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A Little Motivation

The perks and pitfalls of wellness incentives in the workplace

Back By Jessica Laskey

In the past three decades, a growing number of businesses have been providing more than just basic benefits to employees. Amid complex health care plans and retirement savings plans, businesses have been adding wellness programs to not only help their employees, but also to bolster their bottom line. Healthy employees equal productive employees, so companies now offer incentives for workers to stay — or get — as healthy as possible.

“Changing long-standing behaviors is difficult,” says Alicia Lowe, health and wellness manager at Western Health Advantage. “Employees — anyone, really — usually need extra motivation to try to make changes to their lifestyles that will improve their health. This is where incentives come in. A workplace wellness program is more likely to be successful if it includes positive rewards that motivate employees to make healthy behavior changes and continue making them. The goal is to achieve long-term lifestyle changes.”

Lowe explains that wellness incentives can be anything such as yoga mats, gym bags, free or discounted gym memberships, gift cards, or even cash. Some employers even choose to offer discounts on health insurance premiums when certain biometric criteria are met, such as achieving a healthy weight or normal blood pressure.

While an Amazon gift card in exchange for stepping on a scale may seem like a pretty good trade-off, some people are concerned about the confidentiality of programs that request workers to share personal details like weight or medical issues. But the program enrollment is not mandatory, and employees can choose not to participate — and some companies don’t offer incentives to employees who opt for insurance coverage through a spouse’s program — though some may argue that any workplace program that offers financial incentives, like reduced insurance premiums, in exchange for participation is inequitable.

The concern over privacy can be overcome if the program is designed correctly. “Some employees won’t participate in work wellness programs out of fear that their personal health information may become known by others in the organization,” Lowe says. “This is really not the case. If an organization submits biometric data into an online wellness assessment from a reputable company, they can rest assured that their information is secure, and any data collected and distributed will be in aggregate form, meaning overall statistics for the entire group are shared, but not individual numbers.”

Even if companies have a high participation rate in a wellness program, do they really see a return on their investment in the form of healthier, happier workers? Some studies suggest an employer will see a reduction in health care costs for employees who are more incentivized to take care of themselves and address medical issues — or prevent them — that might otherwise take them away from their desks. Other studies are emphatic that these programs don’t produce enough of an uptick in employee morale or productivity to make the extra cost worth the investment.

According to a RAND Employer Survey published in 2013, 51 percent of U.S. employers with more than 50 employees offered wellness promotion initiatives. Employers overwhelmingly expressed confidence that the programs reduce medical costs, absenteeism and health-related productivity losses. But at the same time, only about half stated that they have evaluated program impacts formally, and only 2 percent reported actual savings estimates. The study’s statistical analyses suggest that participation in a wellness program over five years is associated with a trend toward lower health care costs and decreasing health care use — an average annual difference of approximately $157.

In a 2017 study, “Doing Well by Making Well: The Impact of Corporate Wellness Programs on Employee Productivity,” researchers found that participation in a wellness program increased average worker productivity by 6 percent, roughly equivalent to adding one additional day of productive work per month for the average employee.

“After 2-4 years of a robust wellness incentive program, reports should show employees are eating healthier foods, checking their biometrics, exercising more often, smoking less, drinking less, wearing seat belts more often and being pretty good at controlling their stress,” says Ronda Herman, a benefits broker for Summit Health Insurance Services in Granite Bay. “Wellness incentives can also help alleviate depression and improve life satisfaction. Creating a wellness culture is good for increasing morale and productivity.”

As Laurie Rodriguez, SMUD’s director of Human Resources, Diversity & Inclusion, puts it, “It just feels good to be well.”

SMUD introduced its first wellness initiative in 1984 with brown-bag “lunch and learns” focused on health education and awareness and now has a comprehensive health assessment program that helps employees understand their health risk factors to improve their overall well-being. In 2018, at the Fitbit Captivate conference in Chicago, SMUD was named as one of the Healthiest 100 Workplaces in America — it ranked No. 10 out of more than 1,000 wellness programs.

A number of federal and state laws and regulations impose requirements and regulate the use of financial incentives in certain types of wellness programs. The Health Insurance Portability and Accountability Act and the Affordable Care Act, among others, limit incentives and require the availability of a reasonable alternative if it is medically inadvisable or unreasonably difficult for an individual to achieve the standard. Current federal rules only allow up to a 30 percent premium differential on the lowest health care plan offered, according to USI Insurance Services president Stephen Elkins, and require large prizes be subject to taxes.

So, if they’re secure and provide both fun and financial benefits — for employee and employer alike — are wellness incentive programs really worth it?

“While bottom line return on investment is important, it can be difficult to quantify and doesn’t holistically capture the benefits of a corporate wellness program,” says Rodriguez. “We view ROI on employee wellness as intrinsic, which often delivers positive financial outcomes.”

Similarly for Lowe, wellness programs are not a “nice extra.” They’re a key investment in making sure a workforce stays healthy and happy.

“Healthy employees can experience more confidence in their work and more collaboration with their coworkers and overall improved life satisfaction,” Lowe says. “Most of us spend eight hours or more at work, so it’s beneficial to have opportunities to improve our wellness at our workplace.”