Five trends in wellness incentives for 2013

Employers want return of investment for their wellness programs. They want to know what incentive dollars are really being used for. Here are five trends to look for in wellness incentives in 2013.

1. Personalization of incentives

The idea of incentivizing people to participate in wellness programs is one of the few to be embraced with equal enthusiasm across the board.

While the concept held enough innovation and promise to spur health plans and employers to spend over $60 billion last year to motivate consumers to engage in health, incentives have often been primitive in execution. Incentive dollars flow to plan members as reward or encouragement for healthy behaviors, but what consumers do with that money has until now been largely a mystery to employers and health insurers.

A 2009 survey conducted by MasterCard and Harris Interactive found 61% of employees participate in a wellness program if incentives are offered versus only 26% when there is no added incentive. Additionally, 25% of employees reported that being incentivized was actually the driver and the very reason they agreed to enroll in a wellness program at all.

Instead, the answer is to better tailor the incentives to fit the person, and to provide incentives that motivate while driving program ROI. A recent study from the Journal of Economic Psychology shows consumers prefer to be incentivized with cash. Yet the utility of cash (even cash rebated to a paycheck) leads many to decisions that fail to drive long-term engagement, satisfaction and ultimately outcomes.

2. Incentives tailored around health related products and services

Health incentives need to focus on an emotional affinity felt by participants toward earned rewards—a paradigm that has the potential to create the initial embrace of health behavior change and perpetuate it. Yet, today’s healthcare dollars are stretched thin, and employers want to make sure every dime spent on health and wellness programs is targeted to accomplish health goals. They have increasingly offered discounts to fitness clubs, healthy foods, supplements and Weight Watchers as incentives.

3.  New focus on analytics

The Patient Protection and Affordable Care Act (PPACA) increases the cap on wellness incentives—now at 20% of an employee’s total health insurance premium cost—to 30% and then 50% by 2014. This provides an opportunity to create an incentive program with influence.

Yet as increasing dollar amounts are being driven towards wellness/incentive programs; understanding exactly how funds are being spent; what they are being spent on; and how the actual spending is impacting outcomes and ROI will be critical to understanding the overall impact and success of wellness incentive programs. To that end, rich new data sets being driven by innovation in payments technology will play a key role over the next 18 to 24 months in determining how funds can better be allocated within programs to achieve results.

4.  Deeper integration of wellness incentives into overall care continuum

Through a richer data set of spend analytics tied back into larger Big Data initiatives focused on efficient healthcare dollar allocation, the role of wellness incentives, their impact on behavioral economics, and ultimately their importance within the overall care continuum will be far better understood. Health plans and employers will increasingly have the ability to design and integrate highly targeted incentive dollar programs to reduce costs, and improve outcomes.

5.  Continued focus on gamification

The recent gamification of wellness programs, employee challenges and the role that both competition and fun in wellness program engagement will continue, as these wellness tools have proven successful in driving initial and—in many cases—longer term engagement and results. That said, there will be an increased focus in 2013 on the actual currency being offered as rewards.

According to a March 2012 study by Fidelity and the National Business Group on Health, employers on average are spending a $169 per-employee per-year on wellness platforms. Yet they are spending nearly three times that on the actual incentive, or $460 per-employee per-year. The incentive dollars represent the single greatest investment into wellness programs. Until now, these dollars have been limited in their ability to be tangibly measured and evaluated for their effectiveness. This will be a critical area of change in 2013, and one that will fundamentally shift how actual incentive dollars are perceived and utilized across all aspects of healthcare to drive cost reduction.