Financial rewards for employee healthy behavior

Evidence Rating  
Some Evidence
Evidence rating: Some Evidence

Strategies with this rating are likely to work, but further research is needed to confirm effects. These strategies have been tested more than once and results trend positive overall.

Health Factors  
Decision Makers

Employers can offer payments, credits toward health insurance premiums, or other financial rewards to encourage employees to lose weight, eat more healthily, quit smoking, engage in physical activity or other healthy behaviors. Employees may earn these rewards for joining health programs, engaging in selected activities, or meeting physical standards1.

Expected Beneficial Outcomes (Rated)

  • Improved attainment of short-term health goals

Other Potential Beneficial Outcomes

  • Improved weight status

  • Reduced employer health insurance costs

  • Reduced absenteeism

Evidence of Effectiveness

There is some evidence that offering financial rewards for healthy behavior helps employees reach short-term health goals2, 3, 4. Additional evidence is needed to confirm long-term effects5, 6.

Rewards increase program participation and can help employees reach short-term health goals in some circumstances5. Workplace interventions offering financial rewards for weight loss can result in modest weight loss after one year, although such programs often have high attrition rates4. Financial incentives can encourage more weight loss than program participation without incentives2, 3. One workplace wellness program study suggests temporary reductions of health care premiums may not have a significant effect on participants’ weight loss; experts recommend different incentive designs or larger incentive amounts7. In a study of smoking cessation, employees who received a financial reward were more likely to have maintained abstinence at six months compared to those who received only informational resources and free smoking cessation aids; although many participants resumed smoking after one year, suggesting a need for on-going incentives8.  

Effects appear strongest for larger rewards and rewards delivered soon after participants adopt the target behaviors9. Studies suggest modest financial incentives may increase employees’ healthy food purchases and vigorous and strength training exercise at on-site facilities. However, tailoring is needed to ensure incentives appeal to individuals who may benefit the most from participation, those who typically purchase less healthy foods or report less exercise at the beginning of the program10, 11.

Poorly constructed programs, however, may encourage gaming or unhealthy behavior12, and can increase disparities in health care coverage if they penalize disadvantaged persons less able to reach health goals13. Tying large incentives to health status can lead to unfair cost sharing for employees less able to participate, such as shift, part-time and off-site employees, who may also experience increased health risks14. Financial incentives may also undermine motivation to continue healthy behaviors once rewards end9, 15. Experts therefore suggest pairing rewards with health programs that encourage participation, progress towards health goals, and lifestyle change13.

One study suggests group incentives may motivate greater weight loss, depending on design and reward amount, compared to individual incentives16; however, a study of incentives for smoking cessation and physical activity finds no difference between individual and group incentives8. Still another study of incentives to increase physical activity suggests that the opportunity to earn an individual incentive in addition to an incentive as part of a team leads to the greatest increase in physical activity, though there was no difference at follow up between approaches7.

Workplace wellness initiatives that include financial rewards for healthy behavior can generate cost savings; savings result from reduced absenteeism, lower use of health care services, or reduced workers compensation and disability claims, and generally begin two or more years after implementation13.

Impact on Disparities

No impact on disparities likely

Implementation Examples

A national CDC survey of employers suggests slightly more than half of worksites with health promotion programs include incentives for employees to earn through participation, achievement of a health standard, or both17. The Health Insurance Portability and Accountability Act (HIPAA) requires that employers offer reasonable alternatives for employees medically unable to reach those standards13, though different rules apply to participatory wellness programs, which do not base rewards or penalties on health status18.

Common types of incentives include cash, gift cards, merchandise, paid time off, and health plan premium discounts; for example, wellness programs which use defined health targets may reimburse employees up to 30% of the total cost of health care coverage or up to 50% if tobacco-related components are included18.

Implementation Resources

CDC-Workplace health - Centers for Disease Control and Prevention (CDC). Workplace health promotion: Resources, tools, and programs.

O’Donnell 2012 - O’Donnell MP. Financial incentives for workplace health promotion: What is equitable, what is sustainable, and what drives healthy behaviors? American Journal of Health Promotion. 2012;26(5):iv–vii.

