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  • Writer's pictureWellness Workdays

Participation-Based vs. Outcome-Based Wellness Programs

Over the past 30 years, it has become increasingly commonplace for employers to consider the pros and cons of financially incentivizing their employees to participate in worksite wellness programs.

Participation-based wellness programs first came into popularity with the advent of corporate wellness programming in the 1990s, while outcome-based programs were introduced at the turn of the century in 2001.

There are very few legal restrictions on participation-only programs as they typically provide simple activities and rewards to introduce employees to wellness. The incentives are generally perceived as fair and attainable because they can be achieved by all employees, including those whose health status is less than optimal. However, telling employees about their risks and providing education does not necessarily lead them to take action, nor does it result in long-term sustainable behavior change. Another downside is that determining the ROI can be difficult and may take years to see results.

Many employers try a combination of incentives to support their wellness programs. Best practice recommendations for maximizing employee engagement and minimizing employee backlash or dissatisfaction is for employers to start with a participation-based program design for the first two-to-three years. As long as there is a good culture fit as well as a foundation of trust and engagement within the organization, the employer can then move to an outcome-based incentive model.

Most employers start a wellness program to improve employee health and productivity and/or reduce their health care costs and are thus looking for these outcomes. So, the term outcome-based wellness program could be construed as confusing.

Outcome-based wellness programs are incentive-based strategies/plans used to motivate employees to improve their health. These programs are typically measured by attaining certain results on biometric screenings or completing specific tasks, etc. If the wellness program is successful, it will improve employee health measurably and reduce medical spending.

Outcome-based programs reward employees for being healthy, staying healthy, or improving their health. Employers that implement this strategy are legally required to offer reasonable alternatives to those who cannot meet the required targets.

Improving the health of human beings involves a strategic focus on behavior change. Key ingredients include raising employees’ health awareness, motivation (with a blend of intrinsic and extrinsic), and providing the tools and skills needed to succeed in a supportive environment that makes it easier to adopt and sustain life-long healthy behaviors.

Wellness programs must be legally compliant with the Affordable Care Act and subsequent guidelines from various federal agencies and recent clarifications. Using “carrots instead of sticks" and making wellness program participation voluntary (vs. forcing people to comply or punishing non-compliance) is warranted to avoid the suffering of morale, unimproved health measurables, and no significant reduction in health care costs.

Here are the basic guidelines outcome-based wellness programs should follow:

  1. Allow employees to qualify for a reward at least once per year.

  2. Any offered incentives or rewards must not exceed 30% of the total cost of health care coverage; if the program is designed to prevent or reduce tobacco use, the reward must not exceed 50%. *

  3. The wellness program must be designed to improve health.

  4. The employer must offer and communicate the availability of a reasonable alternative standard.

*i.e., the company must not offer incentives that total up to 30% of the total cost of their healthcare spend. Typically, health insurance per employee costs between $5000-6000/year; 30% is $1500-1800, representing the maximum amount that can be used as a program incentive. (Companies are rarely seen to pay more than $1500 pp/year.)

The key to customizing an incentive strategy for a particular company is to implement a process whereby the wellness coordinator and wellness committee gain a sense of ownership by having input, generating ideas, and selective activities ties to earning point values. The questions to ask during this process are:

  • How do we motivate employees to adopt and maintain healthy behaviors they can sustain lifelong?

  • If we provide monetary incentives to employees, what are the best areas of focus to incentivize?

  • How do we treat employees with respect while making them feel motivated and encouraged to participate in a wellness program and create healthy goals?

  • How do we measure biometric data as a program requirement without punishing those who demonstrate high areas of risk such as high LDL cholesterol, high blood glucose, obesity, hypertension, etc.?

  • How do we reward employees for being low risk while also allowing those with elevated health risks to benefit from the program, and the knowledge of their biometric data, without feeling discouraged?

  • How do we avoid concerns of employee privacy, data confidentiality, and security?

  • How do we best use today’s technology (electronic platforms/portals/apps/wearable devices) to verify employee participation by allowing them to easily report or upload their data, and automatically monitor their progress? (In simplest ways so that employees do not experience a probing of their clinical detailed PHI)

See an example of a detailed wellness program implemented by Wellness Workdays for an existing client below. The wellness program the activities and requirements involved in both the participation- and outcomes-based programs.

Participation-Based program:

Program Requirements:

Rack up 500 points to earn an incentive.

Combination of Participation & Outcomes:

Program Requirements:

Reach the bronze tier to earn a gift card; reach the silver or gold tier to earn entry into a raffle for a large prize.

Bronze Tier:

  • Complete the Health Risk Assessment

  • Complete a Biometric Screening

  • Complete 2 coaching sessions

Silver Tier ( Meet all of the above plus: )

  • Meet 3 out of 5 health targets or complete 2 additional coaching sessions

Gold Tier: ( Meet all of the above plus: )

  • Complete a 6-week online workshop

  • Complete one wellness challenge


Program Requirements:

Meet all the requirements below to earn an incentive:

  1. Complete the Health Risk Assessment

  2. Complete a Biometric Screening

  3. Attest to being tobacco-free OR complete a tobacco cessation program

  4. Meet all biometric goals or make a 5% improvement on previous biometrics. If you do not meet the goals or improve, complete two coaching sessions to meet this requirement.

Summarily, if a company is serious about "bending the spending trend," it must be strategically sincere and thoughtful when implementing a wellness program that measurably improves employee health. There must be a culture of leadership buy-in and environmental supports. Ultimately, for the medical cost trends to bend, employee behavior must change.




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