Seeing her employees bounce down the hall on Hippity Hops wouldn’t faze Cathy Kenworthy.

She’d even reward the winner.

Such flash challenges are all part of the wellness plan at Interactive Health, located about 30 miles outside of Chicago. “The energy here feels good,” says Kenworthy, CEO of Interactive Health, which provides outcomes-based wellness programs to more than 2,000 clients.

Incentives are gaining popularity among employers with more than 500 employees. A study conducted by bswift in conjunction with Employee Benefit News released in May found that 24% of large employers with wellness programs offer outcomes-based incentives for employees who meet biometric thresholds — a 9% increase from last year.

The number of smaller employers (50-500 employees) with wellness programs who offer incentives has also increased, substantially — 78% now offer incentives, up from 52% two years ago.

Kenworthy cites the Affordable Care Act as one reason for more utilization of incentives. The ACA increased the premium reduction employers can offer employees who participate in wellness programs from 20% to 30%. “Those are significant numbers,” says Kenworthy, adding that giving workers the opportunity to pay lower premiums is the most popular incentive.

Employees aren’t as enthusiastic, according to a recent Kaiser Family Foundation poll that found 74% of those surveyed said “it is not appropriate for employers to charge workers higher premiums if they are unable to meet certain health goals.”

Nonetheless, according to Southwest General Health Center, incentives work. In 2010, the Ohio hospital implemented a program through Bravo Wellness and over a three-year period saw smoking rates decrease by 3%. They also saw a 10% increase of employees with desirable LDL cholesterol levels. Twenty percent of overweight employees reduced their body mass index more than two points by the second year, the case study says. “These programs work,” Kenworthy says.

Variety of incentives

The way employers incentivize participation is changing, says Dr. Rajiv Kumar, founder and CEO of ShapeUp, which provides incentive-based wellness solutions to large employers and health plans. Instead of employees paying a reduced premium — $1,000 instead of $2,000 — many are now giving workers a check for the difference — $1,000.

“Unbundling” is one technique borrowed from behavioral economics that Kumar sees several employers using in their wellness program design. Instant gratification and incremental rewards are two other practices employers are implementing. Immediate incentives, like awarding an employee for dropping their body mass index one point, helps keep workers motivated, Kumar says, as does awarding smaller incentives over a longer period of time.

Rewarding employees with gift cards is another trend among employers, Kumar says. Employees are more likely to remember items purchased with a gift card, he says, and gift cards are often perceived as more meaningful than cash, which the employee spends immediately and forgets about. Through ShapeUp, employers can choose gift cards from a variety of businesses, and even a dozen charities that money can be donated to.

Altruism is a great motivator, Kumar says, citing JPMorgan Chase, one of his clients that had more than half of its 250,000 global employees participate in an activity that raised millions of dollars to combat world hunger.

The incentives offered as just as varied as the plans, each specific to the individual company, Kumar says.  “Every employer seems to have their own philosophy,” he says. “You have to keep it fresh.”

One constant is the importance providers place on health screenings. “It’s absolutely crucial,” says Chris Thurin. “Employees need to know where they stand today.”

Many employees think they’re fine and are unaware of their current health status, says Thurin, Digital Benefit Advisors’ managing principal in southern California. Results from a biometric screening not only identify health problems, he says, they also encourage a proactive workforce.

“It’s the catalyst that motives people to improve their health,” Thurin says.

Implementing a plan

When putting together a wellness plan, there are three steps to maintain enthusiasm among participants, says Jennifer Patel, director of wellness engagement at Hallmark Business Connections.

First, get senior leaders involved. “It’s really important,” Patel says. Getting middle managers involved, too, is crucial, she adds. When managers join the program alongside their employees, it promotes participation.

Second, and similarly, get employees from all divisions of a company to participate. The more advocates the better, Patel says, and more participation allows for feedback from several different perspectives.

Third, vary your method of communicating — don’t rely solely on email, Patel says, adding that email isn’t as effective because of the deluge of emails many employees already receive every day. “It’s important to look for other ways of communicating,” Patel says.

Posting signs at the front door, kiosks or vending machines are good alternatives to email, she says.

Outcomes must be achievable, Patel says. Say, for example, a plan requires a participant be in the healthy range for BMI. Instead of penalizing those who fail to reach that range, she suggests giving them a year to reduce their BMI by 5%. Creating a positive experience for employees is essential, Patel says, and harsh penalties can result in lack of participation. “We tend to favor less stick and more carrot,” she says.

