NOTE: The opinions in this article are the author’s and do not necessarily represent the views of Shortlister
When brokers and employers hear the term “wellness challenge,” the first thing that often comes to mind is the classic 10-week step challenge, circa the 1990s. Veterans of the wellness industry may picture a more advanced program like multiple challenges with different themes throughout a year. Few, however, think of a continuous wellness challenge. That is slowly changing as more employers adopt these types of programs.
Traditional vs. Continuous Wellness Challenges
While traditional wellness challenges are great, especially when multiple ones are offered throughout the year, they often have certain limitations. Most notably, these types of programs do not fully embrace a healthy lifestyle in that personal health and well-being doesn’t really take time off the way periodic challenges do. For employers who are more focused on more than employee engagement, periodic challenges may not help them achieve their employee health goals. This is where continuous wellness programs can help.
Continuous wellness programs don’t have a defined start and end date – they are “active” all the time. For example, a continuous wellness program is one that has a challenge that runs every month or every quarter; the end of one challenge is the beginning of the next. These programs typically do not involve teams and often have larger reward budgets.
With all the discussion about the AARP vs. EEOC court ruling and its impact on wellness incentives, it is important to note that continuous programs can include clinical elements, but since these activities are not done regularly (annual screening vs. daily activity), it is certainly not required and, in the opinion of the author, not recommended. By not including clinical elements into a continuous program, the impact from regulatory standards is minimal. As noted in an earlier Shortlister blog, programs capturing medical information will be impacted the most and will have the greatest pressure and limitations on incentive structures.A good example of a continuous wellness challenge is the program HSA Health Plan offers its members. In short, HSA Health Plan members have the opportunity to earn $20 a month deposited into their HSA by taking at least 8,000 steps in 20 or more days in the month. The details of the program (what is being tracked, reward amount, etc.) can differ from each continuous program, but the common element will always be that the program is fluid in that it is always running and does not have break periods between challenges.
Best Practices For Structuring Continuous Challenge Rewards
Timing Of Rewards
Behavioral economics introduced “present bias” into the lexicon describing individual behavior. Essentially, present bias suggests that individuals value rewards in the present more than equivalent rewards in the future. In addition to present bias, research also suggests that delivering a reward as close to the completion of a given task strengthens the connection between the two. Think of Pavlov’s dog classical conditioning experiment; if the bell didn’t ring until hours after the food was given to the dogs, the connection between the two would be weaker (or non-existent).
Despite this research, employers often choose to create programs that have employees complete activities over the course of a year and reward them at the end of the year. For example, a common incentive structure is to have employees qualify for a premium differential the following year. This contradicts individual bias to value a reward today vs. the future (present bias) as well as creates a weak connection between an activity and the reward.
When running a continuous program, it is strongly encouraged to make reward delivery as frequent as possible. This makes small accomplishments meaningful, increasing the value of rewards by addressing the present bias, and linking behaviors to the associated reward. These all are big wins for the employer and the employee. While having daily rewards would be ideal, the administrative burden may make this too difficult to manage for employers. Reward delivery should not occur less frequently than monthly.
Another benefit of frequent rewards is that it resets the clock for each program period. For example, in programs that reward at the end of the year, many employees who don’t start from day one feel like catching up is not attainable and decide to postpone participation to the following year. This comes at the cost of the employer and the employee. When a program resets every month, an employee always has opportune times to join the program without delay.
Diversity In Rewards
There are so many options for rewards these days, including gift cards, cash, paid-time off, premium differentials, health savings account (HSA) contributions, and more. It should come as no surprise that individuals value these rewards differently, and as such, the best way to optimize a wellness rewards program is to allow employees to choose the reward they most prefer and will be motivated by. It is also important to allow them to change their choice in the middle of the program because their preference may change.
Similar to the timing of rewards, employers often avoid creating diverse reward offerings because of the administrative burden it may present. The good news is that there are ways through third-party vendors and internal processes to ease the administrative burden of having diverse rewards so employers should not feel limited in this regard.
Tiers In Rewards
Most wellness reward programs operate by delivering an incentive after an employee achieves a milestone or meets a goal. For many elements of a wellness program, these goals should vary from participant to participant. For example, having a single daily step or activity goal for each person is unreasonable. For some participants, the goal is too low to elicit any behavior change and for others it is so high that the employee decides it is not even worth participating.
To address this issue without creating unique goals for each user, employers should enact a tiered rewards program. To keep things simple, let’s assume steps are the only thing being tracked in the program and rewards are delivered monthly based on the average number of steps taken per day in a given month. Rather than creating a single step goal (e.g., 8,000 per day) that has a binary outcome (an employee surpasses it or not), employers should create tiers such as 2,500 average daily steps, 5,000 average daily steps, etc. that each have a reward tied to it. This accomplishes several things. First, employees at all levels will be compelled to participate because the first tier is attainable. Second, each time an employee crosses a tier, the next tier is within range, which will continue to motivate them to increase their activity level. In the 8,000 average daily steps model, there is no incentive for a person who crosses the threshold to keep working. In a tiered approach, everyone is motivated to reach the next tier.
Below is a sample rewards program that addresses all the best practices noted in this post. The rewards are paid frequently (monthly), employees can choose the prize that best motivates them, and the tiers encourages everyone to participate and improve incrementally.
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Article By Nick Patel
Nick Patel is the President and Founder of Wellable, a wellness technology and services solution for organizational health and well-being. He is also an Adjunct Professor at George Washington University’s School of Medicine & Health Sciences