Even as the use of financial wellness incentives flourishes in the workplace, a number of nonprofit health organizations caution that they could result in discrimination and place undue burdens on employees if not implemented properly.
A growing number of employers are rewarding those who meet certain health goals, such as attaining or maintaining a normal body mass index, or BMI, or cholesterol level, or stopping smoking. And some are imposing penalties on employees who fail to meet the goals.
While the practice may seem like a good way to prompt change, Laurie Whitsel, director of policy research for the American Heart Association, says her group and others are concerned that employees with pre-existing conditions or genetic predispositions might be "punished because they couldn't get below a certain standard," resulting in higher insurance premiums or deductibles. "If people pay more, they may forgo preventive care, disease management care or prescription medication."
Whitsel and members of other organizations, such as the American Cancer Society, teamed up with employers, providers, consultants and others under the auspices of the Health Enhancement Research Organization, to draw up a joint-consensus statement providing guidance on how organizations can design outcomes-based incentives programs that don't discriminate against employees.
The paper is particularly relevant because the federal government released new guidelines on incentive programs in November, and incentive amounts might soar. Currently, incentives can reach up to 20 percent of the total cost of health care coverage, but in 2014, those rewards could jump as high as 50 percent of costs.
While the goal of outcomes-based wellness-incentive programs is to get employees to take a greater interest in their health, even proponents are cautious. "An incentive itself doesn't necessarily buy engagement, it buys compliance," says David Anderson, senior vice president and chief health officer at StayWell Health Management. Anderson helped draw up the consensus statement.
Early adopters began offering financial incentives to employees in the 1990s, and they came in small sums, like $25 or $50 gift cards for completing health assessments and screenings, Anderson says.
Usage spread after the final Health Insurance Portability and Accountability Act regulations in 2006, which allowed premium discounts or rebates if someone adhered to health promotion and disease prevention programs, he says. With passage of the Patient Protection and Affordable Care Act in 2010, usage took off. Incentives still are offered for completing various screenings, but there's now an emphasis on rewarding those who attain certain health care goals.
A survey this year by the National Business Group on Health found that, of 82 large employers, almost half use financial incentives to encourage employees to participate in wellness programs, and about 30 percent link them to attaining specific health outcomes. More than 20 percent apply surcharges if employees don't take part in certain programs.
One caveat under federal law is that if the reward is unreasonably difficult to obtain because of an employee's medical condition or the employee's doctor says it is medically inadvisable for the person to try to meet the standard, the employee must be offered an alternative, or be able to get a waiver from his physician.
For those who offer financial incentives, the median amount employees can receive is now $300, but is expected to climb to $450 in 2013, according to the National Business Group on Health survey. While the increase is notable, it's far short of the maximum allowed by law.
A survey by the Kaiser Family Foundation found that, this year, average annual premiums for employer-sponsored health plans are more than $5,600 for individual coverage and almost $15,750 for family coverage.
Whitsel cautions that simply handing out cash isn't enough. "What motivates people is a culture of health within the work site. This comes from the top down." It can come in the form of having a smoke-free workplace, offering healthy food in the cafeteria or providing exercise opportunities.
On the other hand, employers need to keep in mind that not every employee can meet the standards that are set. As the consensus statement emphasizes, organizations need to protect employees from discrimination or from creating undue burdens in terms of time and costs.
A smoking-cessation program, for example, should be offered during the workday and be easily accessible to employees, Whitsel says.
The statement also recommends avoiding incentives that create a greater economic burden on one race or ethnic group because that could be a civil rights violation, and suggests creating outcomes-based incentives only for conditions and behaviors that can be modified, such as stopping smoking, losing weight or lowering cholesterol.
If a standard is unreasonable or inadvisable because of an employees' medical condition, an alternative standard or waiver must be allowed.
That could mean a company allows someone with a high BMI, who can't meet the standard without putting themselves at risk or relying on prescription medications, to use an alternative, such as weight-management coaching or losing 5 percent to 10 percent of their body weight over the course of a year as a way to obtain the reward, Anderson says.
The statement recommends deferring to a person's primary physician in deciding what is appropriate for that individual, which pleases Whitsel. "Peoples' primary physician will always take priority."
Anderson says he always urges employers to work with their legal counseling in drafting such programs to make sure they don't violate state and federal anti-discrimination laws.
Employers also need to weigh how large an incentive is enough to change behavior, Anderson says.
Now incentives can reach up to 20 percent of the cost of health insurance coverage. The proposed regulations would raise that limit to 30 percent in most cases, and up to 50 percent if programs are designed to prevent or reduce tobacco usage.
Yet Anderson says few companies come close to current limits. Often, incentives of $40 to $60 a month are enough to do the trick and get employees involved in the programs.
While there has been plenty of anecdotal evidence that wellness incentives help boost participation in wellness programs, solid research on their results is lacking, Anderson says. "If they [incentives] are not successful in moving the needle in terms of health, people may back away from them."
Susan Ladika is a writer based in Tampa, Florida. Comment below or email firstname.lastname@example.org.