Fit to Be Paid: The Dynamics of the Wellness Reward Market

November 13, 2008


San Francisco, CA, USA November 13, 2008

With the rising cost of healthcare, employers are exploring a number of ways to keep costs down. One increasingly adopted approach is the complementary use of wellness programs and rewards as a way to encourage employees to address their health before medical problems occur. The aggregate opportunity is huge: Celent estimates that the wellness reward market will grow to over $2.7 billion by 2013.

Given the positive ROI of wellness programs, employers are very interested in gaining employee participation.  The key to elevated participation is clear: use of incentives and rewards. The attractiveness of paying employees to take care of themselves is catching on in corporate circles.  Celent estimates that, in 2008, about 51% of large employers with more than 500 employees have some form of reward or incentive applied to a wellness program. 

By 2013, Celent estimates that this number will grow to 94% of all such companies. This growth will be fueled by the underlying increased costs of healthcare and the related need for employers to utilize whatever means available to combat expenses

On the surface, it would appear that health care + financial rewards + a growing market = a promising new role for financial institutions in the healthcare banking space. In fact, many banks and financial technology vendors have been seriously pondering the potential of such a role. However, Celent recommends that banks and their vendors take a conservative approach to playing in the wellness reward space.

"The value-add in the wellness industry is very straightforward: information," says Red Gillen, senior analyst with Celent’s banking group and author of the report. "Employers, employees, providers, and health plans all have an elevated need for information, and it is highly unlikely that banks could play the role of a wellness program information integrator."

Because of this, the fight for wellness rewards is not one that the banks should lead. Rather, it is one the banks should opportunistically watch from the sidelines.

The only prospect for banks within the wellness reward ecosystem is the actual reward. In terms of what banks could offer, this would be a general purpose prepaid card or a health savings account (HSA) contribution. Rewards are relegated to commodity status in the wellness program cycle, however, and investing heavily in a commoditized line of business is not a recipe for growth.  Among reward types, the ones that make sense for banks and their vendors to promote and support are HSA contribution rewards, which leverage banks’ core competencies and serve to grow banks' deposit bases.

However, the HSA contribution reward opportunity is certainly not earth-shattering. Growth potential is limited by the fact that the majority of employees (98%) do not have HSAs. Even if a significant population of employees did have HSAs, they would not all have them with the same bank. Celent predicts that HSA contribution rewards will amount to a $351 million opportunity by 2013, but the market does not pose a significant opportunity for any one bank.

This report focuses on various reward types, their adoption rates, and motivational influence.  The report also spotlights some of the main players in the wellness reward space that focus on issuance of prepaid cards as a reward type.

The report contains 42 pages, 15 figures, and two tables.  A table of contents is available online.

of Celent's Healthcare Banking research service can download the report electronically by clicking on the icon to the left. Non-members should contact for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

San Francisco, CA, USA November 13, 2008

Executive Summary 3
Introduction: Why Rewards Can Be .... Rewarding 6
Wellness and Rewards: An Overview 10
  Wellness Program Objectives 10
  Wellness Program Types 12
  Best Practices 13
  ROI--The Right Medicine or Bitter Pill? 14
  Reward Values--Show Me the Money 16
  Reward Types 17
  Reward Motivational Assessment 22
  Ecosystem Roles 23
Players in the Wellness Reward Space 26
  AEIS (American Express Incentive Services) 28
  Citi Prepaid Services 30
  Hallmark Insights 31
  IncentOne 33
  TSYS Loyalty 36
Bank and Wellness Rewards: The Bridge to Nowhere? 37
Issues 42
Conclusion 44


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