A new survey by Hewitt Associates demonstrates employers’ growing commitment to penalize workers for unhealthy behaviors.
In Hewitt’s annual health care trends survey of nearly 600 large U.S. employers, 47% 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, 81% say they will do so through higher premiums. Increasing deductibles (17%) and out-of-pocket expenses (17%) were also cited as possible penalties.
When asked what types of behaviors or programs they would penalize, the top behaviors were smoking (64%), not participating in disease management/lifestyle behavior programs (50%) and not participating in biometric screenings (45%).
“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,” says 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.”
The sharper focus on penalties stems from concerns about rising health care costs. Ninety-five percent of employers say cost is a top business issue, and 70% indicate that “promoting employee accountability” is a key component of their health care strategy. For the second year in a row, keeping employees healthy is the top workforce issue.
On the other side of the carrot-and-stick equation, the Hewitt study also quantified employers’ continued — and growing — use of financial incentives to increase employee participation in health and wellness programs.
For example, 58% now offer employees incentives to participate in health and wellness programs; of those employers, 24% also offer them to employees’ spouses and dependents. Two of the most frequently used “carrots” showed large jumps in usage compared with last year:
- 63% offer cash incentives for completing a health risk assessment — up from 35% in 2009.
- 37% offer cash incentives for participating in health improvement and wellness programs — up from 29% in 2009.
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5 Comment(s)
Posted by: keyra_hunt | March 21, 2012 2:36 AM
It will always depend on what people understand by "unhealthy behavior". Some aspects of this field may tend to belong more to the wellness area. Other people will tend to say it`s extremely important for their life, mood, shape or self-esteem to go to a plastic surgeon Houston whenever they consider it to be necessary. This measure of yours should be stimulative for all employees to improve their general health by adopting facilitating behaviors.
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Posted by: Herb G | March 31, 2010 3:26 PM
To SamIam--While you are looking at Wellness companies, you might want to check out Bravo Wellness. One of my larger accounts is 3 months into the Wellness Incentive and the results have been remarkable and the reception by the employees has been very positive. Their self funded claims went from 89% of agg in 08-09 to 36% this plan yesr. They have had biggest loser contests between offices and there are people that have smoked since their teen years.
I prefer the incentive approach.When employees don't meet the requirements, they are far more likely to do something about it with a positive attitude if they have an incentive, (either lower cost or lower deductible) that if they get a penalty.
Individuals with perfect driving records get a lower rate for their auto coverage than the individual that has a terrible driving record. Despite what our fearless leader and his main cheerleader say, group health coverage should operate the same way.
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Posted by: Sam Iam | March 31, 2010 12:16 PM
My company is currently considering health and wellness services from companies like American Specialty Health, GlobalFit, and SonicBoom. The advantage of these particular companies, from our point of view, is their use of FitLinxx activity tracking technology (fitlinxx.com). It is difficult to fake and easy to use for our employees - it's all automatic. Our hope is to not only reduce our insurance rates but to also increase productivity and reduce sick time.
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Posted by: Mark Head | March 31, 2010 9:12 AM
Any way you slice it, a "premium differential" means non-participants pay more than participants. You can call it a reward for participants or a penalty for non-participants. HR/Marketing generally doesn't like penalties, so the spin is on "discounts" for participation.
Human beings are hard-wired to pursue pleasure and avoid pain. Some experts say that the motivation to avoid pain is greater than the motivation to pursue pleasure. We'll stop immediately to remove a pebble from our shoe, but we may walk for a while before thinking to take our shoes off and get our toes in the sand on the beach.
So, some employers have decided to change the spin to say "here's the standard payroll deduction cost, but if you don't participate in the health management program, you'll pay $40 per month more."
Some employers will retain the "here's the standard payroll deduction cost, but if you participate in the health management program, you'll pay $40 per month less."
We're betting the penalty approach will rope in a somewhat higher participation percentage.
Seat belt compliance hovered at about 85% until it became a law subject to penalty for non-compliance; it's now between 95% - 97%.
Go figure.
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Posted by: David N | March 31, 2010 8:47 AM
The use of the word "penalizing" in the title of your column is very misleading. Employers are looking to reduce cost by incentivizing employees who particpate in programs to improve their health, especially those who are prone to chronic conditions. It's not about "penalizing" the unhealthy, it's about incentivizing behavior that results in a healthier lifestyle.
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