Wellness Programs under the ACA: What Employers Need to Know
Businesses clearly see the value in offering health and wellness plans. In fact, 80 percent of employers already offer health and wellness plans[i]. This begs an interesting question: If so many businesses see the value in these kinds of plans, why are only 25 percent of those organizations that already have wellness programs planning to take advantage of incentives under the Patient Protection and Affordable Care Act[ii] (ACA)? Statistics tell part of the story:
- 15.9 percent of employers attributed non-participation to a lack of understanding of the benefits being offered under ACA[iii]
- 19.3 percent attributed "lack of desire" as the reason for not offering incentive plans[iv]
However, I suspect something else is really at play. My theory: A lack of desire may actually translate to the fact that those employers don't have a clear understanding of what is being offered.
Beyond that, they may not realize how the increased incentives can help them develop a more meaningful wellness and disease management program that will help drive positive change in their organizations - as well as impacting their bottom line. Here's what businesses need to know about wellness program incentives under the ACA.
What the Plan Says
The main benefit of the language in the ACA is that it allows employers greater flexibility with wellness incentives and protects them from employee lawsuits as long as they stay within the law. The new guidelines covered by HIPAA and detailed in the ACA take a neutral stance on incentives, classifying them as neither positive nor negative.
That frees employers to decide whether to position their incentives as discounts (which is often a more effective approach) or penalties. Under the ACA, wellness programs are separated into two different categories: Participation-Only Programs and Standards-Based Programs. Each type of plan comes with its own set of requirements and guidelines.
These plans require participation only, but do not condition eligibility for a reward upon a participant's ability to meet a health standard. For instance, employees may receive the incentive of a free T-shirt for attending a health fair; they may be reimbursed for gym memberships; or they may receive a gift card for participating in a health fair or biometrics testing, regardless of the outcome.
The key here is that the incentive is based on the act of the employee taking part in something, rather than achieving a certain outcome or meeting a set of requirements. Employees may be rewarded (with a gift card, for example) for participating in a weight-loss program, even if they don't achieve the program's weight reduction goals.
Standards-Based Programs differ from Participation-Only Programs in that an employee's eligibility to receive a reward is conditioned upon the ability to meet standards related to a health factor. Because of this, the ACA has included the following five requirements employers must meet in order to offer a wellness and disease management program that falls into this category:
- Rewards must be no more than 30 percent of the cost of coverage (for programs that do not also offer a tobacco cessation program) or 50 percent of the cost of coverage (for those programs that do offer tobacco cessation programs)
- Programs must be designed to promote health or prevent disease
- Employees must be able to qualify for reward one time per year
- Rewards must be available to all similarly situated individuals
- Employers must disclose that alternative standards (or waivers) are available for people with certain health conditions or disabilities (i.e., someone with genetic history of high cholesterol may not be able to achieve a certain cholesterol level; or, wheel-chair bound employees who are unable to participate in a walking program)
The first three requirements are the easiest to meet. However, the fourth and fifth are where employers need to pay the closest attention. An example of violating the fourth requirement (making the program available to all similarly-situated individuals) might be if your organization only wanted to offer a wellness incentive to the C-Suite employees and not to all other plan participants.
As for the fifth requirement dealing with waivers, if an employee with a genetic disposition to high cholesterol is unable to meet the criteria for a health level, either through medication or lifestyle changes, they must still be considered eligible to receive the incentive, provided they obtained a waiver from their primary care physician that validates their condition.
Transitioning from a Participation-Only to a Standards-Based Program
Consider these factors when implementing your wellness program:
- Don't just pull the trigger on a Standards- Based Program. Your employees' benefits should always been seen as just that - a benefit (not a punishment). The most successful wellness programs promote a sense of inclusion and ownership with the employees.
- Education is the lynchpin for success. Before your employees can be expected engage or participate in these programs, it's imperative that they have a solid understanding of what's expected of them and why the criteria are important for their personal health.
Remember, your goal should be to affect a long-term cultural change within the organization - not just imposing short-term requirements. Achieving long-lasting cultural changes requires a commitment to, and the implementation of, a multi-year strategic plan.
About the Author:
Gary Cassidy and Corporate Synergies' internal creative team generate professional, branded programs that support clients and engage and educate their employees. These programs engender heightened benefits literacy, enabling employees to properly enroll in, understand and use their benefits.
Gary works closely with account management teams to develop communication and wellness strategies that drive positive changes in workforce behavior and help clients control benefit costs.