Wellness Incentives - Overview (winter)

Faced with double digit health insurance premiums and the need to recruit quality employees, the majority of United States companies are now offering wellness programs to their workforce. As a matter of fact, some form of a wellness program can be found in over 90 percent of US companies with 200 or more workers that provide health benefits.1

Corporate employers plan to spend an average of $594 per employee on wellness-based incentives within their health care programs this year, a 15-percent increase from the 2013 average, according to an employer survey by Fidelity Investments and the National Business Group on Health.2

Incentives are steadily being used to increase program participation and encourage positive employee health behavior. With only one in five employees participating in health promotion initiatives3, companies have turned to the use of incentives as a way to entice employees to take advantage of their health promotion services. Aon Hewitt’s survey of nearly 800 large and mid-size U.S. employers representing more than 7 million U.S. employees found that 83 percent of the employers offer participation-based incentives to their employees.4

According to a new employer survey conducted by Fidelity Investments® and the National Business Group on Health (Business Group), the most popular wellness-based incentives continue to be a decrease in premiums (61%), cash or gift cards (55%) or an employer-sponsored contribution to a health savings account or similar heath care-based savings vehicle (27%).5

Typically, incentive strategies fall into one of the following categories:

1. Participation-based incentives reward employees with a financial incentive for their participation in a program or a wellness activity. Examples of participation-based incentives include the completion of a health risk appraisal or participation is some kind of biometric screening event.

2. Outcomes-based incentives reward employees financially for meeting specific health outcomes. For example, an employee may receive an incentive for reaching a targeted blood pressure, cholesterol or body mass index (BMI) reading. Industry studies suggest that around 18 percent of large companies have outcomes-based incentives programs currently in place5 and that about another 23 percent plan to introduce such programs in 2013.7 Some companies are reluctant to use outcomes-based incentives due to potential legal issues arising from the Health Insurance Portability and Accountability Act (HIPAA), Americans with Disabilities Act, and the Genetic Information Nondiscrimination ActIf you are considering implementing an outcome-based incentive program, you should review the guidelines in this publication – Guidance for a Reasonably Designed, Employer-Sponsored Wellness Program Using Outcomes-Based Incentives.

This publication was produced as a collaborative effort of six healthcare organizations, including the American College of Occupational and Environmental Medicine, the American Cancer Society and the American Heart Association.

3. Progress-based incentives reward employees for making meaningful progress towards individual achievement milestones. A progress-based incentive model encourages the employee to earn the incentive while taking “smaller but sustainable steps” to the ultimate health goal.

Companies interested in starting or expanding their incentive program should make sure they are in compliance with the law since the guidelines have changed with the Affordable Care Act.  Check out our section New Guidelines for a brief overview of these changes. Check out What Works?  for some valuable insight as to what other companies are doing with wellness incentive programs. Of course you want to do your due diligence by reading as much as you can on the topic of wellness incentives. We have recommended a number of excellent articles, publications and blogs in our Recommended Reading section.



  1. Cessation,” New England Journal of Medicine 360 (2009): pp. 699-709.
  2. Employers are spending more on wellness programs, Fidelity/NBGH sure finds (http://www.boston.com/business/news/2014/02/20/employers-are-spending-more-wellness-programs-fidelity-nbgh-survey-finds/pqXOiLWRqHWjfBm94kl18N/story.html)
  3. Soeren Mattke, Christopher Schnyer, and Kristin Van Busum, A Review of the U.S. Workplace Wellness Market, RAND Corporation, July 2012, http://www.dol.gov/ebsa/pdf/workplacewellnessmarketreview2012.pdf
  4. http://aon.mediaroom.com/2013-03-25-Aon-Hewitt-Survey-Highlights-Important-Role-of-Incentives-in-U-S-Employers-Efforts-to-Improve-Workforce-Health-and-Performance
  5. http://www.businessgrouphealth.org/pressroom/pressRelease.cfm?ID=207
  6. National Business Group on Health and Fidelity Investments, Employer Investments in Improving Employee Health; Mercer, National Survey of Employer-Sponsored Health Plans 2011, 2011
  7.  Towers Watson and The National Business Group on Health, Performance in an Era of Uncertainty; National Business Group on Health and Fidelity Investments, Employer Investments in Improving Employee Health


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