Incentives for Participation in Wellness Programs

According to a recent report from the Obesity Society, employees who are offered financial incentives or time off were 33 times more likely to participate in health coaching and wellness programs.

There is not yet a lot of evidence to prove that increasing overall health for your employees will actually decrease health plan costs. Nevertheless, there is evidence that it does affect presenteeism and absenteeism, and participation tends to increase when employers offer incentives. MSEC’s 2014 annual Health and Wellness Plans survey shows that 56 percent of members offer gifts or gift cards as incentives and 20 percent offer cash.

The MSEC survey also shows that 64 percent of employers who offer wellness programs have observed a reduction in obesity among employees. More than half of these employers have seen a reduction in health insurance claims, and 55 percent of respondents have reduced tobacco usage among employees. Employee engagement has increased—and employee absenteeism has decreased—by 36 percent.

Please note that when developing wellness programs and incentives for participation, the safest approach is to make participation completely voluntary and reward employees for engaging in healthy habits rather than punishing them for failing to do so. The Equal Employment Opportunity Commission has taken the position that attempts to penalize employees for non-participation or failing to achieve a prescribed health outcome are unlawful. Until that issue is resolved, employers should focus the programs on the overall wellness of employees.

Also remember any incentives in the form of cash, gift cards, or gifts should be taxed like all other “rewards” under current tax law. The value of the reward should be treated as taxable wages and subject to payroll taxes. MSEC recommends consulting with your tax advisor when developing incentive programs.