Many people know about HIPAA law and the fact that it allows companies to charge different premiums on their insurance plans based on participation in wellness initiatives and health outcomes. What most people don't know is how to implement such incentives as a lower premium without backlash from employees and creating dissension among its ranks. This question is often posed as a dichotomy of using the carrot or the stick: the carrot meaning you provide the employees with a financial incentive and the stick being you take a financial disincentive from them.

Unless your customer can afford $500 or more per employee as an incentive, the carrot is not a viable option. Instead, the broker needs to help the customer deliver a message to turn that stick into a carrot.

The first step is to discuss with the customer the anticipated wellness insurance increases. What is the expected increase? How much will the company eat of the increase? How much will be passed on to employees? Take the number passed on to the employees and add $20 per paycheck. No one will know that this number was not part of the standard insurance increase. After the dust settles on open enrollment, the company can announce its new “carrot” to the employees: “Because Company XYZ cares about our employees, we will be offering a great new wellness initiative this year. If you participate in the plan or reach certain health outcomes, we will pay you $520 by putting $20 in every paycheck throughout the year.” Not only did it not cost anything, but the company will actually earn money from all participants that do not participate. We'll get to that next.

2. Budget Neutral

The second benefit that comes with this approach is that it can actually make an entire wellness initiative budget neutral for the company. What helps guarantee this result is to split the incentive and provide half of the money for merely participating in certain components of the wellness program and the other half for healthy outcomes. By implementing this methodology, you will not discourage the unhealthy employees who need it most by offering the incentive to those who are already healthy. You also make it necessary for all employees to participate in behavior change programming. This will enable you to improve the health of your least well employees, while taking steps to prevent your relatively healthy employees from getting ill.

The inclusion of a health outcome in this model will guarantee that some percentage of employees will not earn their entire incentive. The law of averages will play out and roughly 20 percent of participants will not qualify for this half of the incentive, and 5 percent of employees will not participate at all. This means the company will have earned a budget of almost $100 per participating employee, which will pay a big chunk of the cost of running the wellness program. If management wants to provide more revenue for a more intensive program, they just need to work with the variables a bit, such as raising the total incentive amount or providing stricter criteria to qualify for the outcomes-based portion of the incentive.

Now you have an answer to answer the million-dollar question:“What's the ROI on this wellness program?” Any savings is providing positive ROI because the program is not costing them a thing and will result in a healthier, more productive environment.