Health Care

The Unintended Consequences of Company Wellness Penalties

Employers may think they’re encouraging healthful habits by charging overweight workers more for insurance. Three new studies suggest that approach may backfire.

07.06.13 8:45 AM ET

Bosses can make you come in on a Sunday morning or cut your vacation short. But can they make you lose weight?

More and more companies are saying yes—and not only can your company encourage you to get healthy, it can punish you for being overweight, usually by raising your health-care premiums.

That’s right—being unhealthy could start digging into your paycheck.

About 18 percent of workplace wellness programs include some kind of penalty for employees who don’t get healthy—and a 2010 survey by Hewitt Associates found that percentage is expected to rise to 47 percent by 2015.

But three new studies on workplace wellness incentives have found that employees aren’t taking new penalty-laden policies lightly.

The studies, published by the Association of Psychological Science (APS) and conducted by four academics specializing in sociology or psychology, all found that employees preferred “carrot and stick” policies and felt threatened by wellness programs with penalties.

Both carrot-and-stick policies are increasingly widespread partially because the Affordable Care Act offers greater incentives for healthy employees.

The studies tested both carrot-and-stick policies, asking survey participants how they would react to policies that either punished overweight employees—with a body mass index (BMI) of 25 or higher—with an extra $500 on health-care costs or rewarded healthy employees with a $500 deduction.

These hypothetical situations aren’t far off from today’s penalty policies: Western and Southern Financial, a financial-services group, charges health-care-premium surcharges to employees with high BMIs. Clarian Health, a Midwestern hospital chain, deducts money from employees’ paychecks for unhealthy behavior, including being overweight.

Although other recent studies have found that people who join group weight-loss programs are more likely to lose weight if there are financial incentives involved, the APS studies found that even money mattered less than punishment.

“Participants disliked stick policies regardless of whether they meant that overweight employees would end up paying the same or less than they would under the carrot policy,” the study found.

The studies also looked at the influence of anti-overweight bias in policymaking. When a group of participants was asked to create hypothetical employer policies, the ones who later admitted to having biases against overweight people chose stick as opposed to carrot policies.

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Study participants who were themselves overweight viewed stick—but not carrot—policies as threatening. And they aren’t the only ones shuddering at the thought of penalties embedded in new workplace policies; a nationwide poll conducted in 2009 that gauged reactions to 16 obesity-related employer policies found the least popular policy was one that charged higher premiums for employees who were overweight or didn’t exercise.

Even though penalty-laden employer policies are on the rise, the study warned policymakers about the unintended effects of stick policies.

Since penalties for overweight or unhealthy employees are a relatively new phenomenon, companies that implement stick policies are particularly vulnerable to legal problems.

And on a basic level, employees who get dinged on their paychecks for not losing weight or exercising are bound to end up resenting their employers. Stigmatization is linked with unhealthy eating behaviors and lower levels of exercise, meaning policies intended to help employees slim down may actually have the opposite effect.

But there’s a sliver of good news for employees scrambling to lose weight before their premiums go up. Now that the employee health-care mandate under Obamacare has been delayed until 2015, uninsured employees may have some extra time to get in shape before their BMI starts affecting their paycheck.