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More Companies Linking Rewards, Penalties to Wellness Program Results

Fifty-eight percent of employers offering wellness incentives pegged rewards to completion of lifestyle modification programs such as weight loss, smoking cessation and physical fitness.

August 9, 2012
Related Topics: Legal Compliance, Reward (Recognition) and Incentive Programs, Corporate Culture, Motivating Employees, Health and Wellness, Latest News
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While the majority of employee wellness incentives offered in 2012 were aimed at boosting participation rates, a growing number of companies are linking rewards and penalties to measurable results among program participants, according to a study released this week.

A survey of nearly 2,000 employers in the United States—conducted by Lincolnshire, Illinois-based Aon Hewitt—revealed that one-quarter of employers offering incentivized wellness initiatives in 2012 have attached rewards to progress made toward meeting healthy blood pressure and cholesterol levels, body-mass ratios and other biometric measurements, compared with just 4 percent the prior year.

Additionally, 58 percent of employers offering wellness incentives pegged rewards to completion of lifestyle modification programs such as weight loss, smoking cessation and physical fitness, as opposed to 31 percent of employers in 2011 that only incentivized participation in those activities.

"Incentives solely tied to participation tend to become entitlement programs, with employees expecting to be rewarded without any sense of accountability for better health," Aon Hewitt's chief innovation officer for health and benefits, Jim Winkler, said in a statement released Aug. 8. "To truly impact employee behavior change, more and more organizations realize they need to closely tie rewards to outcomes and better results rather than just enrollment."

Though results-based wellness incentive and penalty structures have been shown to generate a higher likelihood for improved health outcomes, they also carry a greater potential for exposure to compliance issues and litigation, experts have noted. The federal Health Insurance Portability and Accountability Act, for example, requires employers to make available reasonable alternatives or exceptions for workers whose disability or physical condition renders them incapable of meeting an incentivized benchmark.

Despite the overall rise in utilization of incentives and penalties, the vast majority of employers surveyed still have not sufficiently connected wellness participation and health care accountability, which the study's authors identified as crucial to realizing sustainable behavioral shifts.

Eighty-four percent of employers indicated they reward employees for participating in health risk assessments and 70 percent said they penalize non-participation, compared with 49 percent rewarding participation and just 8 percent penalizing abstention in 2011.

Similarly, the percentages of employers using enrollment-based rewards and consequences for biometric screenings rose in 2012 to 64 percent and 53 percent respectively, from 33 percent and 5 percent a year ago.

However, the study noted, less than 10 percent of employers surveyed said they offer any incentive to employees who share their assessments and screening results with their physicians.

"An effective incentive strategy rewarding those who take action to improve their health is fundamental for improving health and reducing cost," Stephanie Pronk, clinical health improvement leader for health and benefits at Aon Hewitt, said in the company's statement.

In addition to wellness incentives, Aon Hewitt's survey quizzed employers on a wide range of issues regarding health benefits management and cost containment. Significantly, though, more employers—70 percent—identified increasing their wellness and prevention program enrollments in 2012 among their top desired benefits management outcomes than any other goal. By contrast, improving population health habits was the most desired outcome among employers in the prior year's survey.

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