Tracking Employer Use of Financial Incentives to Reward Healthy Behaviors

Many employers and wellness professionals as well have been keeping an eye on the growing trend of awarding meaningful incentives – not just tee shirts, coffee mugs and other similar tokens for participation in the organization’s wellness program. By meaningful incentives, we’re talking real cash incentives.

We have been conducting a survey on the use of incentives in wellness programs and some 110 wellness managers have responded. We are about to begin reporting on the results of this important survey in our monthly management newsletter – Wellness Program Management Advisor. We will also share the significant survey findings at some point on this blog.

A survey released last year by Watson Wyatt Worldwide and the National Business Group on Health illustrated just how important a subject incentives are as employers are realizing the real benefits resulting from having a healthy workforce.

That survey found that the number of employers offering workers financial incentives to better manage their health was expected to jump sharply this year.

From a ‘sneak peek’ at our every three years survey on incentives results, the Watson Wyatt Worldwide survey results are right on the money.

The survey of 453 large employers found that half currently use incentives to encourage their workers to participate in health improvement activities, such as smoking cessation or weight management programs.

That number was expected to leap to 74 percent this year.

“Some employees need a little extra inspiration to address their own health and develop healthy habits,” said Ted Nussbaum, Watson Wyatt’s director of group and healthcare consulting in North America. “Financial incentives can be a valuable investment that provides that essential push.”

According to the survey, employers are using a wide range of financial incentives to promote healthier lifestyles – from completing health risk appraisals (HRAs) to participating in health improvement and disease management programs.

While the vast majority of employers are rewarding healthy lifestyles, 6 percent are penalizing employees for poorly managing their health conditions.

Companies use financial incentives to encourage a healthier lifestyle.

Employers Offering Financial Employee Action/Behavior Incentives:

  • Full coverage of preventive services – 53 percent
  • Completion of a HRA – 53 percent
  • Participation in health improvement or disease management program – 42 percent
  • Participation in smoking cessation program – 40 percent
  • Participation in weight management program – 31 percent
  • Management of cholesterol level, blood pressure – 21 percent
  • Completion of consumer education module – 12 percent
  • Maintaining a personal health record – 7 percent

Employers use cash or an equivalent reward most frequently as an incentive for participating in health engagement activities. However, some employers now tailor their programs, matching desired rewards with a specific behavior or activity. For example, premium or deductible credits are more effective than cash at boosting HRA participation.

Seventy-three percent of companies that offer premium credits and 67 percent that offer deductible credits have at least half of their workforce enrolled in an HRA compared with 17 percent that offer cash and 12 percent that offer no incentive.

Employers with a consumer-directed health plan (CDHP) are more likely to offer incentives. Twenty-six percent of companies with a CDHP offer financial incentives for managing health risk levels (e.g., weight, blood pressure) compared with 17 percent of companies without a CDHP.

Similarly, 50 percent of CDHP companies offer incentives for participation in health improvement or disease management programs versus 35 percent of non-CDHP companies.

Address: Watson Wyatt Worldwide, 901 N. Glebe Rd., Arlington, VA 22203; (703) 258-8000,

Wellness Management Information Center,


One response to “Tracking Employer Use of Financial Incentives to Reward Healthy Behaviors

  1. The article is very interesting, giving a lot of inspiration for this beginners.
    Thank you for sharing with us.

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