Take care or pay a higher share of your health insurance

By Posted : 11/11/2011

woman holding hamburgerEmployers have tried for years to cajole workers to get healthier through company wellness programs.

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Now, a growing number are upping the ante: They're paying employees to take better care of themselves, and penalizing them when they don't.

That means you can earn rewards for things like exercising regularly, visiting with a health coach or dropping extra pounds. Tempted to blow off the company wellness program? Be prepared to pay more toward employer-sponsored health insurance.

Health insurance trend: more incentives for wellness, more penalties for slacking

The number of employers offering financial rewards for participating in wellness programs rose by 50 percent from 2009 to 2011. Next year, four out of five companies plan to offer some type of financial health incentive, according to the 2011/2012 Staying@Work survey by Towers Watson and the National Business Group on Health. The survey polled 335 midsize and large companies.

The use of penalties among employers more than doubled from 2009 to 2011, rising from 8 percent to 19 percent. It could double again next year when 38 percent of companies plan to have penalties in place. Requiring smokers to pay a higher portion of the health insurance premium is among the most common penalties. A growing number of employers also base rewards on actual outcomes, such as reaching targeted healthy weights or cholesterol levels, rather than simply rewarding participation.

Rising health care costs drive the trend

Large employers usually bear the cost of employees' health insurance claims. A healthier workforce means lower medical care costs, increased productivity and a fatter bottom line.

"Employers have realized there's a connection between wellness activities and productivity, but if you can't get employees engaged with activities, [the activities are] not going to do any good," says Julie Stone, a Towers Watson senior consultant based in New Jersey.

A provision in the federal health care reform law will let employers offer greater incentives for participating in wellness programs starting in 2014. Under current rules, employers can provide incentives of up to 20 percent of the total health insurance premium per person. The 2010 Patient Protection and Affordable Care Act boosts the threshold to 30 percent and, in cases approved by federal health and labor officials, up to 50 percent in 2014.

Employer programs often reward employees who exercise, lose weight or participate in disease management programs. Incentives may include cash awards, gift cards, higher employer contributions toward the health insurance premium, contributions toward employee health savings accounts or the chance to compete in a sweepstakes.

"A lot of research shows people are very much motivated by the potential of a large prize," Stone says.

Some employers offer both individual awards and team awards.

Aircraft Gear Corp., in Rockford, Ill., has contracted with Tangerine Wellness Inc. in Bedford, N.H., for the last five years to run a weight-management incentive program for its workers.

"I needed something simple to administer that would also engage the maximum number of people possible," says Jim Knutson, Aircraft Gear's risk manager and human resources director. "Everybody weighs something."

The manufacturer has about 100 employees and was looking for ways to control health care costs when it contracted with Tangerine.

Lose weight, earn cash

The Tangerine program rewards individuals and teams for participating and moving toward or maintaining a healthy weight. It provides online calorie-tracking tools, and lets employees choose weight loss and management programs that work best for them. As part of the effort, Aircraft Gear pays half the cost of memberships in organizations such as the local YMCA and in programs such as Weight Watchers.

"We saw dramatic, significant results," Knutson says. "People rallied around the program, and there were some feel-good stories from people."

Health care costs did go down, Knutson says, although it's hard to tell if it was a direct result of the Tangerine program.

Entrepreneur Aaron Day started Tangerine with partners in 2004, two years after he lost 130 pounds and kept it off. The idea for the company evolved from his own experience as well as growing national attention on rising costs of obesity. In the past, many wellness programs have rewarded employees for participation without basing incentives on actual results. The Tangerine program does both, and the rewards are cumulative.

"If you're overweight, the more you lose and the longer you keep it off, the more you earn," Day says.

Once workers achieve a healthy weight, they continue to earn rewards, which are typically cash or points toward gift cards. Day says an average 60 percent of employees join the program, and participation tends to go up after two years. Tangerine administers the program, conducts weigh-ins, and provides only aggregate results of weight loss and rewards to employers. Employers never see results for individuals, Day says. In other words, your boss doesn't know how much you weigh.

Some wellness programs target a broader range of health issues influenced by lifestyle choices, such as high blood pressure, high cholesterol and diabetes.

"One out of two adults covered by a self-insured employer health plan typically has a chronic health condition," says Jim Dolstad, chief actuary and vice president of reporting and actuarial services for

Carewise Health. The company designs and runs employer health and wellness programs.

"Employers are trying to change behavior to prevent onset of the conditions for the population that doesn't have them, and manage the behavior of the population that does have the chronic conditions," says Dolstad.

Lifestyle choices are responsible for 70 percent of health care costs, Dolstad says, and 90 percent of people have at least one lifestyle risk.

Carewise Health provides a combination of health education, online tools, and personal health coaching tailored to employers and their workers. Incentives are important, Dolstad says, but they must be carefully designed so they encourage continued participation and achievement of goals.

Some employers have found rescission of a reward especially effective, Dolstad says. For instance, an employer might offer a $500 health insurance premium discount to everyone and rescind the reward for employees who choose not to participate in the care management program.

A big challenge for employers is maintaining workers' enthusiasm. Knutson says excitement for the weight-loss program at his company leveled off a bit after three or four years, so he's looking for ways to keep it fresh.

"The role of incentives becomes even more important," he says.



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