An incentive plan is a great way to increase and maintain overall participation in wellness programs. In a collaborated study conducted by Fidelity Investments and NBGH (National Business Group on Health), 56% of surveyed employers stated that they had a better than expected success rate in increasing employee participation with the use of incentives.

When used correctly, incentives can drastically increase the enrollment and participation in your program as a whole.  To achieve a successful program, HR professionals need to develop an incentive strategy that focuses on incentive goals, communication tools, and legal compliance.

Incentive goals

Incentives should also be designed with goals in mind. Employers need to determine what they want their incentives to accomplish, and align those goals with a health continuum.   The goals should:

• Encourage the 68 percent of low risk individuals to continue their healthy behaviors


• Motivate the 37 percent of moderate risk individuals to adopt healthier lifestyles


• Compel the 3 to 5 percent of high risk individuals to better manage their conditions

The incentives should be available to all employees, and not ostracize any one group.  The goal is to tailor incentives to your participants’ interests and needs.  An effective way to do this is by conducting employee surveys or focus groups. Direct feedback ensures a higher rate of overall participation and success.

Incentive types

Employers use a variety of wellness incentives.  Some of the more common ones include:

• Cash payouts


• Gift cards


• Premium reductions


• Health Savings Account contribution


• PTO accruals


• Merchandise-based rewards

Choose incentives based on employee preferences and make the measured goals challenging, yet achievable.  Unachievable goals will only result in decreased participation, and discredit your wellness program as a whole.  Incentives can be given on an individual or team basis, and should be appropriately valued.  Setting incentives too high or too low can often mean loss of interest over time.  Offer a variety of incentives for different programs and activities, and include both short-term and long-term incentives.

Monetary versus non-monetary incentives

Studies show that a mix of both monetary and non-monetary delivers greater success. Depending on the particular goal and the employee culture, it may be more appropriate to use monetary incentives versus non-monetary.   For example, in companies where overtime is a general practice, employees might prefer PTO time as an incentive versus a gift card or premium reduction.

Communication

Communication is key in all incentive strategies.  Make sure your communication is frequent and consistent.  Constant reminders will keep employees engaged and participating.  Use posters, emails, intranet, and other appropriate tools to deliver your message. Keep employees engaged by notifying them of upcoming events and programs.  This will help them feel included and get them excited about future events.

Legal concerns

Like any other business programs, there are legal issues that HR professionals should be aware of when constructing their incentive plan.  All plans should comply with federal and state regulations, including Americans With Disabilities Act (ADA), the Health Insurance Portability and Accountability Act (HIPAA) and the Genetic Information Nondiscrimination Act (GINA). Some additional rules include:

• Ensuring the program promotes health or prevents disease


• Incentives or penalties cannot exceed 20 percent of the cost of employee-only health care coverage; starting in 2014, this rate increases to 30 percent


• The program must give eligible individuals the opportunity to qualify at least once a year


• A reasonable alternative standard must be offered, with the opportunity to earn the reward, for any individual unable to satisfy the standard due to a medical condition.


• The plan must disclose program terms and conditions in all printed or online materials.

The bottom line

An incentive plan is a great solution for increased and continued participation in wellness programs.  Each incentive strategy is a unique footprint of that particular company’s culture.  When designing an incentive strategy, HR professionals should ensure that their plan includes appropriate incentive goals, effective communication of those goals, and legal compliance.