Feature Article - November/December 2016

Healthy Motivations

How Wellness Initiatives Can Lead to Financial Fitness

By Rick Dandes

What Incentives Work Best?

The use of incentives varies depending on the organization, but cash is more common than the use of tangible merchandise and gift cards, which tend to be used more as promotional elements of the campaign, explained Ira Ozer, founder and president, Engagement Partners, Chappaqua, N.Y. "For example," he said, "a wellness program launch often includes giving employees shirts or other apparel, water bottles and related fitness items and sometimes gift cards for health and wellness-related merchants for taking basic engagement actions, such as enrolling in the program and attending educational or fitness sessions. But the bigger incentives are given as health insurance premium reductions or actual cash either in the paychecks or on stored-value cards."

Everybody knows there are different types of incentives, said Mark Hall, agreeing with Ozer. Hall, CEO of G8Way, an end-to-end payment solution provider for health care, based in Princeton, N.J., said, "A few years ago there was a trend toward using contributions in benefits design to house savings accounts as an incentive. Basically, giving the employee money that they can then use just to pay for health services as an incentive. In the broader health population, I don't believe that is an optimal incentive. Certainly, the use of a gift or aspiring to getting a gadget or a bike can be effective, but at the end of the day, we believe the best incentive is either cash or a representation of money, such as a gift card."

Points are nice, Hall said, "They get us excited. They can keep us engaged. But it is incremental cash incentives administered in a lot of ways that is most effective, in my view. And so at the end of the day we suggest a prepaid card solution administered in an incremental manner. It is not good enough to say, 'OK, if you do all these things in six months, or at the end of the year, we are going to give you this.' Incremental incentives, even smaller dollar values, at $25 to $50 can really be motivating."

Hall suggested varying the dollar amount based on what behavior you are trying to drive. If you are giving an incentive for someone to just sign up for a program, maybe that is a $25 incentive. But if you want someone to get diabetic screenings, which could reduce your overall cost of care, you need to increase that incrementally so that a greater component of people are complying and participating in that activity. "As we look at the landscape, particularly in terms of incentive design, where your contribution to your health plan is based on participation and wellness," he said, "we believe motivational rewards that are incremental in value, rewards that feel like cash and can be used in that manner, and are tied to the brand of the sponsoring organization, is most effective in driving engagement."

Meanwhile, Ryan, of Madison Performance, has data showing "the participation rates we've seen in wellness increases anywhere from 26 all the way up to 90 percent when non-cash incentives are offered. Conversely, when a program uses just cash, generally, the results disappoint. And by cash, that can be a premium rebate or some other type of financial inducement. Human beings just don't calculate that as being a benefit. So they tend to underperform. That's a big part of whether people are going to be motivated by them or not."