More Employers Looking to Impose Wellness Program Nonparticipation Penalties in 2014

More employers are planning to use financial penalties to motivate their employees to participate in corporate-sponsored health and wellness programs, according to a recent survey published by Lincolnshire, Illinois-based Aon Hewitt.

The survey reports 83 percent of employers offer incentives for participation in health and wellness programs, such as health risk questionnaires, biometric screenings and smoking cessation programs. Among that group of employers, only 5 percent exclusively use health insurance premium increases or penalties, while 16 percent offer a mix of rewards and penalties. Seventy-nine percent of employers only use awards like premium discounts, cash or gift cards to encourage participation in health and wellness programs, according to the survey, which is due out in April.

But the percentage of employers who use penalties is expected to increase. According to the survey, 58 percent of employers indicated they intend to impose penalties on employees who “do not take appropriate actions for improving their health” in the next three to five years.

Additionally, the percentage of employers who tie financial incentives to specific health management goals is expected to increase as well, the report says. About 24 percent of employers currently offer rewards for employees who achieve healthy blood pressure, body mass index, blood sugar and cholesterol levels, while 66 percent are considering offering similar incentives during the next few years, according Aon’s findings.

“Motivating people to participate through the use of incentives is a best practice in the industry and these strategies will continue to be a critical part of employers’ health care strategies in the future,” Aon Hewitt’s chief innovation officer for health and benefits, Jim Winkler, said in a statement released March 25.

Another recent study conducted by New York-based Towers Watson strengthens the notion that employers are taking a tougher stance on health and wellness. The Towers Watson survey found 18 percent of employers impose premium and/or deductible penalties against employees who do not participate in or do not complete health management programs, and an additional 36 percent indicate they plan to implement similar penalties in 2014.

Outcomes-based incentives in the form of rewards or penalties are offered by 16 percent of the 583 employers surveyed by Towers Watson, and 47 percent indicated they will be offering such incentives to employees in 2014.

Max Mihelich is Workforce’s associate editor. Follow Mihelich on Twitter at @workforcemax. Comment below or email editors@workforce.com.