Program participation remains one of the greatest challenges of worksite health promotion (WHP) programs. Without acceptable levels of participation, program successes are difficult to quantify. Incentives, or the reward designed to influence the decision-making and engagement process of an individual or a group, are often used in WHP programming as an extrinsic motivator to stimulate employee participation. Long-term maintenance of behavior change is probably more likely when employees are intrinsically motivated; however, the use of incentives as an extrinsic motivator may promote the initial adoption of a new behavior among those who otherwise would not even consider starting, as well as reinforce the continuation of the desired behavior among those who are already maintaining the behavior for the long-term.
Reasons to Use Incentives
Despite the fact that there are few studies and limited research evidence indicating that incentives promote lasting behavior change, the use of incentives appears to be a tried and true strategy to increase program participation and adherence. Most WHP programs use some form of incentive to encourage participation. A benchmarking study conducted by M.P. O'Donnell and colleagues (1) showed that among successful health promotion programs, the use of effective incentive programs was an important component of being identified as a “best practice” program. A survey conducted by the former Association for Worksite Health Promotion Financial Incentives/Benefit Plan Design Practice Group (2) showed that among the top reasons for incorporating incentives into WHP programs were:
- increased program participation
- increased health behavior change
- decreased health risk factors
- decreased health care costs
- increased program visibility
- improved employee morale
- increased employee productivity
In addition, survey respondents also reported on what specific program or program components were most commonly rewarded with financial incentives. These included:
- changing health behaviors
- health screening program participation
- health education program participation
- exercise program participation
- completion of a health risk assessment (HRA)
A good example of the impact of using incentives to increase HRA completion is a recent study by P.S. Wang and associates (3). The study team asked 2,539 employees to complete an HRA and compared subsamples of employees who were asked to complete the HRA after a single mailing, after two mailings, and following two mailings and a telephone interview with or without a $20 incentive. The results, shown in the Figure, indicated a dramatically varied response disposition across the four subsamples, ranging from a low of 20.1 for the single-mailing group to a high of 67.7 with the financial incentive group. Interestingly, the estimated prevalences of chronic conditions and levels of work impairment (loss of productivity) did not differ between the four groups regardless of response rates.
What Approach to Use for Incentives
A couple of issues should be considered when deciding on the use of incentives. First, will the type of incentive used be a positive incentive or a negative incentive? That is, a positive incentive will reward participation or performance whereas a negative incentive will use an undesirable consequence, or penalty, for not participating or cooperating. In addition, the company should consider legal and regulatory implications and limitations that relate to the implementation of incentive-based programs.
Examples of Incentives
Typically, employers choose a positive incentive approach since it supports the right messages most employers want to send. In fact, the negative incentive approach can create resentment, morale issues, and have legal ramifications. Various positive incentives can be used to engage employees, including financial, non-financial, token, personal time-off (PTO), or accrued vacation incentives, among others. For example:
- Cash payment—immediate financial benefit in response to completion of the desired action. For example, HRA completion, wellness program completion, etc.
- Premium Differential—varied premium based on a defined wellness-related criteria and/or participation. For example, non-smoking related premium discount, completion of an annual HRA and at least one wellness program offered by the WHP program results in reduced premium contribution.
- Medical Spending Account (MSA)—a lump sum of money is made available to use for a defined health care benefit. For example, benefits relation to WHP incentive programming may include health club memberships or subsidies, lifestyle and behavior change classes, etc.
- “Well Days”—additional vacation days, PTO, or paid time-off for participation in WHP programs.
- Merchandise Award Program—employees earn points or “well bucks” based on defined criteria related to program participation or completion. These points may be used to buy merchandise.
- Benefit Design Modifications—employees who meet a set of defined criteria related to WHP program participation and completion receive enhanced medical care coverage.
Legal and Regulatory Issues
There are three particular issues that WHP practitioners and employers should keep in mind when designing an incentive-based WHP program. These include the Health Insurance Portability and Accountability Act (HIPAA), the Americans with Disability Act (ADA), and tax laws.
HIPAA prevents discrimination in health plan eligibility or contributions based on health status. However, the HIPAA rules do allow plan designs that establish discounts, rebates, or modified co-payments and deductibles for individuals who meet criteria for specific health promotion programs. The use of positive incentives tied to benefit plans and based on participation in WHP programs are acceptable under HIPAA.
ADA prohibits employers from discriminating on the basis of disability against individuals with a disability in regard to hiring, advancement, and “other terms or conditions of employment”. Incentive programs are included under the “other terms or conditions” provision. Therefore, incentive programs must be designed to allow “qualifying individuals with a disability” to be able to meet the eligibility criteria. Sometimes, if the specific criteria for a program may possibly violate ADA standards, compliance to ADA may be achieved by providing “reasonable accommodations”. For example, programs can be restructured to allow disabled employees to receive full credit using alternative criteria.
Understanding the tax implications of an incentive-based WHP program is extremely important especially in communicating the program to employees. Cash awards and fair-market value of non-cash awards are subject to Federal withholding, and potentially State withholding taxes. Financial or non-cash awards may be tax exempt when the value of the award makes accounting for it unreasonable, such as when the incentive is less than $50. To be assured that the WHP incentive programs address these worries, legal and accounting council should always be included in the design of such programs prior to implementation.
In order to get the most out of WHP programs, employees must engage and participate. Positive incentives are a successful strategy to promote participation. To successfully implement incentive-based programs, WHP practitioners should work closely with other Human Resources staff to create an optimal design and communicate the program clearly to the employees.
1. O'Donnell, M.P., C.A. Bishop, and K.L. Kaplan. Benchmarking best practices in health promotion. The Art of Health Promotion
2. Association for Worksite Health Promotion (no authors listed). Industry Trends Update: Financial Incentives/Benefit Plan Design. AWHP, 1996.
3. Wang, PS, AL Beck, DK McKenas, et al. Effects of efforts to increase response rates on a workplace chronic condition screening survey. Medical Care