the power of incentives in workplace wellness programs to reduce employer healthcare costs

Presents:The Power of Incentives to Reduce

Employer Healthcare Costs1

Agenda

Growth of Health Care Costs Decreasing Costs Through Wellness Programs The Growth of Employee Wellness Programs Reward-Based Wellness…..What Works? Incentives as the Solution Government Update ROI From Wellness Programs

2012 GiftCard Partners, Inc. All Rights Reserved 2

of Health Care CostsGROWTH

Employers and Employees alike are having trouble keeping up with rising costs


http://info.giftcardpartners.com/healthy-incentives-for-your-corporate-wellness-programs

Healthcare Costs Continue to Grow• 5.9% increase per year is expected• Average health care costs per employee are

expected to reach $11,664 in 2012 from $10,982 in 2011

• 61% of employers view employee poor health habits as the single biggest challenge to maintaining affordable benefit coverage*

* 2012 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care



DECREASINGCosts through Wellness Programs



Companies Who Support and Optimize Healthcare Objectives Have a Clear Competitive Advantage

•TowersWatson 2012 17th Annual Towers Watson/National Business Group on Health62012 GiftCard Partners, Inc. All Rights Reserved

The Growth of Employee Wellness Programs

72012 GiftCard Partners, Inc. All Rights Reserved


What is a Wellness Program?• In their most basic form, employee wellness programs provide

employees with incentives to participate in activities that promote their health

• 70% of U.S. Employers Offer Wellness Initiatives



Wellness Programs Growth

• 24% of the 70% overall have started offering them since 2010

• 60% of American employers have implemented new or additional wellness programs since 2008

• In the past year, only 46% of those with access to a wellness program have participated


Source: Wellness Programs and Value-Based Health Care, Third Edition, International Foundation of Employee Benefit Plans, 2012.


Source: Wellness Programs and Value-Based Health Care, Third Edition, International Foundation of Employee Benefit Plans, 2012.


Reward-Based Wellness…What Works?



Two Types of Reward-Based Programs

Participation-Based Outcome-Based



Participation-Based Programs

• Engage the employee with the simple goal of participation

• Wellness engagements entice employees to show up for wellness events and programs

But…..no guarantee of changing behavior



Outcome-Based Programs

• Outcome-Based programs are wellness programs that focus on tangible measurements such as blood tests, weight loss documentation, smoking cessation, etc. with accurate and provable results Focused on specific and measurable outcomes Incentives for biometric results vs. rewards for

participation Improve at-risk employees with rewards Participants are not rewarded for unhealthy outcomes


Outcome-Based Examples

• 4 Basic biometric targets outlined by the Dept. of Labor as reasonable & modifiable Weight Total cholesterol Blood pressure Tobacco use

• Reward for making progress and positive results*http://blog.wgains.com/2012/08/13/wellness-2-0-outcome-based-financial-incentives-for-getting-healthier



The Next Generation of Health and Wellness Programs

Outcome-Based Programs are the next generation• Companies are also rethinking their current incentive

designs and imposing tougher, more specific requirements, including some that are outcome-based

• More than 33% of companies use rewards (or penalties) to discourage tobacco use, a trend that could rise to more than half by 2013

Shift from aggregating data & encouraging healthy outcomes to long term changes in wellness

Long-term healthcare cost savings for employers and employees


Incentives as the Solution

The winning component in Driving Engagement Delivering Outcomes Lowering Costs



Incentives on the Rise

• Approximately 75% of all companies who implement a wellness program use some sort of incentive to do it 43% provide incentives specifically to encourage

participation in biometric screenings 30% offer incentives to engage in healthy lifestyle activities

in the workplace

The combination of wellness and incentive programs helps companies achieve unprecedented benefits for the

employees and the business

Source: 2012 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care


Which Incentives Work Best?Gift Cards are rated

the most effective Incentive1

Wellness Programs and Value-Based Health Care, Third Edition, International Foundation of Employee Benefit Plans, 2012.

