Do Wellness Incentives Work? Experts Investigate

Key takeaways:

Employers offer wellness incentives to promote and reward healthy behaviors among employees. If an employee completes a health risk assessment (HRA) or biometric screening, for example, they may receive a reward from their employer.
Incentives can range from gift cards to discounts on insurance premiums.
Wellness programs and incentives aim to reduce healthcare costs, but employee participation is key to driving results.

Many companies throughout the U.S. offer wellness incentive programs. Effective wellness incentive programs aim to help employees take control of their health and reduce healthcare costs.

According to a 2019 employer health benefits survey, more than 8 in 10 large firms offered a health and wellness promotion program to help employees in these areas:

Behavioral or lifestyle coaching
Smoking cessation
W eight management

About 40% of companies that offered at least one of these programs also provided employees with a wellness incentive to enroll or finish a health goal.

How do wellness incentives work?

Wellness incentives are rewards intended to motivate or encourage employees to make healthier choices. For example, employees may receive an incentive for completing a specific health goal or committing to a series of tasks as part of a wellness program.

Wellness incentives can vary from a few dollars to more than $1,000. They can come in the form of cash, merchandise, or discounts. These incentives may include:

Free health classes
Flexible work hours
In-office massages
Company-sponsored lunches
Earbuds
Yoga mats
Water bottles and coffee mugs
Clothing
An afternoon off work (with pay)
Workplace yoga
Gift cards worth several hundred dollars
Contributions to a health savings account (HSA)
Discounts on health insurance premiums
Fitness trackers
Vacation days or paid time off
Mental health days

The Affordable Care Act (ACA) supports two basic types of wellness incentive programs: participatory and health-contingent.

Participatory wellness programs

These programs either do not offer an incentive or offer incentives without regard to participants’ current health status or risk. Participatory wellness programs may provide incentives for:

Completing a health risk assessment (HRA)
Attending a smoking-cessation class
Signing up for a gym membership

Health-contingent wellness programs

These programs, which can be activity-only or outcome-based, provide incentives to employees who achieve specific health outcomes. If an employer rewards you for reaching a target weight or lowering your cholesterol level, you are most likely participating in an outcome-based health-contingent program.

The ACA requires that health-contingent programs comply with nondiscrimination requirements by following five guidelines:

Design: The wellness program must be reasonably designed to prevent disease or improve health. Different requirements exist for activity-only and outcome-based programs.
Participation: Eligible individuals must have the opportunity to earn the incentive at least once per year.
Incentives: The reward must be capped at 30% of the cost of self-only coverage if the program is exclusive to employees in a certain health plan. The limit is 50% for programs designed to reduce or prevent tobacco use.
Access: The full incentive must be available to all similarly situated individuals. If an employee cannot participate due to medical reasons, an employer would have to offer an alternative way of qualifying for the reward.
Disclosure: Health plans must disclose the availability of any reasonable alternatives or waivers in all materials.

How do companies use wellness incentives?

Wellness incentives can be given out at various points during an employee’s health journey, such as:

When an employee signs up for the wellness program
After an employee is enrolled for a certain amount of time
When an employee has reached a health goal, such as achieving a healthy body mass index (BMI)

Many companies use incentives to get employees to monitor their health and adopt healthier lifestyles. This may mean asking employees to complete a specific number of health screenings or disease management activities to qualify.

For example, employers may ask employees to complete HRAs or biometric screenings to gain information about their health status. This information can be used to make a wellness program more effective, which would ideally lower healthcare spending. Employees can also use the results of their assessment to take preventive measures and reduce their risk of chronic conditions.

Below is an example of how companies can use HRAs and biometric screenings to encourage employees to take control of their health.

HRAs: These are questionnaires that ask about a person’s health status, medical history, and lifestyle. A 2022 employer health benefits survey showed that 55% of large firms offering health benefits offer employees the opportunity to complete an HRA. About half of those firms use penalties or incentives to motivate employees to finish the assessment.
Biometric screenings: These are in-person screenings that assess overall health status and the risk of conditions like heart disease and high blood pressure. About 57% of large firms with this type of screening program use incentives or penalties to motivate employees to complete the assessment.

