With employer-sponsored wellness programs facing increased scrutiny from the Equal Employment Opportunity Commission, the debate over wellness incentives may also heat up.

Some industry experts say the use of financial incentives to spur wellness plan participation has gone too far. Don Powell, president and CEO of the American Institute of Preventive Medicine, believes there are inherent problems with using extrinsic rewards to motivate employees.

“It gives the wrong message,” he says. “If you’re saying ‘we’re giving you $100 to fill out a health risk assessment’ how valuable is that activity if you have to pay somebody to do it? It gives the wrong message to the employee – that this activity must be so onerous that we have to pay you to participate.”

Also see: Newest EEOC wellness program draws further industry ire

In 2014, corporate employers planned to spend an average of $594 per employee on wellness-based incentives within their health care programs, an increase of 15% from the average of $521 reported for 2013 and more than double the average of $260 reported five years ago, according to an employer survey from the National Business Group on Health and Fidelity Investments.

“If you think of all the different cost management levers employers can utilize – plan design changes, contribution increases – we can label them lots of different things – but those are cost shifting to the employee,” says Robert Kennedy, health and welfare practice leader with Fidelity’s benefits consulting business. “But I think employers see a great opportunity to actually improve the underlying health risks and health profile of their population. And if that’s what you’re trying to achieve, at least in part, then I think incentives become just a piece of that story.”

Under the Affordable Care Act, employers are permitted to spend up to 30% of the cost of health coverage on incentives in their health-contingent wellness programs. And for programs designed to prevent or reduce tobacco use, employers can spend up to 50% of the cost of coverage on incentives.

“That’s a pretty large number. I don’t think we’re there yet, certainly not in terms of averages,” says Kennedy.

Also see: Prevention is the new focus of health care

Still, some say there’s not much evidence to suggest incentives work to induce long-term behavior change. “I’m not sure there’s a lot of data that shows what the right incentives are and whether they always produce better results,” says Brian Klepper, CEO of the National Business Coalition on Health, adding “you can certainly use incentives to get people to do certain things [but] getting them to change their lifestyle – getting someone to stop eating fried chicken and drinking Cokes – that’s an entirely different proposition.”

Moreover, says Powell, “some literature also suggests that paying people to do things undermines autonomy. People, when they make long-lasting behavior changes, tend to do it because they really want to, not because somebody’s paying them to.”

Employers appear committed to the continued use of incentives, however, with the NBGH/Fidelity research finding that 93% of companies indicated they plan to expand or maintain funding for their wellness-based incentive program over the next three to five years. And 44% said they plan to maintain or increase their investment in wellness programs, even if their company were to move away from direct involvement in employer-sponsored health coverage.

Also see: How the ACA is shaping outcomes-based wellness

Last week, the EEOC Monday filed a memorandum in Federal District Court in Minnesota asking for a temporary restraining order against Honeywell, alleging that wellness programs sponsored by Honeywell violated both the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. Kennedy says the EEOC’s actions against Honeywell were “surprising in a way we weren’t expecting.”

“We did hear from clients … more employers saw themselves in Honeywell than not, so it did raise some eyebrows,” says Kennedy. “It would be great if the EEOC issued some guidelines and we could reconcile the ADA versus GINA versus HIPAA versus the ACA. Employers don’t want to willingly violate any of those [laws] and I think they just need some regulatory help making sure their programs don’t.”

Register or login for access to this item and much more

All Employee Benefit News content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access