Employers Increasing Use of Penalties to Encourage Healthy Behavior

March 17, 2010 (PLANSPONSOR.com) - U.S. companies continue to use financial incentives as a way to increase employee participation in health and wellness programs, but a new survey by Hewitt Associates shows employers are also increasingly penalizing workers for unhealthy behaviors.

Expanding on an earlier report of findings from its annual health care trends survey of nearly 600 large U.S. employers (see Employers Continue to Invest in Health of Workers), Hewitt said nearly one-half (47%) say they either already use or plan to use financial penalties over the next three to five years for employees who do not participate in certain health improvement programs. Of those companies using or planning to use penalties, the majority (81%) say they will do so through higher benefit premiums, while increasing deductibles (17%) and out-of-pocket expenses (17%) were also cited as possible penalties, according to a news release.       

When asked what types of behaviors or programs they would penalize, almost two-thirds (64%) of employers cited smoking, half (50%) said not participating in disease management/lifestyle behavior programs, and 45% cited not participating in biometric screenings.   

Hewitt’s survey found more than half (58%) of employers offer employees incentives for participating in health and wellness programs. Of those, almost a quarter (24%) extends these incentives to spouses and/or family members.       

Nearly two-thirds (63%) of respondents offer cash incentives for completing a health risk questionnaire, up from 35% in 2009, and 37% provide cash incentives for participating in health improvement and wellness programs, up from 29% in 2009.   

Ninety-five percent of employers say cost is a top business issue. Seventy percent indicate that “promoting employee accountability” is a key component of their health care strategy, and for the second year in a row, keeping employees healthy is their top workforce issue.