Wellness programs have slowly gained traction with large employers over the past decade, as businesses find that healthier employees are cheaper to insure.
Initially, these programs had little impact on an employee’s finances: A company might sponsor a weight loss seminar or offer a $20 gift card for filling out a health questionnaire.
But new employer surveys suggest businesses are moving toward giving direct cash rewards for making improvements to specific health outcomes, such as body fat or cholesterol — and testing employees regularly to monitor improvements.
Forty-eight percent of employers surveyed by Towers Watson in 2014 said they are considering such measures, compared with 14 percent in the same survey four years ago.
The results can influence how much a person pays for health care. Under many programs, a third party might be hired to regularly test participating employees on metrics such as body fat, cholesterol, blood pressure and a range of other health measures deemed to be reasonably within an employee’s power to change.
When the lab results come back, a private health coach or service communicates the information to the employee and assigns a health score that determines an employee’s reward. The employer never sees the test results and doesn’t know which employees have been rewarded or penalized; they just see the aggregate numbers.
By law, these incentives cannot be more than 30 percent of an employee’s premium, potentially forming a sizeable chunk of a given employee’s paycheck (or 50 percent for anti-smoking programs). This limit increased from 20 percent this past January because of a little-known provision in the Affordable Care Act.
Researchers at Towers Watson said employers are embracing cash incentives tied to health tests because they think they will be better motivators than the “participation-based” programs used in the past. For example, increasing a smoker’s monthly premium might be more effective for getting them to quit than offering a seminar on tobacco addiction.
“We are seeing more and more employers intrigued by this approach because they have not been able to get results from a purely participation-based incentive,” said Randy Abbott, a senior researcher in charge of the employer survey at Towers Watson.
There has been some pushback. One program at Penn State University would have docked employees’ pay by $100 each month for refusing to take an online questionnaire and submit to a series of biometric tests, but university executives canceled the program after Rep. Louise Slaughter, a Democrat from New York, responded to public uproar by asking the federal Employee Equal Opportunity Commission to investigate the matter.
In other cases, employees welcome the incentives, treating the extra cash as a better reason to keep a New Year’s resolution.
“We find that many employees are actually very happy that employers are offering these things,” said LuAnn Heinen, vice president of the National Business Group on Health.