Surcharge for Poor Health Habits

April 4th, 2013 by Andrea Bennett

More companies are adopting incentives for good health and disincentives for those who aren’t as careful.

Brought to you by Liberty Mutual's
The Responsibility Project

In the last week, one of the nation’s largest convenience store chains has sat under a bright spotlight for its latest initiative – requiring all employees who participate in a work-provided health plan to undergo an annual health exam for (among other things) blood sugar, blood pressure and body mass and weight, and share the results with the company.

If employees of this company don’t schedule their checkup within the next year, they’ll be assessed a $600 annual surcharge, in the form of a recurring $50 monthly fee, on top of their regular premium cost.

In an email to reporters, the company cited the growing use of health screenings by employer-sponsored health plans, with a National Business Group on Health survey finding that 76 percent of employers who offered a health assessment in 2011 also offered incentives for completion.

A USA Today story noted that health incentive programs gained new popularity after a 2006 change to health care laws that clarified the legality of some incentives over others. The paper reported that 54 percent of employers offered the programs in 2012, up from 49 percent in 2010.

The company, which wrote to its employees that they would not only have to manage their numbers (as in weight and blood pressure, etc.), but also need to be smoke-free or signed up for the company’s tobacco-cessation program to avoid the surcharge, has been loudly criticized for coercion since it made the policy public. According to critics, the policy is not so much incentive for good health as it is a penalty for not being in great shape. 

But a Forbes article indicates that plenty of other companies are already headed in this direction. According to new data from Aon Hewitt, the global human resources consultancy, nearly 60 percent of U.S. employers plan to “impose consequences on participants who do not take appropriate actions for improving their health.” 

Jim Winkler, chief innovation officer for health and benefits at Aon Hewitt, told Forbes that as more and more companies adopt the belief that employees must be on a path to better health, “Employers are increasingly adopting this type of ‘house money/house rules’ approach. Whether it’s through a reward or consequence, they are reserving a portion of their health care dollars for those employees who exhibit good health behaviors or who can show measurable progress toward their health goals,” he said. 

And despite the concerns about worker privacy, Forbes noted, employers only know that workers took the test – not how they turned out. The tests and screenings are designed for employees to manage themselves. 

What are your thoughts on incentives (and disincentives)? Would you be more likely to make choices for your own health if your money were on the line? And do you think the new measure is coercive, or just a sign of changing times?