Wellness programs are an important tool employers can use to encourage healthier employee behavior. They provide companies with significant opportunities for short- and long-term cost savings — but only if employees actually participate in a meaningful way.

Typical wellness program incentives are financial in nature: cash, gift certificates, discounts on programs or merchandise, and so on. Others incentives include prizes and recognition at the end of a contest or challenge. Incentives that encourage longer-term employee involvement and commitment are generally more effective for truly driving change in employee behavior.

How to Weigh Wellness Program Incentive Ideas

In general, when employers are considering wellness program incentive ideas and implementing them, there are several key concepts to keep in mind:  

• Identify the desirable behaviors you are trying to encourage and clearly define the program’s goals. What are you trying to achieve, and why? Use incentives that support and encourage these goals.
• Understand your employee population. Determine what will motivate them. Some will value cash or gift cards, but others would prefer reduced health plan premiums or other types of incentives.
• Determine precisely what your incentives will be and exactly what employees need to do to receive them. Will they be financial or something else? Will the rewards be further focused on health, or unrelated (e.g., fitness club memberships vs. movie passes)?
• Choose a good vendor. Wellness vendors need to be capable of gathering and tracking data for your whole employee population. They also must be able to engage employees and evolve with your needs over time.
• Adopt a culture of health, company-wide. If you have a cafeteria, food options should be healthy. Allow for flexibility in work schedules so employees can use fitness facilities. Do not institute any barriers to employee participation.

Trends in Incentive Programs

As with everything in health care that seems to be changing these days, some new trends for wellness program incentives seem to be emerging for 2013 and beyond. Consider the following:

• Develop more personalized wellness program incentives. Tailor incentives to fit individuals. Place an emphasis on incentives that motivate and drive ROI.
• Tailor wellness program incentives around health-related products and services. The goal of your incentive dollars should be to create a healthier workforce. Incentives are another means of achieving that goal — not something entirely unrelated to health or well-being. Discounts for health clubs, healthy food, supplements and weight loss (e.g., Weight Watchers) memberships are ideal.
• Focus on data capture and analysis. As wellness programs become an increasingly large slice of the health care expenditures pie, it is more important than ever to gather and analyze data to understand exactly how funds are spent, what they are spent on, and how spending impacts outcomes and ROI. Data capture and analysis is critical to understanding the overall impact and success of wellness incentive programs.
• Wellness program incentives should be more closely linked to the overall care continuum. Improvements in data collection will help employers better understand how wellness incentives fit into the big picture. Health plans and employers will increasingly have the ability to design and integrate highly targeted incentive programs that reduce overall health care costs and improve outcomes.
• Using games and challenges as wellness program incentives is a growing trend. These types of incentives have proven successful in driving initial and longer-term engagement and results.

Design Incentives with Eye Toward Compliance

There are some compliance considerations when considering wellness program incentive ideas. To discourage discrimination against employees, HIPAA generally prohibits group health plans from charging employees different premiums based on their health status. But the law does allow employers to establish premium discounts or to provide other financial incentives for employees who participate in health promotion programs or achieve certain health targets. Further regulation established more specific guidelines for these types of incentives based upon whether a program was “participation only” (employees only need to participate to receive the incentive) or “outcome based” (employees are required to meet certain standards to receive the incentive).

Beginning in 2014, the Affordable Care Act expands HIPAA’s wellness program exemption to allow employers to offer employees incentives of up to 30% of the cost of their coverage for meeting employer-defined health targets. Incentives could be in the form of premium discounts, waivers of cost-sharing requirements, or the absence of a premium surcharge.

What wellness program incentives do you offer? What's worked — and what hasn't — for your firm? Please share below in comments.