Mid- to large-size companies seek value in incentive-based wellness initiatives

February 14th, 2011

By Lucas Foley

Companies across the U.S. are progressively investing in the wellness and productivity of employees.

According to a recent study, 56% of mid- to large-size employers feel that an incentive-based wellness approach leads to higher employee participation rates. The study, performed by Fidelity Investments® and the National Business Group on Health (NBGH), analyzed employee wellness programs of 147 companies and found that financial incentives are driving employee participation.

In 2010, the percentage of employers that provided incentives for employees rose to 65%, a five percent increase from 2009. Of these companies, half of them extended these incentives to the dependents of their employees.

“Employers know that a healthier workforce is more productive in the long term,” Sunit Patel, senior vice president of Benefits Consulting at Fidelity, said. “Wellness programs in the past have typically had modest impact because of low participation,” noting, however, that, “incentives are starting to make a real difference in employee interest and engagement.”

Financial incentives such as cash and gift cards and increased cost sharing by sponsors were found to be a trend as employers seek to influence employees’ health-related behaviors. Along with rewarding employees through incentives, some companies surveyed (12%) enforced punitive incentives as a result of non-participation. Such consequences included reduced employer contributions.

The study separated various employee wellness programs into four main categories: health-risk management, lifestyle management, condition management and communication/education. Condition management, which focuses heavily on chronic diseases such as diabetes or hypertension, accounted for the most (41%) of employers’ wellness spending on average.

Wellness initiatives are beginning to produce a reciprocal relationship between companies and employees. As employers offer more wellness incentives, employee participation continues to improve.

In 2010, nearly 75% of employers surveyed offered 19 or more wellness programs. Additionally, 65% of all employers indicated plans to add at least one new health improvement program this year. Health-risk management programs are expected to increase the most, with almost 40% of companies reporting intent to implement programs such as biometric screenings.

“Growing numbers of employers nationwide recognize the importance of having a healthy workforce and its link to improving productivity and reducing rising health care costs,” said Helen Darling, NBGH president and CEO. “We believe strongly that the various wellness initiatives that employers are undertaking will have long-lasting positive results for employers, workers and their families.”

About the Study

Survey data was collected between September 20, 2010 and October 29, 2010 by NBGH. The sample size included 147 companies ranging in industry and size (between 1,000 and 100,000 employees).