Over the past few years, we have witnessed much confusion and uncertainty surrounding the Affordable Care Act (ACA) and its accompanying rules and regulations. Thankfully, one area of the ACA that has been ruled on and somewhat finalized recently are the guidelines for workplace wellness programs.
In late May, a joint effort between the U.S. Departments of Health and Human Services, Labor and Treasury resulted in a set of guidelines that employers can now use in designing and modifying their workplace wellness programs. These guidelines cover programs that offer a reasonable chance of improving a participant’s health or preventing disease and are included in health plans that start on or after January 1, 2014.
The ruling defined the types of wellness programs that employers are permitted to offer their employees, while leaving out a great deal of detail in hopes that employers will creatively design plans that fit their workforce best.
Wellness programs are quickly becoming a staple in any employee benefit package. In fact, in recent a Kaiser Family Foundation survey, found that 41% of employers with more than 200 workers have some sort of wellness program in place for their employees.
Workplace wellness programs are paying off in a number of ways for employers. A Harvard study on workplace wellness programs showed that they lower the cost of health care to an employer, as well as the cost of absenteeism, rather significantly. In addition to the financial benefits, wellness programs can also influence employee morale and productivity.
The following is a run-down of the types of wellness programs employers can offer under these new rules:
Participatory Wellness Programs
Participatory wellness programs reward participants based on their activity in some sort of program that is unrelated to their specific health status or improvement. Essentially, you are paid to just sign-up regardless of the outcome.
Probably the most common example of a participatory wellness program is offering employees discounts on a gym membership. Rewards for participatory wellness programs usually are given in the form of a monetary gift such as rewards or discounts.
A key rule for participatory wellness programs is they must be available to all similarly situated individuals.
Health-Contingent Wellness Programs
The new rules focus on defining health-contingent wellness programs and the various provisions that go along with them. There are two types of health-contingent programs set out in the rules: activity-only and outcome-based.
Activity-Only Wellness Programs
Activity-only wellness programs reward individuals that aim to achieve a specific health goal. The reward is given based on their taking the steps to achieve the goal, but is NOT based on actual achievement of the goal.
These types of wellness programs are completely effort-based. A good example of an activity-only program would be creating a heart-healthy walking program that is aimed at lowering participant cholesterol levels. A reward would be granted to anyone that participated in the program and not just the individuals that actually lowered their cholesterol.
Outcome-based programs are those that reward individuals for achieving and/or maintaining a specific health goal. These types of plans usually require an initial measurement related to the goal and then progress is monitored and measured.
In keeping with the activity-only cholesterol-lowering program example, in an outcome-based program, an individual’s cholesterol level would be measured upon joining the program and a reward would be given based on a specific reduction over a defined period of time.
Considerations for Health-Contingent Programs
Under these new rules, the maximum reward for employee participation in health-contingent wellness programs has increased from 20-30% of the cost of their health coverage. While this may be a generous incentive to drive participation, some employers have called for increases in this amount to match the tobacco use incentive maximum.
The maximum reward for employees that participate in health-contingent programs aimed at preventing or reducing tobacco use has increased to 50% of the cost of their health coverage.
Health-contingent programs must be offered to all employees at least once a year and there must be an option for reasonable alternatives to the established plan if an individual is medically unable to participate in a health-contingent wellness rewards program. Because of this provision, these individuals will be able to work with their physician and/or employer to create alternative means to qualify for the reward.
The option for a reasonable alternative to a wellness program must be disclosed to all employees at the time that the plan is explained to them. Also, reasonable alternatives do not have to be designed up front and can be handled on a case-by-case basis.
Setting Up Your Own Wellness Program
There has never been a better time to start thinking about implementing a wellness plan for your employees or redesigning your current program to ensure compliance. Fortunately, you don’t have to do it alone.
Our employee benefits team has a vast amount of experience in developing wellness strategy, designing wellness programs to fit your organization’s needs, and helping employers implement and measure wellness ROI. Our team is comprised of industry experts that can help you navigate the daily changes of the ACA to ensure your wellness programs and all of your employee benefits, are compliant.
Contact us today to get the discussion started about your workplace wellness program.
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