Though health care cost increases have moderated, they still are substantial, projected for employers at 9.9% in 2006, according to human resources consultant Hewitt Associates. Employees, too, have been stung by the rising cost of health care, seeing their contributions nearly double since 2002, according to Hewitt research. Along with premium contributions, employees have experienced increases in their out-of-pocket costs, in the form of higher copayments, coinsurance rates and deductibles. Overall, employees' total health care costs-including their premium contribution and out-of-pocket costs-will rise 12% to $3,136 for 2006, Hewitt projects.
Such data should make employees more motivated to be open to ideas that have the potential to reduce their health care cost outlay. Most people understand intuitively-though their actions might not indicate it-that eating a nutritionally sound diet, exercising, not smoking, not drinking in excess, and undergoing preventive exams and screenings all enhance one's chances of staying healthy and, in turn, the likelihood of having lower health care costs. And, if the fact that "it's good for you" isn't reason enough, financial incentives from an employer or health plan can provide an added push to encourage employees to develop healthier habits, and to get them into programs that help them to learn and live a healthier lifestyle.
Lifestyle incentive programs sweeten the pot for employees to take steps toward and engage in healthier habits. In an online survey of health care industry professionals-employers and health plans-conducted by the Health Intelligence Network, 43% had lifestyle incentive programs in place and of the remainder, 47% planned to implement such programs in the future.
What behaviors do lifestyle incentive programs encourage? Some of the most common include undergoing health risk assessments, participating in smoking cessation programs, joining fitness programs (nutritional counseling, weight loss, exercise), and participating in disease management programs for chronic conditions such as asthma, diabetes, hypertension or high cholesterol. The incentives that provide the added push to get employees into these programs might include cash, gift cards and reduced health care premiums. Or, some employers and health plans try to nudge employees toward healthier behaviors with a stick instead of a carrot, such as by assessing surcharges for employees with an unhealthy behavior who fail to participate in an available program (for example, smokers who decline participation in a smoking cessation program). However, the attitude toward the use of negative incentives is split. In a survey of large U.S. companies from PricewaterhouseCoopers Health Research Institute, 48% said that employees who exhibit unhealthy behaviors should be responsible for paying a larger share of their health benefit costs, but only a slightly smaller percentage (42%) disagreed.
According to the Health Intelligence Network online survey, the behaviors that earned incentives most frequently were proper nutrition (44% of the employer and health plan respondents had incentives in place for this), smoking cessation (34%), and adequate exercise (20%). The incentives used most were a reduced health care benefit cost for participants (43% of the employer and health plan respondents utilized this as an incentive), merchandise and certificates (24%), and cash (21%).
Employers considering healthy lifestyle incentives (or unhealthy lifestyle disincentives) need to be aware of any applicable laws governing benefit plans that might limit implementation of such initiatives. Consultation with a benefits professional or legal counsel can help ensure that provisions of the Health Insurance Portability and Accountability Act of 1996 (which prohibits discrimination on the basis of health status) and other applicable state or federal laws are not violated in designing and implementing healthy lifestyle incentives.