Ignoring ‘wellness’ may cost workers

After years of trying positive incentives, more employers are switching from the carrot to the stick to make workers more responsible for managing their health. The goal is lower health insurance costs for companies and employees alike.

The financial stakes are large for each. The average cost of health insurance for an active employee has climbed above $12,000 annually, according to one survey. Employees pay about one-third of that in premiums and out of pocket expenses, and most employers say they intend to increase the percentage workers pay.

Using the stick carries a risk, though. Some benefits experts say they can alienate workers. And critics are leery of employers intruding in what some people consider the employee’s private life.

Apart from penalizing workers for using tobacco, most employers, including those in Georgia, still rely on positive incentives, such as gift cards, deposits to workers’ Health Savings Accounts and lower insurance premiums. Some critics consider lower premiums for participants a penalty in disguise, since those who don’t participate end up paying higher premiums.

Experts say the trend of more companies using direct penalties is inevitable, and growing.

“It’s still a tiny number, but it’s headed that way,” said Helen Darling, president of the National Business Group on Health. “In three to five years this will be more common.”

At Mohawk, the goal “was not to collect a penalty; the goal was to encourage people to know their biometric numbers so they could make better health decisions with the support, tools and knowledge available confidentially through third party providers,” Phil Brown, senior vice president of human resources, said in an email.

Mohawk’s $100-a-month penalty, he said, “… was significant enough to capture the attention of employees … but not so unfairly punitive” that it would cause “a genuine hardship.”

Johnny Fuller, an information technology worker from Lilburn, opposes mandatory wellness participation and penalties.

“I understand companies wanting to do it to help bring their costs down,” said Fuller, whose employer so far has not used the stick approach. “But people have their own lifestyles. It should be up to the individual if they want to take care of themselves or if they want their own premiums to go up.”

Penalties and results measurements mark a new stage for employee wellness programs.

One example of the evolution is found at AGL Resources, the big Atlanta-based natural gas distributor.

For its wellness program, the company initially offered only free and voluntary health screenings including blood pressure and cholesterol testing, flu shots and a health history questionnaire.

In 2007, it introduced a health appraisal. Employees who completed the health appraisal would get a deposit in their healthcare reimbursement account if they had a high deductible plan. In 2008 the company raised premiums for employees who did not complete the health appraisal. It also added a surcharge for tobacco use.

Currently, employees and their spouses face a $10 a month premium increase if they don’t complete an appraisal. Wellness program participants, meanwhile, can receive up to a $300 cash premium rebate at the end of the year.

Tobacco users are subject to a $10 per pay period charge, but that is waived if they enroll in a tobacco cessation program.

“The power to influence the cost of healthcare, both out of pocket and premiums, is in the hands of each employee …” the company said in an email response to questions about the changes. “Finding ways to manage health costs is good for employees as well as the company.”

Consulting firm Aon Hewitt found that of 800 large and mid-size employers questioned, 83 percent offered health-related incentives. Of those, 79 percent offered only rewards, while 21 percent offered a mix of rewards and consequences, or consequences only.

The survey found that 58 percent plan to impose penalties on those who don’t act to improve their health.

More incentives are being linked to results, not just participation in a wellness program.

Aon Hewitt found one in four employers who use incentives tied them to progress in areas such as BMI, or body mass index.

By itself, “participation doesn’t cut it,” said Tony Holmes, a partner in the Atlanta office of Mercer Health and Benefits. “More employers want outcomes.”

Some feel penalties go too far.

“Americans aren’t the healthiest people in the world. We’d all be better off if we cleaned up our act. And if employers want to help, good,” said Lewis Maltby, president of the non-profit National Workrights Institute. “But sometimes it’s coercive. And sometimes it’s completely unfair.”

He said some people, for instance, have naturally higher body mass indexes.

“For employers to charge more for unhealthy behavior isn’t inherently unfair, but it gets your employer into your private life with no limits,” Maltby said.

Wellness program requirements generally are regarded as legal so long as they comply with federal regulations on health privacy. But discussion continues. The U.S. Equal Employment Opportunity Commission this week heard expert testimony in Washington on the pros and cons of wellness program incentives, including their effectiveness and whether they discriminate against disabled persons or along gender, race or age lines. The EEOC has not taken a position on the issue, a spoksperson said.

Courts in some key cases have supported employer programs. But employers face risks beyond legal challenges, said Prem Bhatia, co-founder of Cooleaf, an Atlanta wellness program provider to employers.

“All the stats in the world will tell you that you’ll get better participation. But with a stick you risk creating a negative environment,” Bhatia said. “It goes in the wrong direction of having a better culture, higher engagement and a more positive environment.”