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Premium Reductions No Longer Rewarding

Posted, by Jennifer DiPietro
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Premium reductions are becoming less effective when it comes to employee health and wellness programs. We recently wrote about how cash isn’t king when it comes to rewards and incentives, and the same can be said for rewarding and incenting employees for healthy behaviors.

Even with the high cost of healthcare, premium reductions are not as motivating

Currently, about 50% of corporate wellness programs offer a premium reduction. But studies show that financial incentives are becoming ineffective, especially when it comes to encouraging employees to lose weight and change their lifestyles. In a recent study from the University of Pennsylvania, 197 obese employees were offered health insurance premium reductions or other financial incentives to shed excess weight and adopt a healthier lifestyle. After 12 months, there were no significant changes in weight from the employees. The study concluded that more creative incentives might lead to changes in behavior.

"There is often a presumption that the size of the reward is all that matters," said Dr. Kevin Volpp, director of the Penn Center for Health Incentives and Behavioral Economics. "In reality, incentive systems vary in effectiveness according to how well they are designed," he explained in a university news release.

Employees want to be rewarded immediately for positive healthy behaviors or lifestyle changes. Premium reductions, cash, and other financial incentives that get “hidden” into a paycheck do not help employees associate their reward with their behaviors. Currently under the Affordable Care Act, companies can use up to 30% of health insurance premiums (average $1,800 per worker) to encourage employees to adopt healthy lifestyles.

What types of non-financial incentives should we use in our corporate wellness programs?

Wearables, gift cards, and point-based programs are expected to have the most growth in 2016. Wearables, such as Fitbit, make health and fitness goals easy to track while gift cards are often customizable to employee interests and make them feel recognized. Learn more about corporate health and wellness programs and the role gift cards play in our webcast.
Using Incentives to Drive Change in Corporate Wellness Programs.Download Webcast
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Topics: Gift Card Incentives, Health & Wellness, Incentives & Rewards, Insurance premium reductions

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