Employees must be patient when implementing a wellness plan. “People don’t change a whole lifetime set of choices in one moment,” Kenworthy says.

The same goes for employers.

It can take years for employers to see savings, Patel says, but the return on investment is significant. According to a 2010 Harvard study, for every dollar employers spent on wellness programs, health care costs dropped an average of $3.27 and “absentee day costs fall by about $2.73 for every dollar spent.”

If a workforce’s overall health improves, Thurin says, it will lead to fewer claims, which leads to reduced costs for employers.

Along with ensuring ROI, employers need to establish a balance when selecting incentives for outcomes-based programs, Thurin says. Programs can’t be too weak or too harsh, he says. Plans need to be aggressive enough to prompt a change in behavior for employees who participate, Thurin says, but need a positive perception from the entire workforce.

Once a program is established, both the employer and employees benefit, Patel says: “A healthy, happy employee is going to be more productive.” They will miss less work and be more engaged, Patel says, which helps the financial health of the business.

Increase engagement

To increase participation in its own plan, naturally, Hallmark developed a line of custom e-cards used to introduce new programs and celebrate milestones. Employees are greeted with moving graphics and inspirational messages, Patel says.

But, she adds, the company relies heavily on communicating with printed posters in high-traffic areas. The “1980s version of marketing,” as Patel calls it, is quite effective.

Overall, plans need to be tailored to each company, Patel says, and different branches need autonomy. “One size fits all doesn’t work,” she says.

Get input from the employees about the plan’s design, Patel says, and use a lot of incentives when first starting the program. Use a variety of rewards — what motivates one employee might not motivate another.

Patel also recommends offering weighted rewards for employees who participate in health risk assessments and/or biometric screenings — the information learned from such tests is extremely helpful on an individual level. 

Successful wellness plans have variety, Kenworthy says, that’s why Interactive Health has hundreds of flash challenges to prevent falling into the same routine. It could be a recipe contest one day or maybe a Pilates instructor visits the office during lunch.

Involving employees’ spouses is another way to increase participation, Kenworthy says, and it also benefits employers who bear spouses’ expenses.

Importance of technology

Measuring progress is an important aspect to wellness, Kumar says. In the past, employees were tasked with keeping track of their daily activity manually. Technology, like wearable devices, has done away with that cumbersome chore, he says, allowing employees to focus solely on improving their health.

“Technology is enabling the measurement of outcomes that wasn’t possible before,” he says. “That’s a really incredible step forward.”

Technology is also unifying workers all over the country. Employees in all locations can participate in wellness activities together — going back to the Hippity Hop contest, remote employees can send a picture of themselves on the rubber ball.

“Everybody can be involved,” Kenworthy says. “That creates a lot of connection.”

Technology is also being utilized to promote education and preventative care. Change Healthcare Corporation created targeted engagement alerts, which are sent out digitally via email, text, etc., to enhance wellness programs.

An alert targets a specific group of people, like sending information about mammograms to women ages 40 and older, Change Healthcare CEO Douglas Ghertner says. The alert would educate women about mammograms and also supply a list of providers based on proximity to the recipient’s address, cost and quality rating. “We’re giving all the information you need to act,” Ghertner says.

If an employee doesn’t respond, a reminder alert is sent, he says. Alerts like these are part of the larger goal of making health options easier to understand, Ghertner says — better informed consumers make better decisions.

“Health care is inherently complex,” Ghertner says. “It’s intimidating.”

Alerts can be tailored to an employer’s specific plans, which increases employee engagement. Digital alerts are also a great way to disseminate information year-round, Ghertner says.

More participation

Many large employers are considering moving to a private exchange, Kumar says. The question then is, if they cap their health care spending, will employers care about outcomes-based wellness programs?

Kumar says yes. In fact, he expects to see increased investment in employee wellness plans because private exchanges are likely to give employers more time and money they can devote to their employees wellbeing.

Kumar says the key message for employers and advisers alike when considering outcomes-based wellness is to remember that every program is different for every company.  “Tailoring and personalization is really critical to success,” he says.

Companies of all sizes and all industries can implement outcomes-based wellness plans, Kenworthy says. “These topics are universal,” she says. A well-designed program is good for both employers and their workforce, Kenworthy adds. “Employees are not only more productive … but they’re healthier,” she says.

 

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access