Issue: More employers are turning to incentives and penalties to increase participation in on-site health-risk assessments.
Benefit: Attracting employees to this first step can improve their health, which cuts your costs.
Action: Use the advice below to choose the best approach for your organization.
When Illinois-based Westell Technologies launched a health-risk assessment program in 2003, the company hiked premiums by 10 percent for employees who refused to take the program's blood test. More than 70 percent of employees participated.
Two years later, Westell tightened the noose further, withholding $10 from the pay of employees who didn't take the test. That pushed participation to 90 percent.
Westell's disincentive approach is unique. Most organizations use incentives, such as cash rewards and health premium discounts, to encourage participation in health screenings.
It's not clear which approach produces the highest participation rates, but experts agree on two things: Both strategies can cut health care costs and yield a return on investment ratio of up to 13-to-1. That's because health screenings detect costly problems like diabetes, high blood pressure and heart disease.
"What works best depends on the age and education of employees, how HR communicates the program, the industry sector and whether there are manufacturing, distribution or service operations," says Kerry Finnegan, a health and benefits consultant with Mercer Human Resource Consulting.
Disincentives: Westell says disincentives work well at the 480-employee telecom manufacturing firm because the company has a centralized work force of mostly labor, assembly and service employees.
To spread the word about health-risk assessments, Westell puts forth employees who discovered treatable health risks to champion the program. Since 2003, insurance costs per employee have declined by about 30 percent, says Westell's HR director, Gary Hansen.
Disincentives do have their downsides and detractors.
"They seem controlling and can hurt morale over the long term. I'm for incentives more than disincentives," says Tracy Koll, executive VP of HR for Atlanta-based NCDR.
Incentives: Cash incentives are effective for a variety of industries. Organizations generally award employees anywhere from $10 to $200 to attend a health screening, says Diane Murphy, a health benefits consultant for Watson Wyatt.
Companies that pay $50 to $100 are likely to gain a 60 to 70 percent participation rate.
Final tip: Communicate health-screening benefits beyond the initial incentive or disincentive. Use your company Web site, mailings, pamphlets and bulletin-board postings. Use employees as champions.
"Having senior folks lead the charge on the values and benefits can lessen the need for incentives," says Mercer's Kerry Finnegan.