Using Health Incentives … on Healthy Things

Besides wanting to get the most out of their human capital, there’s a good reason for companies to be concerned with how healthy their employees are.

“Although few people realize it, employee health costs have now become the third-largest expenditure for U.S. businesses today, constituting a whopping 8 percent of total compensation. And they are rising fast, more than doubling in just the last decade to more than $15,000 a year for family coverage,” Darrell Moon, CEO of wellness program provider Orriant, wrote in an editorial.

Hoping to slow the increase in health costs for their companies, many employers use incentives to encourage workers to participate in wellness programs and corporate health screenings. The incentives usually come in the form of gift cards or cash.

How much value do employers get out of the $250 to $450 dollars a month they spend on each employee?

It’s hard to know, but health startup United Preference is trying to make sure incentive programs work, and it’s trying to analyze how they do. Its system, which uses a currency United Preference calls Tailored Spend, ensures that employees use the incentive money on things like healthy foods and supplements.

“As a health plan or even as an employer you want to know that the funds that you’re giving your members are going toward things that they want that are driving behaviors — but also aren’t being spent on things like cigarettes and candy bars,” United Preference CEO Mark Hall said.

United Preference is counting on incentives like electronics, spa products and yoga packages to drive good employee behavior. The same Tailored Spend card can also be used to buy benefits like over the counter medication.

All purchases are recorded on a software program so that employers can look at analytics to figure out exactly what their employees spent the incentive money on. The tracker also makes sure that whatever isn’t spent gets returned to the employer or health plan.

At the end of the month, incentive programs really only work if they help to lower insurance costs.

“We have had discussions with some very significant health plans who are talking about premium reduction programs and even leveraging our card to administer those premium reductions,” Hall said. He wasn’t able to say who those health plans are yet.

United Preference is a recent graduate of Chicago startup incubator Healthbox. United Preference COO Pamela Hall said that when she and (husband) Mark came into the program, all they had was a well-thought out idea. Mark said the company will announced the health plans and employers it’s working with when it rolls out its initial pilot programs within the next two months.

Health 2.0