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Eight of 10 Companies Use Rewards, Penalties in Wellness Programs, Survey Finds

Wednesday, March 27, 2013
By Robert Iafolla

Employers increasingly are rewarding some workers and penalizing others as part of their employee wellness programs, with 83 percent of companies using some type of incentive, the human resource consulting firm Aon Hewitt said March 25.

Of the nearly 800 employers responding to an Aon Hewitt survey, 79 percent said they offered rewards for participation in wellness programs, which range from taking a health screening test to making progress toward certain blood-pressure, blood-sugar, or cholesterol levels.

The survey found that 5 percent of employers currently use penalties, and 16 percent use both penalties and rewards.

Moreover, the use of penalties appears set to rise, as 58 percent of the companies said they are planning to impose penalties on workers who do not take actions to improve their health.


Monetary Rewards and Penalties
Reduced insurance premiums and cash or gift cards were the most common forms of rewards used in respondents' wellness programs, while penalties are exacted through increased premiums, Aon Hewitt spokeswoman Maurissa Kanter told BNA.

Companies have turned to wellness programs as a way to cut their health care costs. The federal government also has promoted the programs in the Affordable Care Act, which increases the maximum reward in health-contingent programs to 30 percent from 20 percent of the total cost of coverage.

Although wellness programs raise privacy and discrimination issues, a well-designed program can address those concerns, according to Jeffrey Liva, president of Preventive Plus, a New Jersey-based company that assists employers in setting up wellness programs.


'Wellness Scores'
Liva told BNA that health-contingent programs are best conducted off site in concert with workers' primary care physicians. In these programs, doctors communicate with third-party wellness program administrators such as Preventive Plus. Employers only receive wellness scores indicating whether individual employees are meeting their tailored health goals, he said.

“Wellness scores are like credit scores,” Liva said. “The employer wouldn't know if the employee was being treated for an ingrown toenail or full-blown AIDS.”

For example, CVS Caremark is launching a program that requires workers to submit to a health screening; failure to do so triggers a $600 penalty.

The program complies with medical privacy standards under the Health Insurance Portability and Accountability Act, CVS spokesman Mike DeAngelis told BNA. A third-party administrator collects the medical information and does not share it with CVS, he said.

“To encourage a higher level of participation in our wellness review,” DeAngelis said, “we reviewed best practices and determined that an additional cost for those who do not complete the review was the most effective way to incent our colleagues to improve their health care and manage health costs.”

By Robert Iafolla

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