Employers Increasingly Use Incentives for Wellness Programs

June 26, 2008 (PLANSPONSOR.com) - A new survey reveals that as the use of health and wellness programs continue to grow, so too does the use of incentives for employee participation in and completion of these programs.

The second annual survey conducted by the ERISA Industry Committee (ERIC), the National Association of Manufacturers (NAM), and IncentOne Inc.found that currently 77% of employers offer formal health and wellness programs, up from 72% in 2007. More than half of those currently without programs plan to add them within six to 12 months.

In 2008, 48% of employers offer formal disease management programs, according to the survey report.

The proportion of employers offering incentives for health and wellness programs increased from 62% in 2007 to 71% in 2008. The survey found the use of incentives with disease management programs declined.

Gift cards are the most common incentives offered for health and wellness programs in 2008 (28%), followed by premium reductions (26%) and cash bonuses (24%). Incentives are most frequently offered to drive program participation and program completion.

For health and wellness programs, incentives were most commonly awarded to employees for participation (48%) or when employees complete a program (38%). If an employee achieves an outcome goal (weight loss; smoking cessation), 16% of employers offer an incentive, the survey report said.

The 2008 survey found the value of incentives is typically between $100 and $300 per person per year, with the average incentive value estimated to be $192 per person per year.

While only about one-third (36%) of respondents have attempted to measure return on investment (ROI) of health and wellness programs, more companies have become successful in the effort.The proportion of companies successfully measuring ROI increased between 2007 and 2008 from 14% to 26%. Among these respondents, more than 83% estimated an ROI greater than break-even in 2008, up from 66% in 2007.

The top three outcomes measures used by employers with programs are health risk reduction measures such as smoking cessation (27%), program engagement measures (24%), and number of program participants (23%). Eighty-nine percent of those currently with programs said incentives sometimes or almost always improved ROI.

In both 2007 and 2008, the top challenges cited by employers with health and wellness programs were "maintaining employee motivation over time" and "measuring program effectiveness."

The complete survey report is here .