[March 01, 2012]

New Survey Finds Most Companies Plan to Increase Dollar Value of Incentives Offered to Workers This Year

Most companies plan to increase the dollar value of the incentives they offer employees to participate in health-improvement programs this year, according to a new employer survey conducted by Fidelity Investments^® and the National Business Group on Health (NBGH).¹

The survey is the latest in a series of studies Fidelity and NBGH have conducted since 2009 to analyze the growth of health-improvement programs in the workplace. These programs typically consist of condition-management services (e.g. managing insulin treatments), lifestyle-management services (e.g. weight loss advice) and health-risk management services (e.g. on-site flu shots).

The survey found that almost three out of four (73 percent) companies used incentives in 2011 to engage employees in health-improvement programs and the average incentive value was $460. That figure has steadily increased from an average of $430 in 2010 and $260 in 2009. According to the study, employers used different types of incentives including cash, gift cards and contributions to Health Savings Accounts. The majority (57%) agreed that incentive-based programs had a better than expected success rate at increasing employee participation.

"Incentives have come a long way from a free T shirt and a water bottle," said Adam Stavisky, senior vice president of Fidelity's Benefits Consulting business, which commissioned the study with NBGH. "As companies have increased their commitment and investment in health-improvement programs, they have made their incentives more enticing. They have also learned which programs resonate best with their workforce, whether that involves on-site flu shots or weight loss challenges. Now employers are starting to see results from their efforts."

More Companies Requiring Participation in Health-Improvement Programs

The survey found that a small but growing number of companies are requiring employees to participate in health-improvement programs in order to be eligible for medical benefits. Last year, 5 percent of companies required their workers to complete biometric testing (e.g. cholesterol screening) or be excluded from coverage. That number is expected to nearly double in 2012 to 9 percent. Likewise, 7 percent of companies required completion of a health-risk assessment last year. This year, 10 percent of companies will require it.

"Employers are increasingly expecting employees to take steps to improve their health, conditioning even access to health benefits on meeting certain requirements," said Helen Darling, president and chief executive officer of NBGH. "This isn't surprising given how much control employees can have over their own health and how much poor health habits cost employers."

Incentives Aside, Funding for Health-Improvement Programs Holds Steady

The survey found that, incentives aside, the average employerspent $169 per employee on health-improvement programs in 2011, comparable to $154 in 2010 and up from $108 in 2009.

While smoking cessation and Employee Assistance Programs (EAP) are the most prevalent lifestyle-management offerings in the workplace, healthy cafeteria food options are expected to be introduced by 16 percent of employers this year. Currently, 51 percent of companies offer such choices. Among health-risk management programs, 11 percent of companies are planning to introduce health care advocates (who help employees find medical specialists and navigate the health care system). Currently, 46 percent of companies have advocates. Condition-management programs are expected to remain unchanged from 2011, with companies investing the most in managing conditions related to diabetes and asthma.

Fidelity and NBGH Offer Employers Five Action Steps to Help Maximize Program Effectiveness

The majority (76 percent) of companies surveyed reported they do not know the return on their investment in health-improvement programs. To help employers maximize the impact and effectiveness of their offerings, Fidelity and NBGH offer five suggestions.

• Secure commitment from senior management

Employees are more likely to engage when there is encouragement from senior executives.

• Align programs with the health risks and challenges of the workforce

Determine what the pressing health issues are (e.g. high blood pressure) and offer solutions. Don't offer diabetes management services if that illness is not a significant health risk for most workers.

• Set realistic goals and measure results

Define what the desired behavior is (e.g. weight loss) and track it.

• Offer incentives that appeal to the workforce

Collect feedback from employees on what is appealing and discontinue incentives that aren't working.

• Manage vendors by establishing performance requirements

Employers should consolidate employee data collected from multiple vendors and measure the results. Vendors should be held accountable if the results fall short of objectives.

Methodology

Data for the survey was collected online between Nov. 1, 2011 and Dec. 30, 2011 by the National Business Group on Health in conjunction with Fidelity and is based on responses from a national sample of 139 companies from numerous industries including transportation, health care, technology, entertainment, consumer products, retail and energy. The sizes of the companies spanned a broad range, from 1,000 to 100,000 employees. The results of this survey may not be representative of all companies meeting the same criteria as those surveyed for this study.

About the National Business Group on Health

The National Business Group on Health is the nation's only non-profit organization devoted exclusively to representing large employers' perspective on national health policy issues and providing practical solutions to its members' most important health care problems. NBGH helps drive today's health agenda while promoting ideas for controlling health care costs, improving patient safety and quality of care, and sharing best practices in health benefits management with senior benefits, HR professionals, and medical directors from leading corporations. For more information, visit www.businessgrouphealth.org.

About Fidelity's Benefits Consulting

Fidelity's Benefits Consulting business helps mid to large-size employers nationwide assess the effectiveness of their benefits programs. The business provides a comprehensive approach to benefits design, strategy, funding, communications and delivery by looking at clients' health care and retirement plans before diagnosing business solutions. The group's specialties include retirement and health care plan consulting, custom data administration, compliance and employee communication. Benefits Consulting has offices in Boston, New York City, San Francisco, Chicago, Raleigh and Dallas.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of $3.5 trillion, including managed assets of $1.6 trillion, as of January 31, 2012. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity, Fidelity Investments and Fidelity Investments and the Pyramid Design logo are registered service marks of FMR LLC.

The National Business Group on Health is an independent entity and is not affiliated with Fidelity Investments.

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© 2012 FMR LLC. All rights reserved.

¹ The survey found 52 percent of companies plan to boost the dollar value of their incentives this year.

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