Deep Dive: Rewarding Healthy Worker Habits

It’s no secret that healthcare costs are soaring in America, but what will it take to get a nation’s workforce moving?

Some companies that depend on employees to be healthy and perform efficiently are encouraging staff to engage in activities that can help prevent health issues — or catch them in an earlier, less expensive phase. These wellness programs are designed to reward employees based on healthy lifestyle choices, like regular exercise and healthcare screenings, and can also stimulate additional mindful behaviors, such as financial wellness.

As more employers take an interest, platforms and apps that enable employee health assessment, goal setting and performance tracking are expected to drive growth in the U.S. corporate wellness market, with a predicted compound annual growth rate (CAGR) of more than 8 percent from 2018 to 2023. This month’s Deep Dive explores how these programs utilize disbursement tools to financially reward workers for healthy activities and the impact they have on businesses’ productivity.

Inside Wellness Programs

Employee wellness programs take a variety of approaches, but all generally list encouraged activities and then reward employees with cash or other incentives for engaging in those behaviors. Many providers offer employers apps and platforms to manage these programs with ease.

Online mattress retailer Casper is one employer dreaming of better employee health. The company has employees track behaviors via fitness reward app IncentFit, then rewards them with $4 per mile run, $0.20 per mile walked, $2 per mile biked, $50 for completing a race and $20 for going to a gym or fitness class. Employees can accrue exercise earnings up to $130 monthly and have the funds deposited directly into their bank accounts, health savings accounts (HSAs) or flexible spending accounts (FSAs).

Competitor iRewardHealth allows participating employees to earn points by logging their activities and eating habits with a smartphone app. Points can be instantly redeemed as cash and paid out via PayPal, transferred using ACH or disbursed directly into a bank account as part of employees’ regular paychecks.

Based on PYMNTS’ research, quickly disbursing financial rewards into participating employees’ bank accounts could encourage further participation. The most recent Disbursement Satisfaction Index found that direct deposit earned the highest possible satisfaction score of 100 out of 100.

On the flipside, workplace wellness program WellSteps’ CEO and co-founder, Steven Aldana, Ph.D., recommends steering clear of a direct cash incentive. He believes employers are better advised to reinforce desired behavior by awarding employees with entry into a lottery to earn a prize, like a gift card, or with benefits like insurance premium discounts or paid time off for completing promoted tasks.

“We have noted, over the past 14 years, that a premium differential incentive in the range of $30 to $40 per month is optimal for achieving best outcomes,” Aldana stated.

Other models tie incentives to healthy lifestyles. A new app called Earthmiles@Work allows employees in the U.K. to collect points for healthy lifestyle activities, which can then be redeemed for other healthy choices like nutrition products or athletic clothing.

Establishing a rewards system is only the first step, of course, and employers must somehow confirm employees are actually performing the activities they log.

For WellSteps, that means an app through which employees can take a photo that’s automatically uploaded to their account to verify the activity. IncentFit, meanwhile, tracks employees’ mileage while running, walking or biking using a wearable fitness device or app like Fitbit, and verifies that an employee truly is at the gym through location-based algorithms.

Companies aren’t limiting their wellness programs to just exercise, either. In a move befitting a mattress company, Casper also enables employees to earn up to $60 a month for tracking their sleep in its wellness program app — that’s $2 per night of tracked sleep.

Is Big Brother Weighing You?

Not all professionals are thrilled by the idea of their workplaces tracking their private lives, nor do they want their bosses to know their sleeping habits.

Organizational psychology expert Liane Davey is one voice of dissent, warning that safeguards should be taken to prevent a manager’s knowledge of employee wellness participation — especially when it comes to decisions around a promotion, for example. Even if specific health records are withheld, employers can still see how much employees are paid through wellness program rewards, which Davey worries could unfairly sway decisions like pay increases.

Some workers have also stated concerns about both the privacy and marketing use of the personal information collected by wellness programs. If employee medical coverage payments are influenced by involvement in such programs, some wonder if this could amount to financial coercion to participate.

Assessing Effectiveness

Employers turn to wellness programs for a variety of reasons, including a desire to better control healthcare costs and increase employee productivity and health. But whether these programs result in long-term benefits for employees or employers is still up for debate.

A 2010 Harvard Business Review study reported that American consumer packaged goods company Johnson & Johnson’s wellness program appeared to have netted $2.71 in savings per dollar spent on it between 2002 and 2008. A more recent study did not find direct medical cost reductions to result from such a program, however.

In January 2018, researchers released the results of a large-scale, randomized controlled trial of a similar program at the University of Illinois Urbana-Champaign. In this study, 12,459 university employees were randomly assigned either to a group that could participate in a researcher-designed wellness program or to a control group not allowed to participate. Those assigned to the wellness program — which included recreational classes and other wellness activities, biometric health screening and online health risk assessments — received paid time off to participate and cash rewards for completing the entire program. The study did not find significant evidence that participating in the program had a causal impact on healthy behaviors, medical expenditures, employee productivity or self-reported health during the first year.

But that doesn’t mean the program held no value for employers. Results of the study found that those who were allowed and chose to participate were more likely to get health screenings, and said they believed management prioritized worker health and safety.

Neil Parikh, co-founder of Casper, has also received positive responses to his company’s wellness program. He believes incentive programs have a more motivating effect on employee behavior than simply offering a free gym membership, and it does appear that his company’s approach has some traction. More than 50 percent of Casper’s employees participated in the program as of June 2017, and 69 percent of those registered with the app earned money in May of 2017, meaning the majority of those who intended to participate actually did so during that month.

The University of Illinois Urbana-Champaign study found that most of those given the option chose to participate in a wellness program — in this case, 56 percent. But there was a clear division: Voluntary participants tended to have experienced lower medical expenditures and demonstrated healthier behaviors in the previous year than voluntary non-participants. Less likely to participate were those who might benefit the most, such as employees with weaker health, higher medical spending and lower salaries.

Researchers said this trend of already-healthy employees participating — and their resulting expression of belief in managers’ care for their well-being — suggests that programs may help companies recruit and retain such employees. In turn, this can net savings for employers, but falls short of making workplace benefits fully inclusive and equitable.

As employers look to give a lift to their employees’ wellness and to their own bottom lines, it appears that a carefully designed wellness incentive program can be one — but not the only — useful tool to be prescribed.