and trends for your small business: Subscribe to our monthly e-newsletter.

This content is provided solely for informational purposes. It is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisers.

COVID-19 Resources: Managing Your Business During a Crisis