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The 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 leap to 74 percent.
“Some employees need a little extra inspiration to address their own health and develop healthy habits,” said Ted Nussbaum, Watson Wyatt’s director of group and health care consulting in North America. “Financial incentives can be a valuable investment that provides that essential push. And the payoff from improved workforce health and productivity cannot be overstated.”
According to the survey, employers are using a wide range of financial incentives to promote healthier lifestyles — from completing health risk appraisals to participating in health improvement and disease management programs. While the vast majority of employers are rewarding healthy lifestyles, 6 percent are penalizing employees for poorly managing their health conditions.
Companies use financial incentives to encourage a healthier lifestyle
Employers offering financial
Employee action/behavior incentive (%)
Full coverage of preventive services 53%
Completion of health risk appraisal 53%
Participation in health improvement or
disease management program 42%
Participation in smoking cessation program 40%
Participation in weight management program 31%
Management of cholesterol level, blood pressure 21%
Completion of consumer education module 12%
Maintaining a personal health record 7%
Employers use cash or an equivalent reward most frequently as an incentive for participating in health engagement activities. However, 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. Seventy-three percent of companies that offer premium credits and 67 percent 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.
“Companies are targeting specific results with incentives that align with their business goals and matter most to their workers,” said Bruce Kelley, senior group and health care consultant at Watson Wyatt. “For these types of rewards to be effective, it’s a matter of tailoring the incentive to the desired behavior and ensuring that employees are more involved in the process.”
Employers with a consumer-directed health plan (CDHP) are more likely to offer incentives. Twenty-six percent of companies with a CDHP offer financial incentives for managing health risk levels (e.g., weight, blood pressure) compared with 17 percent of companies without a CDHP. Similarly, 50 percent of CDHP companies offer incentives for participation in health improvement or disease management programs versus 35 percent of non-CDHP companies.
“A second generation of incentive programs that rewards a new range of health care choices such as selecting high-quality doctors and providers is around the corner,” said Nussbaum. “Employers view this as a big picture. They realize the broad power of targeted incentives in building a healthier and more productive workforce.”
To view the 13th annual National Business Group on Health/Watson Wyatt Report, visit http://www.watsonwyatt.com/purchasingvalueinhc.
About Watson Wyatt Worldwide
Watson Wyatt (NYSE, Nasdaq: WW) is the trusted business partner to the world’s leading organizations on people and financial issues. The firm’s global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,000 associates in 32 countries and is located on the Web at http://www.watsonwyatt.com.
About the National Business Group on Health
The National Business Group on Health is the nation’s only nonprofit organization devoted exclusively to representing large employers’ perspective on national health policy issues and providing practical solutions to its members’ most important health care and benefits related issues. Business Group members, primarily FORTUNE 500 companies and large public sector employers, include the nation’s most innovative health care purchasers who provide health coverage for more than 55 million U.S. workers, retirees and their families. The Business Group fosters the development of a safe, high- quality health care delivery system, works to achieve transparency and make scientific evidence of effectiveness the standard for care, and shares best practices in health benefits, health and productivity, related paid time off and work balance issues. For more information about the NBGH, visit http://www.businessgrouphealth.org.
SOURCE Watson Wyatt Worldwide / PRNewswire
I understand how companies are trying to cut their medical costs, but to reveal your personal habits with the hope of getting bonuses for healthy behavior isn’t something I could do.
I wonder if some people would find themselves in a higher tax bracket with their success?
I know that there have been companies around here have gave incentives to people that don’t smoke or quit. It cuts down on their insurance premiums from my understanding.
I’m on the fence over how I feel about this. On one hand, great that companies might help employees be more healthy…
… but on the other hand, there’s that huge issue of privacy. Like what’s next? Will they tell me I can’t stop at Starbucks on the way home because caffeine isn’t good for me?
I can’t eat a candy bar for the same reason? Nah, I don’t think I like this.
I know, Katharina.
The recent changes in employer involvement gives me more incentives to work as a contractor at all times.
How will they determine if incentives are based on what is deemed healthy and based on sound research, or simply the personal desires of the boss?
Exactly! The boss is diabetic, so he’ll be darned if someone in HIS office is going to sit there eating a piece of cake or candy for lunch.
Let’s just use the health incentive package and charge Suzie more for bringing sweet desserts every day. They’re not “healthy” and could cause her to gain weight, after all.
