By Paul Terry, Ph.D., chief science officer
The use of financial incentives continues to be a point of discussion for employers, wellness providers, individual program participants and the news media. On the heels of recent litigation against employer wellness programs, here are some questions and answers that may help you better understand the situation and assess your own program offerings.
Q: Why use financial incentives?
Solid peer-reviewed research shows that incentives increase participation in simple transactional events, such as attending a health screening or completing a health assessment. As such, incentives are often used as a tactic to increase participation in activities that help people become more aware of their health. The new EEOC rulings suggest there will be close alignment between Affordable Care Act (ACA) and Americans with Disabilities (ADA) rules. For example that for both outcomes based and participation based programs, participants can be eligible for incentives up to 30-percent or 50-percent limits specified in the ACA. Such incentives tied to medical testing (which encompasses health assessments and screenings) are considered voluntary under the Americans with Disabilities Act.
Q: Can financial incentives change health behavior?
Not likely for the long term, and they can even backfire and create resistance to change. But, used judiciously, these “extrinsic” motivators can be a “nudge” that helps some people take a first step that can lead them to discover their intrinsic motivation to become healthier. Smart use of incentives may serve as a catalyst for igniting change in a culture that values health. Use of financial incentives in a culture that is not conducive to health, however, is counterproductive.
Q: Do the ACA wellness provisions protect against discrimination?
Yes, the language is painstakingly clear that the full incentive must be available to all similarly situated employees and, if the employee is unable to meet health-contingent incentive requirements, the employer must offer a “reasonable alternative standard” consistent with their health status. We believe the preferred common ground between tying incentives primarily to health outcomes or primarily to program participation is to offer incentives for reasonable progress toward a goal that is sensitive to an individual’s starting point in their journey toward better health.
Q: Must employees achieve a certain health standard to be eligible for incentives?
No, the ACA rules make it clear that incentives are an “either/or” proposition. That is, people can earn incentives either by showing that they’ve achieved good health or by satisfying a reasonable alternative standard. For example, the ACA goes so far as to note that even if smokers who participate in smoking-cessation programs don’t succeed in quitting, they’re still eligible for incentives if they complete the program.
Visit these resources to learn more about best practices for wellness incentives and industry guidance for a reasonably designed wellness program.
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