The Loop

Healthcare Employee Rewards Programs

Filed under: Benefits

According to research by the National Business Group on Health, in 2019 the average cost of healthcare – including premiums and out-of-pocket costs for each worker and his family – was $14,800.

The good news for employees is that employers cover about 70 percent of those costs. The bad news for employers is that the average annual cost increased by $700 per worker in just one year’s time.

Clearly, the rising cost of healthcare is affecting everyone now, not just small businesses, the self-employed, unemployed and uninsured. As such, employers are seeking new ways to engage their workers in healthcare decisions in an effort to lower those costs. While wellness programs have been around for quite awhile, their success is affected by a number of variables, such as:

  • Low participation rates
  • Participation largely by workers who are healthy and already pursue a healthy lifestyle
  • The programs can be complex and intimidating
  • Workers may not be fully aware of all of their benefits
  • Workers may not appreciate the value of benefits offered
  • Health benefits, which impact costs, may take many years to see fruition
  • The return on investment may seem low for quite a while

However, it appears the majority of employers see an investment in worker health via wellness as well worth the effort. Last year, more than 80 percent of US employers said they were planning to invest more money in worker health and wellness over the next three years. In fact, a recent workplace study from UnitedHealth Group found that employers are more than twice as likely to value the importance of workplace well-being programs as part of their benefits package than they were ten years ago.

New Trend: Transparency Rewards

A new trend in wellness programs is transparency rewards. This type of program focuses on educating workers on the value of price shopping for healthcare services. It then incentivizes them with financial rewards for choosing lower-cost options.

According to a recent survey by the Society for Human Resource Management, 60 percent of employer organizations have implemented a transparency rewards program. Instead of simply offering monetary rewards to lower expenses, the program actually shares a portion of the money saved from choosing a lower-cost provider. However, some employers offer other options such as gift cards, points systems and catalogs, or contributions to health reimbursement or health savings accounts (HSA).

There are different types of transparency rewards programs. One type assigns a representative to work with the member (and/or covered family member) to research local options for prescribed tests or procedures. The representative will then present the member with several quality options, each at a different price point. If the member selects a lower-cost provider, he is not only rewarded by lower out-of-pocket costs, but with cash back or other rewards.

Targeted Wellness Programs

When it comes to wellness programs, some of the most effective ones address more complex and chronic conditions, such cancer, heart disease and diabetes. Just over half (56 percent) of current wellness programs offer specific disease-management components, which is where much of the return on investment is generated. According to a recent RAND study, 87 percent of savings (from $30 per-member, per-month programs) are attributed to disease management.

Those numbers can increase further by pairing a financial incentive with chronic care management. For example, reward measurable activities such as refilling medications on schedule, completing preventative screenings, and regularly monitoring levels such as blood pressure, body weight, blood glucose, etc.

In recent years, employers have been expanding the scope of wellness programs offered, such as focusing on mental health, substance-use disorders, and women's health. The latter offers opportunities to provide financial assistance rewards to help pay for fertility services, neonatal care, and first year of life expenses.


Of course, the more benefit programs you offer, the more administrative and compliance issues must be addressed, especially those associated with financial incentives. And, while there is a cost associated with providing individual representation to research and provide cost comparisons in a transparency rewards program, recognize that the employer and health insurer also benefit from costs savings.

Smaller organizations may want to consider outsourcing an incentive-based wellness program. While an outside vendor can manage the day-to-day administration of the program, it’s important that the company HR staff understands the program and implement a well-conceived communications plan to engage workers.

Focus on three key communication tenets:

  1. What’s in it for me (the worker)?
  2. Use the full spectrum of communication mediums to deliver a consistent message (e.g., enrollment meetings, posters, mailings, emails and texts, webinars, etc.), and continue delivering the message all year round.
  3. Extend communications beyond the worksite so that family members are aware of them.

Incentive Rewards ROI

The wellness industry, currently an $8 billion market, continues to grow right along with the growth in healthcare delivery costs. Recent studies of new transparency rewards programs for choosing lower-cost healthcare providers are showing a great deal of promise. One such provider found its program saved employers $6 for every $1 spent administering the rewards.

Furthermore, although transparency rewards programs are still in the early stages, recent research has found they tend to boost higher utilization rates by members. Most rewards programs pull in about one to two percent utilization; healthcare rewards programs are seeing eight to 16 percent higher participation.

Program providers say that the two key elements to a successful healthcare rewards program are a positive worker experience and rewards that are relevant to their needs or desires. For example, instead of offering $10 in rewards for undergoing a colonoscopy, workers may respond better to a $10 gift card at Best Buy or choose from a selection of merchants. In this scenario, the worker has an additional incentive to get the preventive care she needs but may be inclined to put off. This is one way gift cards can play an important role in a healthcare rewards program.

As a final note, be aware that there are few – if any – types of wellness offerings that generate an immediate substantial return on investment. First recognize that changing specific behaviors, such as diet, exercise or smoking cessation, generally take from six to nine months to modify. One of the reasons it’s important to continue outreach messages all year long is to keep workers motivated to stick with their goals and change their behaviors.

Even once lifestyle changes are made, it can take one or more years for those behaviors to impact health outcomes – and accompanying costs. That means an employer healthcare rewards program can take several years to start producing true financial returns.

However, the returns on worker morale, energy levels, productivity, and fewer instances of absenteeism and presenteeism can begin much sooner. Additionally, a company culture that promotes good health and well-being can help retain talent and attract new recruits.

Once a company does start to see a return on investment, there’s even better news: You can expect that payoff to continue for many years to follow.

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