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Wellness Incentives for Group Policies

Posted September 1, 2013 | Filed under topic Health Insurance Information

New research shows that more and more companies are turning to wellness incentives to manage health insurance costs. 2012 studies from the Society for Human Resource Management or SHRM showed that out of a survey of almost 2000 U.S. employers representing more than 20 million employees, the vast majority, around 84%, offered some type of incentive for either answering health-based questions or getting certain health screenings. These studies also showed the dollars allocated for wellness incentive spending growing throughout the last few years.

Types of Wellness Incentives

Wellness incentives for group policies can be based on particular health outcomes. For example, a program can be targeted toward “smoking cessation,” a single factor that can have a dramatic effect on group policy rates, or toward overall wellness goals like diet and exercise outcomes.

Another difference between wellness incentives is the use of either participation-based incentives, where employees are rewarded for participating in a program, or outcome based incentives where the rewards are given for concrete results. For example, employees who agree to join different kinds of workout sessions, or practice fitness activities like yoga, may get an incentive, where in other companies, they may be awarded for pounds lost, or changes to vital to like blood pressure and cholesterol levels.

What’s Behind Wellness Incentives?

The idea behind these kinds of programs is that employers can save a lot of money. Employees can also save money on their premiums. Getting better rates on a group policy benefits everyone who is involved in the business, assuming that employees share some portion of their policy costs. That’s why a lot of employers are jumping on the bandwagon and creating wellness incentives at work.

Issues Around Wellness Incentives

Although many employees are happy to participate in wellness programs, some others are skeptical. Some love the rewards and compensation that these firms provide, and they welcome the idea of being incentivized to live healthier. Other employees may feel forced to participate, where they may have grievances about privacy policies attached to these programs. In general, companies that have mandated participation or the sharing of private health information have seen a lot of controversy around their efforts.

Effects of Healthcare Reform

Another topic related to wellness incentives is whether the affordable care act now getting implemented in the American healthcare system will have a particular effect on employer wellness incentives.

One of the major aspects of healthcare reform is that individuals will be able to shop for their own policies, rather than relying on employer offer group policies. Still, to the extent that people choose to remain on their employer’s insurance, wellness programs will still be a big driver of lower costs. Health insurance companies calculate risks according to concrete criteria. When employers improve their group health statistics, they will get better rates in return. In many ways, group policy wellness incentives are independent of healthcare reform. They are one of the few ways that group policy managers can negotiate with insurance companies in an era where skyrocketing healthcare costs are a factor in the business models of many enterprises, from large corporations to small businesses and startups.

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