Introducing VP Passport™: A New Health and Safety Solution to Help You Return to the Workplace with Confidence Learn More


VP Passport™

A new health and safety solution

Safely reopen workplaces, ensure health, wellbeing and engagement, and provide valuable guidance as your employees navigate this next phase.

Learn more Schedule a Demo Dismiss

Enter search term and hit Enter

Webinar Q&A: How to Use Incentives to Change Behavior (Not Get Bad Press)

May 31, 2013 / Uncategorized

05.31.13_Incentives blogThank you to everyone who attended last week’s webinar: How to Use Incentives to Change Behavior (Not Get Bad Press).  Missed it? Check out the recording. We didn’t have time to answer all of the great questions we received before and during the webinar, so I’m happy to answer them here on The Uprising.

If you have follow-on questions or a new question, post it in the comments below and I’ll be sure to answer your questions.


What are the best incentives for manufacturing and truck drivers?

Incentive design should take into account a particular company’s culture, so it’s hard to provide a best incentive answer without a number of caveats.  That being said, in our extensive experience with manufacturers and “mobile” workers, we find that cash or cash equivalent incentives work best with a heavier  upfront incentive as these populations need a little bit more of a push to participate than an average employee.


How may Virgin HealthMiles be incorporated into a Cloud-based benefits enrollment or wellness update process?

Virgin HealthMiles can be incorporated into the benefits enrollment process in a number of ways – depending on what’s easiest for customers: 1) Employees are automatically enrolled in the program as part of their benefits package, 2) Employees are given the option to enroll on a pre-existing benefits form (we enroll on the back end), 3) Employees are given the option to enroll, Virgin HealthMiles handles communications to promote the program enrollment.


What are the taxes (if any) that may be needed to be considered when awarding HealthMiles?

While you should consult your finance team for tax advice, there are two scenarios to consider:

  • Company sponsored incentives (such as cash, health care reimbursements, gift cards etc.).  In this scenario, employers need to withhold taxes for incentives provided to employees.  In the HealthMiles program, we provide companies with a list of incentives earned by employee on a monthly basis to our customers’ finance team so they can make the payroll withholding – simple, straightforward process.
  • Virgin HealthMiles funded incentives (such as raffles, sweepstakes, prizes).  These incentives are not directly funded by companies and therefore employers don’t need to report the incentives to the government, withhold taxes, etc.  Virgin HealthMiles is responsible for reporting to the government when prizes/winnings are over $600 per employee.  In this case, Virgin HealthMiles would file Form 1099-MISC and the employee would be responsible for declaring the incentive as income.  Under $600 of incentives earned, Virgin HealthMiles is not required to report the incentives earned by an employee and the employee must determine if he/she is required to declare the incentive as income based on their individual tax situation.  Bottom line, for Virgin HealthMiles-funded incentives, the employer has no requirement to withhold taxes on or report incentives.


What’s the best way to get labor unions to support wellness initiatives/penalties for unhealthy behaviors?

In our experience, labor unions are most likely to follow a successful non-unionized employee program.  Once they see the results and see that the program was provided in an equitable manner, they’re more open to support extending the program to their membership.


How do we motivate older staff that refuses to be healthy?

Older staff/employees are often the most engaged, but you need programs that they can get excited to participate in. Walking programs in particular work well with seniors.


Is there an ROI for wellness? 

Yes, there’s a substantial return on the right wellness investments – what we call Wellness 2.0 programs that are more consumer-oriented and that have been proven to change employee behavior. The ROI benefits come from lower health claim and pharmacy costs, lower absenteeism and presenteeism, lower workers compensation and short-term disability costs.  Unfortunately, there are many studies and articles that treat wellness as one monolithic category even though the term wellness covers a wide spectrum of programs.  While traditional wellness programs such as HRAs and Biometric screenings don’t provide a proven ROI, what we’ve found is that when these programs are coupled with Wellness 2.0 programs (such as Virgin HealthMiles) that put in place an employee engagement platform, they generate substantial behavior change and ROI.

