Incentive Program

An incentive program is any plan feature that pays or rewards members for a specific behavior: completing a health assessment, using a preferred facility, picking a generic drug, seeing a primary care doctor before a specialist, or getting a second opinion before surgery. The reward can be cash, an HSA deposit, a premium discount, or a gift card.

The rules around incentives are more detailed than most people expect. Under HIPAA and the ACA, a wellness incentive tied to a health outcome can't exceed 30 percent of the cost of coverage, or 50 percent when it involves tobacco. Incentives tied simply to doing something, like using a lower-cost facility, don't face that cap. Cash and gift cards are taxable income; premium discounts and HSA deposits generally aren't. What works, from the programs I've watched: rewards of $100 or more, paid within a pay cycle, for decisions that happen at a moment the plan can see coming, like a scheduled surgery. What doesn't: $25 for a wellness portal login, paid at year end.

The takeaway: aim incentives at the handful of decisions that move plan cost, and pay them fast. A $250 reward for choosing a $3,000 procedure over a $9,000 one is a bargain for everyone at the table.