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Rewards, penalties gain traction as motivators to improve wellness

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As workplace wellness programs grow more sophisticated in design and evaluation methods, so too have strategies for motivating employees to measurably improve their health outcomes and behaviors.

During the past three years, the percentage of U.S. employers using “health-contingent” incentives — rewards or penalties based on an employee’s completion of a wellness activity or achievement of a specified health outcome — has increased slowly but steadily.

Fifty-seven percent of employers polled in October 2014 by Eden Prairie, Minnesota-based Optum Inc. said they’ve added activity-based incentives to their workplace wellness strategy, and 43% said they use outcomes-based incentives, up from 52% and 42%, respectively, in the previous year.

Another 30% of employers polled indicated that they are contemplating adding outcomes-based incentives to their wellness strategy soon, while 18% said they may add activity-based incentives.

A separate study, published in February by the International Foundation of Employee Benefit Plans, found that employers — except municipalities — are adding outcome-based rewards or penalties primarily to motivate healthy behaviors among their employees, and only secondarily to reduce health care costs.

“You would think that people want to take care of themselves just for their own benefit, but of course that often isn’t the case,” said Elizabeth Glenn-Bottari, vice president and chief operating officer of integrative health at the Irvine, California-based St. Joseph Health hospital system. “We know that you do need to incentivize people to do these kinds of things, and that cash can have quite an impact.”

Additionally, employers are becoming increasingly willing to extend their wellness incentive programs to employees’ spouses, which experts say signals a growing recognition that many, if not most, health behaviors and decisions are forged in the home, not in the workplace.

According to survey data published jointly by Fidelity Investments Inc. and the National Business Group on Health, the percentage of employers that offer wellness incentives to employees’ spouses and domestic partners rose to 54% in 2015 from 37% in 2014 but still lagged well behind the percentage of employers that offer spousal wellness programming and services, surveyed at 84% and 66% in 2015 and 2014, respectively.

“We’ve known for a while that dependents drive a lot of an employer’s health care costs, so we’re definitely seeing more employers offer at least the program services and resources to spouses, if not the incentives,” said Seth Serxner, chief health officer at Optum. “Sometimes employers won’t immediately grant spouses access to the incentives, and instead do it in some phased manner.”

However, while incentives may command the lion’s share of attention from industry observers, media outlets and employees when it comes to workplace wellness, experts warned employers not to let rewards or penalties become the focal point of their overall wellness strategy.

“Whenever the topic of results-based wellness programs comes up, everyone always jumps to incentives,” said Stephanie Pronk, a Minneapolis-based principal at Aon Hewitt. “They’re probably going to be an important component of a successful wellness program, but they’re not the whole program.”