The Use of Incentives for Health Management and Wellness on the Rise

Major U.S. employers are turning to incentives in increasing numbers to promote employer-sponsored health and wellness programs, according to a new survey, with the percentage rising over the past year from 62 percent to 71 percent.

The average value of incentives per person ranged between $100 and $300 per year, according to the survey conducted by the ERISA Industry Committee, the National Association of Manufacturers (NAM) and IncentOne Inc., with an overall average of $192 per person annually. Incentives for individual programs varied widely. Weight management incentives ranged from $5 to $500, while smoking cessation programs ranged from $5 to a high of $600.

“Employers are keenly interested in innovative ways to lower cost and enhance productivity,” said John Engler, president and CEO of NAM. “Incentives are proving an effective tool to engage employees and keep them interested in these programs.”

The survey showed that employers are experimenting with the types of incentives they offer. In 2007, employers most often offered premium reductions over other incentives but this year, gift cards are the most popular incentive employers are offering, with premium discounts and cash incentives next in popularity.

Of the 225 U.S. companies reporting, some 83 percent of those measuring ROI for health and wellness programs said they are seeing program returns of better than break-even. However, less than 30 percent of companies said they were measuring the ROI of their programs. Other yardsticks in use include completion of health risk assessments and program participation. Employers reported they are more likely to reward program participation and completion than meeting specific goals, such as losing weight. The survey found that:

  • 48 percent of companies rewarded employees for participation in a program.
  • 38 percent of companies rewarded employees for completing a program.
  • 25 percent of companies rewarded employees for signing up for/enrolling in a program.
  • 16 percent of companies rewarded employees for achieving goals/outcomes during the program.
  • 12 percent of companies rewarded employees for achieving outcomes/goals after the program.
  • 6 percent of companies rewarded employees for maintaining outcomes/goals after the program.
  • 2 percent of companies rewarded employees for leading groups to participate in the program.
  • 1 percent of companies rewarded employees for recruiting others into the program.

“The survey findings reveals that use of incentives among large employers is broad, but the science of incentives management is still evolving,” said Michael Dermer, president and CEO of IncentOne. “Success in health and wellness programs will require employee engagement and motivation over time. That suggests a need for a combination of incentive design strategies and effective employee communication techniques that are tailored to a company and its employee culture.”

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