Why it pays to stay healthy at Target

Target Corp., the largest discount retailer next to Wal-Mart, is testing a new employee program aimed at improving wellness and lowering health care costs, by paying employees to participate.

As part of the new pilot program, Target will pay employees to undergo a health screening and follow recommended steps. Executives hope to turn it into a larger program to help the company and employees save money on health care.

Right now, the program has only been offered to about 4,000 Target employees, including 10% of workers at their Minneapolis headquarters, a distribution center and 11 stores.

"We're going to measure biometrics progress through time," said John Mulligan, vice president of Target Pay & Benefits, in an interview. "How are the average cholesterol scores of our population? How are the average blood pressures of our population?

"We're willing to make the bet that if we see those numbers improve, we will see the financial benefit of that to our team members and to Target. Both of us will share in the cost savings." (Reuters)

Target employees enrolled in the new program were paid $25 to undergo a biometrics screening that included measuring cholesterol, glucose and triglyceride levels, as well as blood pressure, height and weight. Employees were also required to fill out a health risk assessment and register for the program online.

Once completing those steps, employees were given a tailored health plan and were paid $50 each quarter they followed the plan’s recommendation. Employees could also earn $25 for visiting a doctor for annual preventative care.

So far, the program seems to be a success, with 59% of eligible employees at Target’s headquarters completing the first three steps to enroll. Of those who are enrolled, 38% remain “engaged” in the program each quarter.

Target executives are still analyzing the program to see whether they should offer it to all 350,00 of their employees.

“We're trying to engage 350,000 people in caring about their health, their family's health and do it in a way that makes getting and staying healthier easier," said Jodee Kozlak, Target's executive vice president of human resources.

In 2005, Safeway CEO Steve Burd developed a health care plan for his company, similar to Target’s new plan, focused on changing employee behavior and improving the company’s overall wellness to keep health care costs under control.

Over the past three years, most companies have seen about a 16% increase in family premiums, while health care costs for Safeway increased by only half a percentage point. Health care coverage costs among employees enrolled in the wellness program fell 11% after only one year.

In today’s economy, companies are continually searching for ways to cut costs. Finding ways to cut health care costs generally falls in the top spots on that list, but is paying employees to stay healthy the best way to go?

Does your company offer monetary incentives to encourage employees to live healthier? Do you think employee wellness plans like these are the right way to reduce health care costs, or are they going too far?