Boost payoff of incentives with these new strategies

Employers want to see sustainable behavior change

More employers than ever are offering incentives for employee participation in health and disease management programs, according to a survey of 242 employers.

The survey was conducted by the Employee Retirement Income Security Act (ERISA) Industry Committee (ERIC), an organization representing employee benefits and compensation interests of major employers, the National Association of Manufacturers (NAM), both based in Washington, DC, and Lyndhurst, NJ-based IncentOne, which provides integrated incentive solutions to employers.

"This survey indicates that the American business community is highly interested in innovative strategies to improve their employees' health and productivity," says John Engler, president and CEO of NAM. Of employers offering health management programs, two-thirds encourage employees to participate with incentives. The most common incentive offered is premium reductions, given by 40% of companies, while 29% offer cash or bonuses.

Edwina Rogers, vice president of ERIC, says, "We see that sick employees cost us money, and, conversely, that employees who switch to healthier behaviors save us money as well as improving their own quality of life." Employers are therefore interested in encouraging their employees to engage in healthy behaviors, Rogers says. "In many instances, they are using incentives to do so," she says.

According to NAM's vice president of human resources policy, Jeri Gillespie, this trend only will increase. "All of this leads to more activity and attention for occupational health managers," Gillespie says.

Asking more of employees

To receive incentives, employees are increasingly being asked to participate in a coaching program or other program intervention, says Michele M. Becker, vice president of employee benefits practice for Chicago-based Aon Consulting. "It's no longer enough to take a health assessment," she says. "Individuals at risk need to engage in follow-up activity that can ultimately lead to behavior change."

"Sticks" are sometimes camouflaged as "carrots," such as charging nonsmokers $20 less a month in premium contributions, says Becker. "However, what's perceived as a stick by a smoker can be effectively communicated as a carrot to those who are tobacco-free," she says.

Employers are looking for long-term, sustainable behavior change in addition to program participation, says Becker. "It's one thing to participate in a health assessment or coaching program," se says. "It's another to move your cholesterol or BMI into the target range."

To maximize results from your incentive programs, do the following, experts suggest:

  • Use appropriate incentives.
    What grabs someone's attention in a manufacturing plant might be very different than their corporate counterparts or sales force, says Becker. She recommends conducting focus groups or simple surveys to determine employee interests for the programs and incentives that would motivate them.
    Rewarding healthy behavior with a flat-screen TV certainly can create some short-lived excitement, but it won't get the job done long-term, according to Becker. "While less costly, there is a trend away from using these types of incentives exclusively," she says.
  • Communicate effectively.
    Even with appropriate incentives, participation can be poor if the programs, tools, and resources offered are not well communicated, says Becker. "A great deal of money is spent on wellness programs, but many employees do not know they exist, nor do they know how to access them when needed," she says.
  • Program integration is key.
    Health and wellness programs need to "work together behind the scenes," adds Becker. "Otherwise, companies will not achieve the best value and ROI for their efforts," she says.
    Every vendor has certain information about employees that is not being used effectively in program strategies, interventions, and outcomes measurement, Becker explains. "Consider bringing vendors together to brainstorm new ways of helping members and tracking results," says Becker. Your health, wellness, and disability vendors can do a much more effective job for you by working in tandem, she says.
    Lawrence M. Becker, director of benefits and policies at Rochester, NY-based Xerox Corp., says, "We spend a lot of time finding 'best in class' offerings. The biggest challenge is, how do you get that information to the right employee at the teachable moment?" Xerox is working with its health plans to send a personalized letter to employees about their individual health conditions, he reports.
  • Tie incentives to premium contribution.
    "Cash can be an effective incentive, because people respond to money on the spot and it can be a great attention grabber. However, there are tax consequences and administrative issues to consider," says Aon's Becker. "Incentives that are linked to premium contributions or benefits in some other way are increasing in popularity and effectiveness."
    At Xerox, employees and their spouses or domestic partners each receive $200 off annual health care premiums for taking a health risk assessment, and another $200 apiece annually for being a nontobacco user or if a smoker agrees to take a cessation class, says Lawrence Becker. About 75% of employees complete the health risk assessment, and Becker attributes this to the incentives and word of mouth. "People are actually seeing situations where their coworkers really benefited from one of our programs," he says.
    However, whether something is an incentive or penalty depends on your perspective, notes Lawrence Becker. "It's the lens you look at it through," he says. "If you choose not to engage in a health risk assessment, you pay $200 more."


For more information on incentives for employee wellness participation, contact:

  • Lawrence M. Becker, Director, Benefits and Policies, Xerox Corp., 100 Clinton Ave. S., Rochester, NY 14644. Phone: (585) 423-3036. E-mail:
  • Michele M. Becker, Vice President, Employee Benefits Practice, Aon Consulting, 270 Davidson Ave., Somerset, NJ  08873. Phone: (732) 271-2678. Fax: (732) 356-1983. E-mail:
  • To obtain a free PDF copy of the Employee Health and Productivity Management Programs: The Use of Incentives survey report, complete a request form online at