1: 2012 Towers Watson


ROI From Wellness Programs


Decrease Health Care Costs Through ROI

• 83% of employers researched indicated a positive return • For every dollar spent on wellness initiatives, most

organizations see between $1 to $3 decreases in their overall health care costs

= Source: Wellness Programs and Value-Based Health Care, Third Edition, International Foundation of Employee Benefit Plans, 2012


Let’s Recap• 70% of employers now offer wellness programs to reduce rising

healthcare costs…..Are you??• Payback is BIG and ROI is strong! Companies who actively

encourage engagement will have $7,000 more per employee annually by 2018 to spend on other aspects…like attracting great talent

• Incentives Work. Productivity increases 22%• Reward employees for participation….but reward MORE for

Positive Outcomes• Gift cards are the reward of choice. 80% of employees prefer

gift cards over other incentives


Government Update


Some Help From The Government

• Provisions in the new reform law offer aid, and even some cash, to small businesses that run wellness and prevention programs for their employees.

• Companies with fewer than 100 employees who work more than 25 hours a week who do not currently have a wellness program can apply for a grant which will be administered by the Department of Health and Human Services, during a 5-year program.

• Only new wellness initiatives -- those launched after March 23, 2010, the date the health reform bill was enacted -- are eligible.

Beginning in 2011, the Patient Protection and Affordable Care Act made available $200 million over five years in grants for small business wellness programs.


Government Sponsored Incentives• Starting Jan. 1, 2014, employers can offer discounts of up to 30% to

employees who participate in employer-sponsored wellness programs, an increase from the current 20%

(This reward could increase to 50% at the discretion of the Secretaries of the Departments of Health and Human Services, Labor or Treasury.)

• Rewards for all goal-based wellness programs cannot exceed more than 30% of the cost of employee-only or family coverage through the plan

The Kaiser Family Foundation’s 2009 Employer Health Benefits nationwide survey found that the average 2009 total premium for employer-sponsored health insurance was $13,375 for family coverage o This means that the additional 10 % incentive increase calculates out to a credit of

$1,337 per employee per year. o The same survey found the single person coverage average for an employer in 2009

was $4,824, which would translate into a $483 additional tax credit in 2014

Source: Can Reform Changes in Wellness Programs Impact Growing Obesity Problems Long Term? By Holly Wright, R.D.


Compliance Concerns• HIPAA regulations require that wellness programs satisfy five nondiscrimination

requirements The program must be reasonably designed to promote health and prevent disease. The program must give individuals eligible to participate the opportunity to qualify for the reward at least once

per year. The reward must be available to all similarly situated individuals. The program must allow a reasonable alternative standard (or waiver of initial standard) for obtaining the

reward to any individual for whom it is unreasonably difficult due to a medical condition, or medically inadvisable, to satisfy the initial standard.

The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of a waiver of the initial standard).

• Americans with Disabilities Act (ADA) Prohibits an employer from discriminating against qualified individuals because of a disability. Limits disability-related inquiries or required medical examinations before and after an employment offer, as

well as during employment. Requires equal benefits for employees with disabilities. A plan’s limitations and exclusions could raise issues

under the ADA, particularly with regard to wellness programs. • Genetic Information Nondiscrimination Act of 2008 (GINA)

Restricts the ability of employers and insurers to collect and disclose genetic information, including family medical history.

If there is a financial incentive offered for HRA completion, then the HRA is not allowed to contain questions about family medical history.

• State Law Concerns State laws may protect certain lifestyle choices

Source: Excerpts from the U.S. Department of Labor’s FAQs about the HIPAA Nondiscrimination Requirements at www.dol.gov/ebsa/faqs/faq_hipaa_


Union OppositionUnions typically oppose rewards that are based on outcomes rather than participation because of concerns about the privacy of employee-provided health information and about potentially unequal treatment of union members by employers.


Who is GiftCard Partners?

• GiftCard Partners is one of the nation's largest developers of corporate B2B Gift Card programs

• We work with companies to help reduce their healthcare costs by offering a variety of gift card incentives to increase program participation and engagement in wellness programs


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