TCHS-Workplace wellness 2015 - Transamerica Center for Health Studies (TCHS) and Institute for Health and Productivity Studies. From evidence to practice: Workplace wellness that works. Baltimore: Johns Hopkins Bloomberg School of Public Health; 2015.

Footnotes

* Journal subscription may be required for access.

1 Sutherland 2008* - Sutherland K, Christianson JB, Leatherman S. Impact of targeted financial incentives on personal health behavior: A review of the literature. Medical Care Research and Review. 2008;65(6 Suppl):36S–78S.

2 John 2011* - John LK, Loewenstein G, Troxel AB, et al. Financial incentives for extended weight loss: A randomized, controlled trial. Journal of General Internal Medicine. 2011;26(6):621–6.

3 Volpp 2008 - Volpp KG, John LK, Troxel AB, et al. Financial incentive-based approaches for weight loss: A randomized trial. Journal of the American Medical Association. 2008;300(22):2631–7.

4 Cawley 2013a* - Cawley J, Price JA. A case study of a workplace wellness program that offers financial incentives for weight loss. Journal of Health Economics. 2013;32(5):794-803.

5 O’Donnell 2012 - O’Donnell MP. Financial incentives for workplace health promotion: What is equitable, what is sustainable, and what drives healthy behaviors? American Journal of Health Promotion. 2012;26(5):iv–vii.

6 Paul-Ebhohimhen 2008* - Paul-Ebhohimhen V, Avenell A. Systematic review of the use of financial incentives in treatments for obesity and overweight. Obesity Reviews. 2008;9(4):355–67.

7 Patel 2016 - Patel MS, Asch DA, Troxel AB, et al. Premium-based financial incentives did not promote workplace weight loss in a 2013-15 study. Health Affairs. 2016;35(1):71-79.

8 Halpern 2015 - Halpern SD, French B, Small DS, et al. Randomized trial of four financial-incentive programs for smoking cessation. New England Journal of Medicine. 2015;372(22):2108-2117.

9 Marteau 2009* - Marteau TM, Ashcroft RE, Oliver A. Using financial incentives to achieve healthy behaviour. BMJ. 2009;338:b1415.

10 Thorndike 2016 - Thorndike AN, Riis J, Levy DE. Social norms and financial incentives to promote employees’ healthy food choices: A randomized controlled trial. Preventative Medicine. 2016;86:12-18.

11 Crespin 2016 - Crespin DJ, Abraham JM, Rothman AJ. The effect of participation in an incentive-based wellness program on self-reported exercise. Preventative Medicine. 2016;82(1):92-98.

12 NIHCR-Tu 2010 - Tu HT, Mayrell RC. Employer wellness initiatives grow, but effectiveness varies widely. Washington, DC: National Institute for Health Care Reform (NIHCR); 2010. Issue Brief No. 1.

13 Volk 2012 - Volk J, Corlette S. Premium incentives to drive wellness in the workplace: A review of the issues and recommendations for policymakers. Washington, DC: Georgetown Health Policy Institute (HPI), Georgetown University; 2012.

14 RAND-Mattke 2013 - Mattke S, Liu H, Caloyeras JP, et al. Workplace wellness programs study: Final report. Santa Monica: RAND Corporation; 2013.

15 Mantzari 2015 - Mantzari E, Vogt F, Shemilt I, et al. Personal financial incentives for changing habitual health-related behaviors: A systematic review and meta-analysis. Preventive Medicine. 2015;75:75-85.

16 Kullgren 2013a - Kullgren JT, Troxel AB, Loewenstein G, et al. Individual vs. group-based incentives for weight loss: A randomized, controlled trial. Annals of Internal Medicine. 2013;158(7):505-514.

17 Linnan 2019 - Linnan LA, Cluff L, Lang JE, Penne M, Leff MS. Results of the Workplace Health in America survey. American Journal of Health Promotion. 2019;33(5):652-665.

18 KFF-Pollitz 2016 - Pollitz K, Rae M. Workplace wellness programs characteristics and requirements. Menlo Park: Henry J. Kaiser Family Foundation (KFF); 2016.

Date Last Updated