Lincolnshire, Ill. — March 30

While U.S. companies continue to use financial incentives as a way to increase employee participation in health and wellness programs, a survey by Hewitt Associates, a global consulting and outsourcing company, shows employers’ appetite for penalizing workers for unhealthy behaviors is also on the rise. This shift in strategy suggests that companies are increasingly challenging employees and their dependents to be accountable for the decisions they make regarding their health.

Hewitt’s annual health care trends survey of nearly 600 large U.S. employers representing more than 10 million employees shows nearly one-half (47 percent) say they either already use or plan to use financial penalties over the next three to five years for employees who do not participate in certain health improvement programs. Of those companies using or planning to use penalties, the majority (81 percent) say they will do so through higher benefit premiums. Increasing deductibles (17 percent) and out-of-pocket expenses (17 percent) were also cited as possible penalties. When asked what types of behaviors or programs they would penalize, almost two-thirds (64 percent) of employers cited smoking, half (50 percent) indicated not participating in disease management/lifestyle behavior programs and 45 percent noted not participating in biometric screenings (45 percent).

“The economy and continued escalation of health care costs have driven many employers to be a little more bold and demanding of their employees, making disincentives an increasingly attractive option,” said Cathy Tripp, a principal in Hewitt’s health management practice. “As companies learn more about their workforce, they’re realizing that some people may be more motivated to take action if they risk losing $100 versus gaining $100. The key for each employer is to find the right mix of strategies and plan designs that will motivate employees to be healthier, but not go so far as to drive the wrong behaviors.”

Incentive Use on the Rise
According to Hewitt’s survey, employer use of financial incentives is also growing. More than half (58 percent) offer employees incentives for participating in health and wellness programs. Of those, almost a quarter (24 percent) extends these incentives to spouses and/or family members. Nearly two-thirds (63 percent) offer cash incentives for completing a health risk questionnaire, up from 35 percent in 2009. In addition, 37 percent of companies provide cash incentives for participating in health improvement and wellness programs, up from 29 percent in 2009.