Virgin HealthMiles has conducted over ten 3rd party ROI studies over the past few years with partners such as Mercer, Towers Watson, Aon Hewitt, and the University of Michigan to help us ensure we’re delivering ROI for our customers.  Every study has shown that Virgin HealthMiles delivers a minimum of 2.5X ROI on the investment, with the highest being 4X.  The reason our ROI is so high is because we’re able to change behaviors and health risk factors – shifting inactive employees to active, high BMI to in-range BMI, high hypertension to in-range hypertension.  Because the majority of Virgin HealthMiles customers choose to use validated data (activity tracking devices, health kiosks), we’re able to track employee population risk factor changes in real-time to optimize our programs.  We even have an entire Institute, chaired by Jennifer Turgiss, DrPH, MS that continues to review our data to ensure we deliver ever more positive health outcomes and ROI to our customers


Do you have any low cost, high impact incentive ideas such as end of year rebates for meeting certain standards?

For company-sponsored incentives, our experience has shown that the lowest cost but most controversial incentives are to enforce penalties for not achieving certain health outcomes or participating in certain programs.  Penalties (the proverbial stick), where an employee owes the company money if they don’t meet a standard tend, to get the highest participation and success rates.  That being said, unless these programs are rolled out with the right context – creating a win-win with employees, the higher compliance may come with a large culture cost.

Moving away from sticks, we’re seeing a trend towards providing “carrot” incentives to employees for reaching a healthy outcome or for participating in certain wellness programs.  As was stated in the webinar, these outcome-based incentive programs work best when they’re included in an overall incentive plan that provides more instant gratification rewards such as incentives to sign-up, ongoing participation, etc., and not only payments for outcomes – given we all have the innate tendency to discount future gains.


What would you measure with a stress or financial incentive program?

For stress and financial planning programs, we’ve seen companies use participation milestones to trigger incentives.  For example, here are a few incentive triggers:

  • Taking a stress or resilience survey
  • Participating in a stress or resilience challenge or course
  • Continuing with a stress or resilience regimen (online) for weeks
  • Taking a financial health/retirement readiness assessment
  • Participating in a financial planning/retirement challenge or course
  • Working with a financial planner and putting a financial plan in place


What information needs to be presented in order to get management to agree to adopt an incentive program?

Management teams invariably want a new investment to be worth the money.  For wellness incentives, this means showcasing that they’ll drive the following benefits:

  • Higher participation.  Programs with incentives typically gain 3-5X more participation depending on the incentive amount and program design.
  • Higher engagement.  Programs with incentives keep employees interested for longer.  Virgin HealthMiles’ customers achieve long-term (3 year) engagement rates of 50-80%.
  • Higher participation and engagement means healthier employees – providing lower health claims, pharmacy costs, lower absenteeism, lower presenteeism, lower workers compensation, etc.
  • In addition, if you choose a vendor such as Virgin HealthMiles where the program is fun, social and has a cultural impact on your company, you’ll improve your employee satisfaction and engagement scores.


Are you aware of clients experiencing law suits or any type of legal issues as a result of wellness programs? (i.e., bias against overweight members?)  Do we need to be careful about the types of programs we are promoting?

No, we have never had a lawsuit.  Our programs are designed to offer equal opportunity for participation and points earning regardless of weight, disability, on leave, etc.  Be sure to work with a vendor that understands the nuances of the law and creates programs to ensure you do not put yourself at risk.


How do gift cards and merchandise work as compared to cash and sweepstakes?

Gift cards, merchandise and cash rewards where an individual is certain to earn a reward if they complete a milestone are the best performing incentives – with cash ranking first.  Depending on the program design, we’ve seen sweepstakes and raffle programs perform anywhere from 40-80% as well.


How do you overcome employee hesitation to participate in programs where you’re asking them to contribute their own money?

Asking employees to contribute their own money to join a voluntary program is a tough challenge.  In these situations, we’ve seen only the currently motivated employees join the program, which usually amounts to no more than 5-15%.

Some ideas that we’ve seen to urge employees to join include:

  • Positioning the employee contribution as a deeply discounted ‘perk” – assuming that the contribution is below market price for the program
  • Providing an incentive to all those that participate in the program such as a giveaway, raffle etc.  This would lower the perceived cost.
  • Use ‘refer a friend’ networking to drive up participation by giving a discount to employees that sign-up their friends, colleagues.


Is there some point where incentives can stop and positive behavior has been so conditioned that it continues?

This will depend upon the behavior and how difficult it is to maintain over time.  Smoking and physical activity may need ongoing encouragement as it’s quite easy to ‘backslide,’  whereas healthy eating  and sleep patterns may be more likely to become a consistent behavior whether an incentive is present or not.  There needs to be more research and evidence in this area.


