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Do Financial Incentives Increase Employee Wellness?

Recognizing the challenge of getting all employees engaged in wellness activities, many employers have resorted to offering direct financial incentives to employees in order to increase participation and raise the overall physical and mental well-being of all employees.

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    Do Financial Incentives Increase Employee Wellness?

    Do Financial Incentives Increase Employee Wellness?

    There seems little debate that happier and healthier employees are more productive employees. That may be why nearly half of all employers offer a health promotion or wellness program.1

    In one study, workers highly engaged in wellness programs reported 55% fewer unhealthy days, 35% fewer emergency visits and 30% fewer hospital admissions than less engaged colleagues. All of which translates into greater worker productivity.2

    The reality, however, is that even a properly structured wellness program (i.e., a program with good communications, personalized options, and tools and technology to sustain engagement) will reach a ceiling in generating employee participation.

    Recognizing the challenge of getting all employees engaged in wellness activities, many employers have resorted to offering direct financial incentives to employees in order to increase participation and raise the overall physical and mental well-being of all employees.

    Financial Incentives to Promote Employee Wellness

    The Kaiser Family Foundation conducted a survey of employers in 2019 to better understand the extent to which financial incentives are offered to employees by their employers. Among the findings were:3

    • Eighty-four percent of large firms offering health benefits also offered wellness programs, while 65% offered employees the opportunity to complete a health assessment and 52% the opportunity to complete a biometric screening.
    • Among all size firms offering health benefits, 11% collected information from workers’ mobile apps or wearable devices.
    • The value of financial incentives offered by large firms to engage in health promotion programs is widely distributed:
    • Under $150 (16%)
      • $151 – 500 (38%)
      • $501 – 1,000 (27%)
      • $1,001 – 2,000 (13%)
      • $2,001 or More (7%)
    • Large firms have found these incentives to be “Very Effective” (39%), “Somewhat Effective” (53%), “Not at All Effective” (6%) or “Didn’t Know” (2%).

    An earlier study by the Rand Corporation found that participation rates doubled among all employers, from 20% with no incentives to 40% with a reward. Interestingly, participation rates increased to 73% when penalties were attached to non-participation.4

    However, among employers with comprehensive programs (i.e., offerings across three basic services: screening, lifestyle management and disease management), financial incentives proved to be less of a motivator of engagement. Participation rates rose from 52% with no incentive to 56% with an incentive. Penalties still motivated more, with the participation rate reaching 71%.

    The lesson may be that a financial incentive is not necessarily the best remedy for low participation in wellness programs; instead, a comprehensive, well-structured wellness program may achieve higher participation rates without the need to pay financial incentives to employees.  As to the degree of health, any step towards betterment is a step in the right direction … the key is to start with the simple stuff.

    Sources:

    1. https://www.corporatewellnessmagazine.com/article/new-study-says-active-participation-in-wellness-programs-increase-employee-productivity
    2. https://www.corporatewellnessmagazine.com/article/new-study-says-active-participation-in-wellness-programs-increase-employee-productivity
    3. https://www.kff.org/report-section/ehbs-2019-section-12-health-and-wellness-programs/
    4. https://www.shrm.org/resourcesandtools/hr-topics/benefits/documents/rand_rb9842.pdf
    5. https://www.shrm.org/resourcesandtools/hr-topics/benefits/documents/rand_rb9842.pdf

     

    Please reference disclosures at: https://blog.americanportfolios.com/disclosures/

    About The Author

     

    Vice President of Human Resources 
    631.439.4600, ext. 280 

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