Results from these screenings cannot be used to discriminate against an employee. Federal laws such as the Health Insurance Portability and Accountability Act (HIPAA), Americans with Disabilities Act (ADA), and Genetic Information Nondiscrimination Act (GINA) protect individuals’ privacy and rights to gain access to benefits and services regardless of their health status.

Do employees take part in wellness programs?

One survey revealed that roughly 90% of employees have access to emotional and mental well-being offerings. However, less than a quarter of employees take advantage of these benefits.

Another survey of large firms measured the effectiveness of wellness incentives in driving employee participation in 2020. Three out of 10 employers described incentives as “very effective” at increasing participation. Nearly half of companies said they were “moderately effective.”

What are the outcomes of wellness incentive programs?

The goals of wellness programs typically include:

Helping employees manage their weight
Exposing employees to nutritious eating habits
Encouraging employees to participate in annual healthcare visits and wellness checks
Helping employees identity healthy ways to deal with stress
Motivating employees to have better sleep habits
Reducing employees’ risk of chronic conditions

When companies implement a workplace wellness program, it typically leads to participating employees exercising more regularly and actively managing their weight. A UnitedHealthcare survey found that among employees who reported benefiting from an employee-sponsored wellness program:

30% were able to use the wellness program to detect a disease.
56% reported fewer days off work due to sickness.
67% said they shed pounds.

Many studies show that employees who participate in wellness programs report higher rates of healthy behaviors compared with those who do not participate. However, more research is needed to show if wellness programs can have an impact on healthcare costs and outcomes over the long term. A study conducted at 160 worksites that invested in wellness programs revealed that clinical measures of health and healthcare spending did not change significantly after 18 months. And many studies show that wellness programs and incentives don’t lead to lower body fat, cholesterol, or blood pressure among employees.

These findings may be due to a lack of sufficiently long-term research. Some experts believe that studies done over a longer time frame, such as 3 to 5 months, have the potential to show a meaningful decline in risk factors for certain conditions, disease incidence, and healthcare costs.

There has been little evidence on the impact of wellness incentives to drastically increase employee participation in wellness programs or health outcomes. However, there are studies that suggest that workplace wellness programs can increase employee productivity.

Which wellness incentives are proven to work?

The jury is still out on whether incentives and wellness programs can change the behavior of those who have the biggest risk of health challenges. One researcher at the Wharton School noted that employees who are already healthy benefit the most from wellness programs.

“The people who are not engaged with their health, when we talk to them as part of our research, they see these incentives and they want to act on it. But their lives are just so complicated,” Wharton professor Iwan Barankay told Wharton Business Daily. “When you are poor in America, when you have comorbidities, this is such a big cognitive burden that the idea of adding more routines is really, really difficult.”

Other studies suggest that wellness incentives work when they are

Hassle-free: These kinds of incentives take little time and effort on the part of employees. In the UnitedHealthcare survey, less than one-third of respondents were willing to devote an hour or more per day on wellness.
Targeted: People with specific health issues are more likely to sign up for incentives if goals are personalized. A general goal, such as visiting a healthcare provider, may not be as effective at helping employees change behaviors.
Motivating: Paid time off and discounts on insurance premiums are particularly enticing to employees. In general, the type of incentive offered has to align with something an employee values.

How can companies effectively incentivize employee wellness?

Employee engagement is key to designing effective wellness programs. Companies can promote interest in health and wellness by:

Providing standing desks and comfortable work stations
Offering relaxation and mindfulness rooms
Having ongoing communication with employees about wellness
Adopting no-tobacco policies on the job
Scheduling in-person and online fitness classes for employees
Demonstrating a commitment to employee wellness that starts at the top

The CDC provides resources and tips to help employers achieve their workplace wellness goals. Here are three key steps:

Get feedback from employees. Employers can conduct surveys, interviews, and focus groups to learn how they can create value for employees and the organization.
Make wellness benefits easily accessible to employees. Companies can design programs so that benefits are accessible online, on-site, and by phone.
Evaluate success. Employers can review participation rates, the impact on employee health, and the return on their investment. But this may require at least 2 to 3 years of data.

The bottom line

Wellness incentives, such as gym membership reimbursement and discounts on health insurance premiums, are designed to reward employees for taking control of their health. Some researchers believe that incentives benefit those who are already health-focused instead of those who typically don’t participate in wellness activities. More long-term research needs to be done to determine if wellness incentives and programs can improve health outcomes and costs over the long term.

References

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