How to include penalties and incentives in wellness programs as a call to action for employees

Employers took a giant leap of faith when they began investing in employee wellness programs to curtail the rising cost of health care. Little data existed to forecast the effectiveness of the new programs and employers could only speculate whether employees would be motivated to make lifestyle changes or follow proactive health regimens to manage chronic conditions.

Now new research by two Harvard professors affirms the hope-laden wellness hypothesis, revealing that companies saved an average of $3.27 in medical costs for every dollar invested in wellness programs while health-related absenteeism costs fell by about $2.73. The news couldn’t come at a better time for beleaguered employers who have theoretically exhausted their ability to shift rising health care costs onto employees, yet face another year of 7 percent increases, as the annual tab for employee medical benefits tops $10,000, according to Towers Perrin’s annual Health Care Cost Survey. Encouraged by early success, employers are turning up the heat on wellness through strategic medical plan designs.

“Employers can no longer cost shift or reduce plan benefits across the board and remain competitive,” says Vincent Antonelli, senior consultant for the health and group benefits practice at Towers Watson. “Savvy employers are offering substantial monetary incentives and value-based benefit designs to engage employees and their families in company-sponsored wellness programs.”

Smart Business spoke with Antonelli about the latest trends in medical plan designs and how employers are mitigating the rising cost of health care through innovative incentive programs.

What have we learned about employee wellness?

We’ve debunked the theory that if you simply build a great wellness program, employees will come. We’ve learned that employees need to be financially motivated to make wellness a priority so employers are offering substantial inducements to employees who actively participate in wellness programs and achieve specific health outcomes. At the same time, competitive health care benefits are now the second greatest attractor of new talent right after salaries, according to our latest survey. Additional data suggests that nearly 50 percent of employees are actively looking for new jobs or would entertain a new offer, making it difficult for employers to enact greater cost shifting without suffering potentially catastrophic consequences.