Our wellness program is run by the health insurer (we are self-funded). Is it common for the insurance company to offer these incentive programs or should Human Resources?

It’s not common for health insurer-sponsored programs to include incentives to drive participation in the program.  Incentives are typically funded out of the company’s HR budget.

While not common, some health insurer programs do offer plan-sponsored incentives in the form of raffles, giveaways, and sweepstakes.


What is an example of a sweepstakes-related incentive program?

A sweepstakes-based incentive program can take a few forms, but has the following base components:

  • Prizes are declared for winning the sweepstakes drawing (ex. iPad, Spa treatment, etc.).  The amount of prizes is proportional to the number of entries (growing prize pool)
  • Entries are earned for participation in a program, completing certain actions, hitting certain milestones
  • A random drawing is held to select winners
  • Winners receive prizes

Programs with  a fixed prize are more accurately defined as a raffle


What is your opinion on wearable activity bands (FitBit Flex, Nike FuelBand, Jawbone UP, etc)? How do you recommend incorporating them into your wellness plans with positive incentives to keep the employee engaged over the long term?

Wearable activity devices, such as those noted above and Virgin HealthMiles’ activity tracking device, are terrific engagement vehicles.  There are many studies showing that the daily, continuous feedback provided by activity devices motivates people to be more active, continue their streaks and stick with their goals.  Seeing your steps increase throughout the day is either an immediate positive reinforcement or an immediate motivator – the key being immediate.  At Virgin HealthMiles, our highest engagement and success rates are when employees track their daily activity and receive incentive points based on meeting daily step goals.

While not giving away too much of our secret sauce, our standard program with activity devices, that has proven to keep engagement for 3,4,5 years (assuming a points-based system that converts to incentives), includes elements such as:

  • Points for daily uploading of activity
  • Points on a tiered basis for meeting activity thresholds – example > 7,000 steps, > 12,000 steps
  • Points for streaks of 5 days or greater
  • Levels where employees accelerate their earning potential by reaching certain milestones
  • Points for participating in/initiating monthly and quarterly activity challenges


What’s your opinion about intrinsic motivations (i.e. achieve a level and the company will donate money to a charity or school of your choice)?

Our data indicates it’s an effective incentive to enable employees to contribute to a charitable organization through earning points from a wellness program.  Its effectiveness lies somewhere between entries to a raffle and cash.


You mentioned $150 as magic number. We are limited to a $75 ‘gift’ or incentive for our employees because of tax reporting issues/rules. Since we are limited to that amount would you still recommend that we offer the incentives for our wellness program?

Yes, any incentive will deliver greater results than no incentive.  Based on our experience, we suggest offering the $75 for hitting three milestones to get the best sustained engagement:

  • $25 for sign-up or initial participation (HRA completion or Activity program sign-up)
  • $25 for reaching a level of participation (participation in a challenge based on the HRA results or reaching an activity milestone such as 150,000 steps in 30 days)
  • $25 for reaching a milestone in 6 months (2-3 wellness program completions, higher activity level, etc.)

If the goal is to drive sign-ups and participation and not necessarily to generate the greatest number of people engaged after 6+ months, the incentive should be more heavily weighted for initial sign-up/participation.


You talked about positioning with the stick in a positive way. Can you give some examples of how to make this work successfully?

Positioning sticks positively is all about setting the right context.  Here are some guidelines:

  • Ensure the wellness program is based on the fact that the company genuinely cares about employees’ health and wellness
  • Highlight the significant increase in focus and spending on health and wellness programs over the last few years despite rising health costs
  • Highlight the practical matter that rising healthcare costs and new government regulations are forcing companies to partner with employees on their health (for employers like yours that choose to continue to offer health insurance)
  • If possible, provide the penalty (stick) in conjunction with an increase in program spending so that the stick is really taking away a new benefit versus reducing an employee’s benefits from a prior year.  For example, offering to increase the contribution to every employee’s HSA by $150 in a given year while putting in place a penalty for not hitting wellness targets of $150.


Have more questions? Post them below in the comments and we’ll answer them here on The Uprising. Then be sure to subscribe and stay tuned for responses to your questions.

Leave a Reply

Your email address will not be published. Required fields are marked *