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Financial Incentives for Healthy Lifestyles: Who's Doing It, What's Legal and Where's the Evidence?

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Employers are increasingly offering incentives financial incentives to improve employee engagement in health and productivity programs. According to the 16th Annual Employer Survey on Purchasing Value in Health Care, 58% of large employers use financial incentives to promote healthy behaviors and improve health outcomes. Incentive designs that include outcome-based incentives and access to premium health plans are become increasingly popular with 33% of employers planning to implement an outcome-based design in 2012.

While incentives have become quite popular, they must be carefully designed to avoid several pitfalls. For example, employers must be sure to comply with a range of federal and state laws; in particular, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) imposes privacy requirements on health plans, and the portability provisions prohibit health plans from discriminating against enrollees on the basis of health status. In addition, the Americans with Disabilities Act (ADA) and federal tax laws must be considered.

This toolkit provides information about how to offer financial incentives while complying with the law. It also provides evidence of what incentives appear to be the most effective based on the limited research that is available. Finally, the toolkit presents examples of companies offering incentives to illustrate how this can be done successfully.

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