Employer Use of Wellness Incentives Increasing

February 27, 2013 (PLANSPONSOR.com) Corporate employers plan to spend an average of $521 per employee on wellness-based incentives within their health care programs in 2013.

According to a survey conducted by Fidelity Investments and the National Business Group on Health (NBGH), this marks an increase of 13% from the average of $460 reported for 2011 and is double the per-employee average of $260 reported in 2009.   

In addition to an increase in the average amount employers plan to spend on wellness incentives, the survey found that the overall use of wellness-based incentives among corporate employers continues to increase. Nearly nine out of ten employers surveyed indicated they currently offer wellness-based incentives (86%), an increase from 73% in 2011 and 57% in 2009.   

The survey results illustrated significant growth in the mid-market, where 77% of employers plan to offer wellness-based incentives in 2013, more than double the 38% of mid-market employers that offered wellness-based incentives in 2010. In addition, nearly half of employers in the mid-market (45%) plan to offer average incentives of more than $500 per employee.   

“As the cost of providing health care continues to increase, employers recognize one of the key ways to manage their company’s costs is to incent their work force to lead a healthier lifestyle,” said Adam Stavisky, senior vice president of Fidelity’s Benefits Consulting business. “Employers of all sizes have embraced wellness-based incentives to help control costs, and companies are now looking at ways to design and optimize their programs to maximize their positive impact on health for both the organization and employees.”

The survey found the most popular wellness-based incentives continue to be a decrease in health insurance premiums (61%), cash or gift cards (55%) or an employer-sponsored contribution to a health savings account (HSA) or similar heath care based savings vehicle (27%). This year a majority of employers (54%) will expand their wellness-based incentives to include dependents, up from 45% in 2011. And nearly half (49%) will now include spouses/dependents in communications about wellness programs.   

Employers are also tying wellness-based incentives to an increasing number of health-improvement activities, including smoking cessation programs and discounts for gym memberships, as well as new options such as employer-sponsored fitness challenges (increasing 10% in 2013) and discounts for health food options in the company’s cafeteria (increasing 9% in 2013).   

The study also found 41% of employers currently include, or plan to incorporate, outcomes-based metrics as part of their incentive program. This gives both employers and employees a measurable goal that can be used to reward behavior or results in certain health categories, such as lowering cholesterol (30%) or blood pressure (29%) or reducing waist measurement (11%).   

Fifteen percent of employers surveyed are requiring employees to complete some sort of health activity—such as an employer-sponsored biometric screening or health risk assessment—in order to determine their eligibility for one or all of the company's health plans in 2013. The survey results showed 10% of employers will be requiring employees to complete a health risk assessment or risk being defaulted into a less attractive subset of the company's health plan, while 7% of employers indicated failure to complete a biometric screening would result in being defaulted into a less attractive subset of their company's health plan. In addition, 3% of employers indicated that failure to complete a health risk assessment or biometric screening would result in loss of benefits for 2013.   

Data for the survey was collected online in October and November of 2012 by the National Business Group on Health in conjunction with Fidelity and is based on responses from a national sample of 120 companies from numerous industries including transportation, health care, technology, entertainment, consumer products, retail and energy.