Employee Benefits

Cash: The Best Motivator for Employee Wellness Programs?

Business woman with yoga mat

Are cash incentives the best way to motivate employees to engage in wellness programs? Kaiser Family Foundation reports that 83 percent of large employers offer wellness programs, such as smoking cessation, weight loss and health coaching, with the goal of encouraging employees to reduce health risks. But employers, large and small, often struggle to find the best way to motivate employees to participate in wellness opportunities.

 

Offering Incentives
Over the years, employers have offered a variety of incentives and rewards to push employees toward healthy choices. A Kaiser Family Foundation study found that 42 percent of large firms encouraged employee participation in wellness programs by offering incentives for participation:

  • 34 percent offered discounts on premiums for insurance benefits
  • 76 percent awarded cash, gift cards, merchandise or contributions to health savings accounts
  • 14 percent provided a variety of other rewards

Analyzing rewards
Healthline News reports that researchers at Duke-NUS Medical School in Singapore explored whether cash or other incentives work best for encouraging wellness program participation. They divided 800 adults into four groups and studied their reactions to different rewards for completing moderately to vigorous fitness activities:

  • No reward – Members reached exercise goals, but over time became less active.
  • Charity donation – Adults achieved target goals, even exceeding them by 20 minutes, but fitness levels stayed about the same. Their financial incentives were donated to designated charities.
  • Activity tracker – Participants received a Fitbit activity tracker and met fitness goals, often exercising an extra 15 minutes. However, after a year, only 10 percent continued to use the Fitbit.
  • Cash – Adults in this group also had a Fitbit and were given $15 for walking 50,000 to 70,000 steps weekly and $30 for exceeding expectations. Members typically exercised 30 minutes beyond the weekly goal. After six months when cash rewards stopped, participation decreased.

In another study, researchers at the University of Pennsylvania examined whether employees were more inclined to exercise if they lost cash rewards for not meeting goals. Scientists found this loss-aversion incentive motivated members to exercise. They also discovered that activity levels increased when people worked in groups to maintain cash rewards.

Ultimately, researchers agree that incentives matter, but employers must determine the rewards that will best motivate their employees based on program goals.

2017 wellness regulations
For several years, the Equal Employment Opportunity Commission has limited the amount employers can provide for wellness rewards to 30 percent of coverage costs and 50 percent of smoking cessation costs. To ensure employees don’t feel pressured to participate in wellness programs, starting in January 2017, the Commission has imposed a 30-percent cap for all wellness rewards. This cap extends to spouses of employees who participate in the wellness programs.

 

Learn how employers are expanding wellness programs by focusing on employee well-being. Watch this interview with Dr. Jim Harter of Gallup.

 

Sources:
Kaiser Family Foundation
Healthline News
Twin Cities Business
MiBiz

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