Companies Offer Financial Incentives to Help Workers Stay Healthy

June 13, 2008
By 2009, 74% will offer financial incentives

A recent survey by Watson Wyatt Worldwide and the National Business Group on Health, reports that the number of employers offering workers financial incentives to better manage their health is expected to jump sharply next year. Half of those surveyed 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%.

Some employees need a little extra inspiration to address their own health and develop healthy habits, said Ted Nussbaum, Watson Wyatts director of group and health care consulting. Financial incentives can be a valuable investment that provides that essential push. And the payoff from improved workforce health and productivity cannot be overstated.

While the vast majority of employers are rewarding healthy lifestyles, 6% are penalizing employees for poorly managing their health conditions.

Over half (53%) of the companies included in the survey offer financial incentives for preventative services and completion of health risk appraisals. Forty-two percent use incentives for participation in disease management programs. Incentives are paid for participation in smoking cessation and weight management programs as well as management of cholesterol and blood pressure levels. Twelve percent pay for completion of a consumer education module while seven percent offer incentives for employees to maintain a personal health record.

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% that offer deductible credits have at least half of their workforce enrolled in an HRA compared with 17% that offer cash and 12% that offer no incentive.

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% of companies without a CDHP. Similarly, 50% of CDHP companies offer incentives for participation in health improvement or disease management programs versus 35% of non-CDHP companies.

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