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Designing Incentives for Wellness


When it comes to health promotion programs, it’s wise to avoid the “build it and they will come” strategy. A wealth of research tells us that people need motivation to adopt healthier behaviors and, especially in the early stages, they respond well to tangible incentives, such as prizes or discounts on insurance premiums. Incentives can jump-start participation in programs and can encourage workers to complete health risk assessments (HRAs), quit smoking, exercise more, or lose weight. At CitiBank, for example, employees receive a $150 cash incentive for filling out a yearly HRA; last year, some 85% of the company’s US employees completed the survey.

According to a 2014 Towers Watson survey, two-thirds of companies with health promotion programs offered financial rewards for participation and nearly a quarter offered employees incentives for meeting health goals such as normal weight, healthy blood pressure levels and regular exercise.[1]

The Affordable Care Act (ACA) permits employers to offer rewards under a health-contingent wellness program that are equal to 30% of the cost of health coverage. Many companies are taking a cue from the ACA’s lead and offering premium reductions to workers who participate in certain health promoting activities  (such as filling out a HRA and attending health coaching sessions) and increasingly, to those who achieve measurable outcomes (quit smoking, lower blood pressure or change other risk factors linked to poor health). Researchers discovered just how powerful this incentive is: 90% of workers will participate in employer health promotion programs when the reward involves reduced insurance premiums.

The trick is to first make sure that incentives don’t unfairly penalize workers who can’t or don’t want to participate. Employers must use incentives to encourage both fit employees—as well as those with health risks such as obesity, high cholesterol or elevated blood sugar—to participate. Lincoln Industries uses a points system to determine how much the company will knock off insurance premiums. Employees can earn a maximum of 10 points (platinum level reward) if they complete a HRA, are tobacco-free and meet targets on five risk factors for metabolic syndrome (waist circumference, blood pressure, glucose, triglycerides, and cholesterol) and up to 20% off insurance premiums—up to $1300 savings. There are two other reward tiers, gold and silver, requiring 7-9 points, and 4-6 points, respectively, to be eligible for discounts. The message is that effort will be rewarded; last year, 95% of employees participated in health screenings alone.

Companies are advised to avoid depending on incentives as a long-term strategy for getting employees to maintain healthy behaviors. The goal of wellness programs should be to encourage employees to value the intrinsic rewards of adopting and maintaining healthy behaviors—which include having more energy for work and family, preventing injury and illness and feeling a greater sense of wellbeing. Testimonials from workers at the companies we visited made it clear that this is possible. Nancy Macloud, an administrative assistant at CitiBank’s Long Island City, NY headquarters dutifully filled out her HRA and along with her incentive, received a call from a health coach. At CitiBank, as at all the companies we visited, HRAs are administered by an outside contractor and no identifying information is shared with the company. Macloud knew she needed to lose weight and the coach encouraged her to try the on-site fitness center ($16 per pay period includes workout clothing and laundry) and to join the Weight Watchers at Work program. After two years, Macloud was fully on-board with the wellness concept; she now attends fitness classes five times a week, participates in on-line challenges and, with her manager’s encouragement, she’s even replaced the candy bowl on her desk with fresh fruit. She’s also lost 50 pounds.  

Incentive strategies, like health promotion programs in general, are most effective when they speak to a company’s culture. This is best illustrated at NextJump, the NYC-based software developer, whose staff has an average age of 28. Most of the employees are high-achieving software engineers who work in a competitive, results-driven business. Charlie Kim, CEO, understood that tapping into his employees’ competitive nature would help increase physical activity among his staff. His goal was to get his young but often-inactive employees working out for a minimum of 20 minutes twice a week. The entire firm is now split into five teams that include workers from across all areas of the company. If every member of a given team meets the workout goal, the whole team wins free training sessions. Also, each week, the winning team of the “Fitness Challenge” gets 100K wow points ($1000) to split among team members. Wow points can be used to shop at hundreds of online retailers. Over time, the incentives have become secondary to the desire NextJumpers have to engage their entire team in the wellness culture. “I missed a boxing session and one of my teammates showed up the next day at my desk, saying ‘come on, let’s go, you’re going to work out,’” says Nayan Busa an engineering site editor who adds, “I never exercised before coming to Next Jump.”

In the end, incentives are a key part of workplace health promotion programs, but they are only one piece that is necessary for companies to achieve a culture of health. When they are wielded punitively or used to shift healthcare costs to sicker employees, incentives become a liability. Best practice companies understand this and work hard to spread the message that improved health is its own greatest reward.

Written with support by the Robert Wood Johnson Foundation

[1] Towers Watson/NBGH 2013/2014 Employer Survey on Purchasing Value in Health Care: Towers Watson/ National Business Group on Health; May 2014