Study: Financial incentives increased employee participation in health improvement programs

Fidelity Investments^®, a leading service provider of employer benefits, in conjunction with the National Business Group on Health (NBGH), released a study today that found financial incentives have taken on greater importance in the drive to increase employee participation in health improvement programs. The survey, which looked at the behaviors and offerings of 147 mid- to large-size companies in various industries nationwide, is a follow-up to research Fidelity^® and NBGH conducted in 2009.

According to the study, employers utilized several different types of incentives in 2010 to encourage employees to participate in health improvement programs. These included offering cash and gift cards and making additional contributions to health savings accounts, along with more punitive efforts such as reducing employer contributions to health plans if employees didn't engage in any programs. The incentives provided by employers averaged a total of $430 per employee in 2010, which was a 65% increase from $260 in 2009.

Half of all companies that provided such incentives in 2010 also offered them to dependents of employees, at an average value of $420. A small number of companies (12%) utilized negative incentives to encourage participation (reducing employer contributions to health plans for those not participating). More employers (62%) offered incentives last year than in 2009 (57%).

"Employers know that a healthier workforce is more productive in the long term," said Sunit Patel, senior vice president of Fidelity's Benefits Consulting business, which commissioned the study with NBGH. "Wellness programs in the past have typically had modest impact because of low participation rates, but our study indicated that incentives are starting to make a real difference in employee interest and engagement."

According to the research, the majority of employers surveyed (56%) agreed that incentive-based programs had a better than expected success rate at increasing employee participation.

In exchange for incentives, employees participated in a variety of wellness programs in four main categories: health-risk management (e.g., on-site flu shots); lifestyle management (e.g., smoking cessation programs); condition management (e.g., nurse phone lines) and communication/education (e.g., company intranet wellness websites).

Excluding Incentives, Marginal Funding Increases Seen in Wellness Programs

Excluding incentives, which represented the largest increase in spending last year, the study found that the average employer spent just $154 per employee on health improvement programs vs. $108 in 2009.

Condition management programs (such as monitoring diabetes treatment) consumed the majority (41%) of the $154 spend, but that was a decline from 43% in 2009. Health-risk management programs (such as health fairs) experienced an increase in spending to 20% in 2010 from 15% in 2009. Lifestyle management programs (such as stress management) received virtually the same spend (29%) in 2010 as the prior year (30%).

"Growing numbers of employers nationwide recognize the importance of having a healthy workforce and its link to improving productivity and reducing rising health care costs," said Helen Darling, president and CEO of the National Business Group on Health. "We believe strongly that the various wellness initiatives that employers are undertaking will have long-lasting positive results for employers, workers and their families."

Employers Increasing Number of Wellness Programs

According to the survey, seven out of 10 (74%) employers offered 19 or more health improvement programs in 2010 and that number is expected to grow. In 2010, half (50 percent) of all employers added one new wellness program to their offerings and in 2011, 63% of employers plan to do the same.

Health-risk management programs (such as biometric testing) will experience the most growth, with almost four out of 10 (39%) employers planning to add such a program. About one in three companies (32%) will add lifestyle management programs (such as preventive care reminders) and roughly one in three firms (30%) will add communication/education management programs (such as health and wellness newsletters).