Whether it is a wristband or a smartphone app, wearable healthcare tracking devices give consumers useful data to measure their wellness and progress toward their health goals. Though the primary focus of these health gadgets on consumer health, there are also economic benefits available to employers whose employees use fitness devices.
Tracking Devices and the ACA
In 2014, the Affordable Care Act (ACA) proposed an initiative for employers to receive up to a 30% reduction in the total cost of coverage for offering incentives leading to a healthier workplace. Since 2014, insurance companies, employers, and wellness companies have worked with fitness tracking device companies and app creators to monitor consumer and employee progress. Nearly two-thirds of insurance executives see a significant impact on the healthcare industry because of wearable fitness trackers and feel that their use will soon be widespread.
Access to Wellness Programs
Most often, there are three options to gain access to wellness programs and fitness trackers ― two direct and one indirect. The direct approaches are (1) wellness programs through an employer’s insurance or (2) a wellness company directly in contract with consumers. The indirect method occurs when an employer uses a third-party wellness company to provide devices and incentives to employees. One report found that “46% of employers offer some type of fitness tracker as part of a wellness program.” In addition, Endeavors Partners, a technology consultancy, found that, “nationwide, employers are expected to incorporate more than 13 million fitness tracking devices into their wellness programs by 2018.”
Incentives for Wearing Trackable Devices
Incentives depend on the plan that an employer uses. In certain markets, employers have used healthcare plans like United Healthcare All Savers Motion, which offers $3 each day (totaling $1,095 a year) in deductions to premiums, provided employees meet specific daily goals. Similar plans allow for money not used one month to roll over to the following month. Other insurance companies and wellness companies offer vouchers. Smaller insurers are also providing incentives by giving out devices for free and offering up to $240 in Amazon gift cards annually.
Though the format varies from company to company, the behavior economics behind these incentives is effective: through incentives, employees buy into a wellness program utilizing fitness tracking and are more likely to participate and meet their goals.
Impact on Insurance Rates
Depending on the approach, insurance rates for those consistently using wearable fitness tracking devices can be lowered or augmented. Joe Mondy of Cigna has stated, “incentives for using wellness coaching and/or wearables include about $750 in premium discounts and cash or health savings account funds.” Though there is not a singular approach to providing monetary aide to clients, there are trends depending on company size. For small businesses, plans such as the All Savers Motion plan by United Healthcare seem to offer great options with a three-tiered approach:
- Self-Funded Medical Plan: This plan covers medical expenses of employees and their dependents.
- Third-Party Administration: Third-party administration covers all administrative services (billing, customer service, etc.).
- Stop-Loss Insurance Policy: This covers large claims and protects employers if claims exceed a dollar limit on a given plan.
Concerns About Healthcare Tracking Devices
Although wearable fitness tracking devices are an appealing new method of health monitoring and insurance reduction, employers and employees have voiced several concerns to insurance companies. By far, the two most common complaints are related to confidentiality and accountability.
- Confidentiality
This is the biggest area of concern given the amount of data being collected by tracking devices and then shared among third parties, insurers, and companies. Employees often fear that data will be collected and used in the future to limit health coverage or even deny certain claims, while employers and insurers worry about the legal ramifications of data leaks.
This issue has been curbed by the use of aggregate data collection. When information is shared by insurance companies, it compiles clients only by sex and age and then provides this anonymous data to interested parties. - Accountability
Accountability is another major concern for employers and employees. How can an employer be sure that employees meet their stated objectives? For that matter, how do employees follow through on their exercise goals?
As mentioned before, theories in behavior economics can resolve this issue. When clients are offered extra items (gift cards, cash, etc.) and are able to buy the device at a discount, they are more likely to remain active.
References
Cook, T. (2016, September 18). Payouts of fitness trackers not just in health benefits – they’re monetary, too. Denver Post. Retrieved fromhttp://www.denverpost.com/2016/09/18/fitness-tracker-payouts-health-benefits-money/
Eastwood, B. (2016, July 28). How wearing a fitness tracker can lower your insurance. Tom’s Guide. Retrieved from http://www.tomsguide.com/us/fitness-trackers-insurance,news-23053.html
Lee, M. (2016, September 27). Insurers offer cash, discounts for fitness trackers. Harford Courant. Retrieved from http://www.courant.com/business/hc-aetna-apple-watch-20160927-story.html
Martin, A. (2015, May 21). Step and save: The truth about wearables and health insurance. Wareable. Retrieved from http://www.wareable.com/wearable-tech/step-and-save-the-risks-of-using-fitness-tracker-to-save-on-your-insurance-premium-1163
Pallarito, K. (2016, May 15). Wearables for wellness fit right in. Business Insurance. Retrieved fromhttp://www.businessinsurance.com/article/00010101/NEWS03/305229995/Wearables-for-wellness-fit-right-in
