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10 Elements of Effective Wellness Incentive Programs

By Hallmark Business Connections | September 9, 2014 | Engage Employees

For employers, wellness incentive programs are not a new concept.  In fact, companies have been using incentives as part of their wellness programs to promote employee wellness engagement and build a healthier workforce for years.

However, navigating the complex system of rules, regulations, and standards associated with wellness incentives has long been a challenge for employers.

Companies struggle to provide effective incentives for wellness program adoption and recent changes to incentives-based wellness programs under the Affordable Care Act (ACA) have only added to this complexity.

To highlight common incentive program traits that lead to success, we searched online for expert opinions from leading healthcare publications, academic researchers, HR leaders, and journalists.  The following is our list of 10 key elements of effective wellness incentive programs:

  1. Transparency and accountability: “Wellness incentives hold considerable potential to improve employee health.  Yet, we know little about which designs are the most or least effective nor about how widespread which types of programs are.  The newly increased levels (of maximum permissible rewards, under the ACA) are likely to spur considerable experimentation by employers.  More is needed to move toward fully evidence-based wellness programs, but a public registry [such as the CDC’s Healthier Worksite Initiative as well as a listing in the NIH clinical trials database] can increase transparency and accountability…helping to make significant progress toward effective and fair wellness incentives.”  (Source: Harold Schmidt, Ph.D., Health Affairs Blog)
  2. Strategy: “Workplace wellness programs are no longer simply a line item managed by HR to attract prospective employees, but rather a comprehensive initiative designed to increase efficiency, reduce cost, and create a more productive work environment.  Employers who use incentives to encourage wellness program participation show significantly higher participation rates.  [For this reason, it’s critical to] determine an effective incentive strategy [at a program’s outset].  Some incentive examples include gift cards, vacation time, or bonuses employees can earn for hitting specific milestones.”  (Source: Hallmark Business Connections)
  3. Ongoing incentives: “We have found, time and again, that rewarding employees for getting healthy and achieving results encourages the type of change needed to get a program off the ground and encourage a real shift in employee culture. However, because the required behavior changes are new, challenging, and difficult to sustain, programs must include incentives and rewards throughout the year in order to drive long-term engagement.”  (Source: Forbes)
  4. Careful structure: “The Affordable Care Act encourages employers to launch workplace wellness programs with financial incentives, including discounts on health insurance premiums.  But, while employers may be eager to enter the wellness arena [both to lower their healthcare spending and to develop a more productive and engaged workforce], it’s critical for them to design wellness programs that comply with federal workplace laws.  The major takeaway on wellness programs is there has to be a plan, it needs to be in writing and the alternative standards should be carefully considered. There are great benefits, but there are also some land mines that come up.”  (Source: Insurance News Net)
  5. Simplicity: “Experts say the simple activities (i.e., filling out a questionnaire about family medical history and/or diet and fitness routine, taking a biometric screening for cholesterol, blood pressure, etc.) are a good way to introduce employees to healthy behavior and their own risk factors. Companies can also use the data to figure out what their workers’ health needs are.”  (Source: Wall Street Journal)
  6. Personal motivation: “When health is made personal and put in real-life terms, people discover the value that health can hold in their lives—and that provides the strong call to action. Johnson & Johnson, which has one of the longest-standing wellness programs in the country, understands that people don’t strive to get healthy because it’s the right thing to do in some abstract sense. ‘Health is usually a means to an end,’ says Adam Glauberg, Director of Global Health Services at Johnson & Johnson. ‘The individual wants to be there for family, to get off diabetes medication, to perform better at work. If the company can tap into those personal motivations, it can better communicate the value of health.’” (Source: Harvard Business Review)
  7. Culture-oriented: “When determining the incentive amount, careful consideration should be made and the following questions should be asked: Does the incentive amount fit with your culture? Will the incentive amount drive behavior change in your population? Is there evidence to support that conclusion? If penalties are used, will they have a disproportionate financial impact across different income levels or racial/ethnic groups within the company? Is the incentive so large that it results in significant cost shifting to nonparticipating or nonattaining employees, jeopardizing their ability to afford coverage?”  (Source: University of Iowa Healthier Workforce Center for Excellence)
  8. Momentum: “Wellness programs should offer employees regular events and scheduled activities to keep the momentum going. Ideas include having a health and wellness event every week (e.g., free fruit on Mondays, Wednesday walks outside the office, etc.) or even offering to sponsor employees for physical activities that may take place outside the office (e.g., marathons, charity walks, etc.).”  (Source: Hallmark Business Connections)
  9. Freedom: “Employees like the freedom to choose their health activities, from bike rides to self-defense classes, rather than having to talk to a nurse or participate in an official program to get the reward, say experts. A wellness program that lays out a tempting trail to follow will have more success keeping people involved.”  (Source:  Wall Street Journal)
  10. Individuality: “Make the goal of the [incentive] program helping each participant earn the incentive reward.  [In other words], create an incentive design that considers individual goal attainment rather than ‘ideal’ health targets.  Rewarding participants for progress toward the goals may help individuals with higher health risks improve their general health and behavior incrementally.”  (Source: National Healthy Worksite/Center for Chronic Disease Prevention and Health Population)

Final Thoughts

This year, corporate employers plan to spend an average of $594 per employee on wellness-based incentives within their health care programs, according to an employer survey conducted by Fidelity Investments® and the National Business Group on Health (NBGH). This marks a 15% increase from the average of $521 reported for 2013, and is more than double the average of $260 reported five years ago.

With employers reporting a significant uptick in incentives this year, it’s more critical than ever to consider how to structure an effective wellness incentive program.  How has your company used incentives to encourage healthy behaviors and lifestyle choices?  What wellness incentive program elements do you consider critical to success?  We’d love to hear your perspective in the comments below.


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