There is *so* much room for abuse here.
I think if an employer is willing to help an employee get healthy…at their expense, I’m all for it. So many people need this type of assistance and encouragement, it’s nice to know that the company will give you the support you need.
Even if their idea of what healthy is happens to be different from the employee’s idea? Maybe if there would be some standard, but I’ll bet there wouldn’t be.
I see the possibilities of more control over our lives looming large here.
I really like owning my own body, and it not be part of a “group plan”!
LOL
I agree with you in that it does seem like it is intrusive into your personal life. I am not sure how they do it but I know that one company you cannot smoke at all in our outside of work.
It is alarming how quickly we are losing personal sovereignty, and no one seems to be pointing it out.
People are so busy listening to, and repeating, the benefits that they aren’t applying critical thought to what is happening to us!
What would be your number one way for people to start getting wise to what’s going on, SageMother? How’s the best way to get the word out?
I think one way is to really talk about the down sides of seemingly altruistic acts, without fear.
Often, people will simply remain quiet when they see some problems with some of these interesting policy changes, and let those who are “feeling the glow” dominate discussions.
Our abilities to have our lives as our own, are too important to let the hidden affects of public policy, remain unexplored.
I’m not sure if I can see your point sagemother. This, to me, seems like a win-win situation. Healthy body and mind equals healthy employee.
The point I see, debrajean, is that once an employer can start dictating what their employees do in some areas, it could turn into something ugly real fast.
Like where would they stop? Dock my pay if I decide on pizza and a candy bar for lunch instead of yogurt?
I am not sure I like this myself. I would not feel comfortable with my boss knowing my personal health issues. Also, I agree that what one person deems healthy may not be the same for another. Who sets the standard? It is way too intrusive for me.
I can see it and agree with it for only a couple issues. If an employee is drinking or smoking and ruining their vital organs, sure I can see having to pay more for insurance.
But I don’t think they’re talking about just drinking, drugs, and smoking.
I think the days of being able to rely on health plans from employers, or other benefits for that matter, are probably over.
I think it would be wiser to encourage employees to set up Health Savings Accounts, under their own names, and leave their private lives alone.
I just think that it could lead to other things. I mean pop is not good for you so what if your boss told you that you couldn’t drink pop. I mean there are a lot of unhealthy things people do in the privacy of their home.
Tater, you are so right.
It is scary to think that many people will not examine the down sides of these policies.
Health savings accounts sound like a decent idea. Wonder how who’d make sure it was saved for those purposes, though?
Wouldn’t people be tempted to borrow on it like they do now with 401K’s? And if borrowing is prohibited, wouldn’t people squawk that no one should be in charge of their money?
Katharina,
I believe that you find out information about how these works from the bank or the institution that administers the account.
SageMother, I am almost positive that existing benefits are not cut, companies are just giving an additional incentive for their employees to stay healthy.
That can translate to a better working environment.
I remember I turned down a job to work for a management position with Starbucks Canada once upon a time and on top of the awesome medical benefits I had, they offered me leisure money to invest in some form of physical activity like martial arts, or going to the gym. I thought it was pretty cool.
Tater03, I don’t think the bottom line really is cutting down on insurance premiums because they still have to pay for it regardless if the person is a smoker or non-smoker. It will take about two years for a smoker to be a non-smoker to get a lower premium.
Companies are after the balance in the employees and healthy employees are usually happy employees.
Katharina, I don’t think organization’s come out with a list of do’s and dont’s, just incentives that if you do what’s best for your health, we’ll support you.
I believe the first movement started with a lady who was trying to lose weight and got her whole office in with the whole program. Then, the company itself decided to match dollar for dollar for the weight loss that they lost and maintained on a yearly basis.
SageMother, being a contractor has a lot more benefits than of course, working directly as an employee.
You get the ability to write a lot of things off that you normally wouldn’t be able to. It also enables you to get better tax cuts.
However, as my hubby and I are self-employed, the medical / dental portion is the portion we really miss…. and of course, all the wonderful extra frills that my former job gave me.
debrajean, it also shows that your company is quite progressive and moving with the times. And that, they have your best interest at heart.
Tater03, here in Canada, smoking in public places have been pretty much banned for awhile even at the bars. It’s what the government calls as it’s “health initivate” program.
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