Nearly everyone involved in helping to run a wellness program would agree that it’s no easy task to manage an incentives strategy. It’s practically a science in and of itself. And unfortunately, a cloud of legal uncertainty isn’t making the job any easier.
You may remember that a federal district court decision last year raised questions about the future of incentives and the design of employer-sponsored wellness programs. Specifically, the rules in question are those under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) that permit employers to offer incentives of up to 30 percent of the cost of self-only coverage for the group health plan. (For more on the decision and its repercussions, read this.)
A recent Willis Towers Watson survey found that nearly half of employees (46 percent) say they would participate only if offered incentives, up from 35 percent in 2011.
We’re hoping the situation will get at least a little more clear next Friday, March 30. That’s the deadline for the Equal Employment Opportunity Commission (EEOC), which administers these rules for employer-sponsored wellness programs, to file a status report on any proposed rulemaking.
For now, we know that the current rules will no longer apply for the 2019 plan year. Even if new proposed rules are issued, it’s not likely they will be finalized in time to design programs for 2019.
Interestingly, this closer look at incentives comes at the same time that more and more employees feel entitled to a financial reward for taking part in a well-being program. A recent Willis Towers Watson survey found that nearly half of employees (46 percent) say they would participate only if offered incentives, up from 35 percent in 2011.1
Where does all of this leave employers?
Think of it as an opportunity to reassess well-being program design. Here’s five suggestions for changes to incentives that you may want to consider. (We should say up front that the following suggestions are no substitute for independent legal advice specifically tailored to your situation.)
1. Consider reducing incentives below 30%.
- This will avoid your program being considered ‘coercive’. In addition to your incentives structure, you may need to reevaluate which actions qualify to receive rewards.
2. Place greater emphasis on intrinsic incentives that reward participation.
- Look at ways to build a culture, improve employee engagement, and create a sustainable well-being environment that is inclusive.
- Encourage programs that rely on non-financial, “intrinsic” incentives such as contests and challenges supported by nominal rewards, non-monetary recognition or charitable contributions.
3. Shift to participation-based rewards rather than outcomes-based rewards.
- Some well-being challenges that focus on getting consistent sleep or managing stress could be more attractive than other challenges based on reaching a specific outcome, such as number of steps or minutes of activity per day.
- Reward participation in webinars or attendance at employee education for such topics as nutrition, financial well-being and resilience.
4. Move to participation-only programs.
- For example, reward employees for completing a biometric screening rather than requiring them to record in-range screening results. Or, reward any participation in a steps challenge instead of logging a minimum number of steps.
- Participation-based rewards focus on an individual’s effort and support a holistic view of personal well-being. They allow rewards for a broad range of activities such as joining community service activities.
5. Engage onsite coaches or wellness coordinators to help develop and promote participation-based events.
- Coaches and coordinators are a great resource, if you have them available.
For more tips on managing incentives, download our e-book, 7 Steps to Smart Incentive Design. It breaks down the psychology of motivation and divides a complicated subject into seven clear steps.
Some good news about rewards and behavior change
We’ll close with some statistics that we consider encouraging. A study published last year in the Journal of Occupational and Environmental Medicine found no difference between the effectiveness of outcomes-based and participation-based rewards in rates of participation or engagement or improvement in health outcomes.2
And outcomes-based incentives may be falling out of favor. The number of employers offering outcomes-based incentives dropped from 44 percent in 2015 to just 24 percent in 2016, according to the National Business Group on Health.3
Given that context, maybe the future of well-being incentives isn’t stuck in legal limbo after all. Maybe the industry is already moving toward participation-based rewards regardless of the courts.