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Wellness programs grow in popularity as more firms offer financial rewards

Companies gain intelligence on workers' health habits

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Wellness programs grow in popularity as more firms offer financial rewards

NATIONAL HARBOR, Maryland — Employers are gradually embracing the concept of providing financial rewards to their employees based on specific health outcomes from their participation in workplace wellness programs.

Recent surveys show a steady, significant increase in the percentage of employers that offer financial incentives tied to measurable improvements in their employees' health, such as losing weight, reducing cholesterol levels and quitting smoking.

Experts say the growing popularity of results-based wellness incentives is being driven by a deeper understanding of the underlying motives that inform employees' health habits and choices, as well as regulatory changes that permit employers to increase the dollar value of rewards and penalties to boost employees' engagement in health management programs.

“There's a lot that goes into incentives,” Colleen Reilly, president and founder of Total Well-Being Inc. in Aurora, Colorado, said last week during the 2014 Employer Healthcare & Benefits Congress in National Harbor, Maryland. “People don't always make rational decisions about their health. You really have to take into consideration how people think and how they make their choices.”

Incentive options vary

Outcomes-based wellness incentives can vary structurally from company to company. Some employers, including Denver-based burrito chain Chipotle Mexican Grill Inc., offer cheaper health insurance premiums to employees and dependents if they achieve or maintain certain biometric readings.

In Chipotle's case, an employee's annual health care premium is reduced $200 just for completing a health risk assessment and biometric screening. It is reduced another $500 for meeting “healthy standards” on at least three of five biometric screening results: tobacco use, body mass index, blood glucose, cholesterol and blood pressure.

Alternatively, employees are also eligible for the $500 premium discount if three of five of their biometric readings improve 5% or more compared with the prior year's results.

“We use the incentives to show our employees that wellness is important to us,” said Lindsay Horning, a Denver-based benefits analyst at Chipotle.

“We think it's important for people to know where they stand vs. where they want to be, and to know that we can help them get there.”

A year after Chipotle's 2012 introduction of outcome-based incentives in its wellness program, Ms. Horning said the company tightened the incentive-eligible biometric standards to align them with recommendations by the U.S. Centers for Disease Control and Prevention and the National Institutes of Health.

Chipotle had planned to increase the number of healthy biometric standards from three to four at the beginning of 2014, but determined that could erode workers' engagement in the program's activities.

“We took a step back and decided that we had such great momentum, we didn't want to throw in another requirement and make it harder for them to engage with the program,” Ms. Horning said.

"Gated' health plans

Employers also are adding results-based incentives to their workplace wellness programs in what are called “gated” health plan offerings.

In addition to rewards tied to preventive care utilization and prescription adherence, Chicago-based cement manufacturer Lafarge North America Inc. last year began limiting access to its gold- and silver-tier health plans based on an employee's biometric screening results and the extent to which they improved, said Philia Swam, the company's director of health wellness and group benefits.

“We're calling it a quasi-outcome-based incentive,” Ms. Swam said.

Now, employees whose biometric readings show they are at risk of certain high-cost conditions must participate in a 90-day health coaching program to enroll in either higher-tier health plan.

When the plans are replaced with a high-deductible health plan in 2015, Ms. Swam said the incentive structure will be applied to the company's contributions to employees' health savings accounts.

“We know that our workplace health environment may not be perfect,” Ms. Swam said.

“But we have seen through our data that our people are taking the medications they need to take, getting the care they need and taking more preventive actions.”