Wellness programs promote health, lower costs
How does the health of employees affect the bottom line? The answer is, a lot! Consider that healthy employees can mean fewer doctors' visits, lower insurance claims, and ultimately, lower insurance premiums.1 Healthier employees also mean higher productivity, with fewer sick days.
Wellness programs aren't new, but recently issued proposed regulations under the Affordable Care Act (ACA) are intended to help promote employer wellness programs and encourage opportunities to support healthier workplaces by increasing incentive limits for health-contingent wellness programs.
The proposed employer-based wellness provision will apply to both grandfathered and non-grandfathered, self-funded and fully insured plans, beginning on or after Jan. 1, 2014.
Participatory wellness programs
Participatory wellness programs are generally available to all employees regardless of their health status. The recently issued regulations do not limit the amount of incentives an employer can award to employees who choose to participate.
Some examples of a participatory wellness program include:
- Reimbursement for the cost of a fitness center membership
- Rewarding employees for attending no-cost health seminars
- Rewarding employees for completing a wellness assessment
Health contingent wellness programs
Health-contingent wellness programs require employees to meet a specific standard related to their health to obtain a reward. One example would be to reduce the employee contribution amount toward the cost of health coverage.
Examples of health-contingent wellness programs include:
- Awarding those who reach a specific reduction of weight or cholesterol level
- A requirement that only applies to "at risk" individuals, such as health coaching
While under the ACA, the participatory wellness program has no incentive limitations, the health-contingent program does limit incentives. The incentive limit for the health-contingent wellness programs increased from 20 percent to 30 percent of the total plan cost. The incentive for a tobacco wellness program, to prevent or reduce tobacco use, has increased the maximum reward amount to 50 percent of the total plan cost.
In addition to incentive limits for the health contingent wellness program, there are also five consumer protection conditions to which the plan must adhere:
- Annual qualification - Individuals have the opportunity to qualify for the reward at least once per year.
- Total reward limit - Incentive does not exceed 30 percent of the total plan cost. Stand-alone tobacco wellness initiatives may not exceed 50 percent of the total plan cost.
- Reasonable alternative - Reasonable alternative for incentive qualification must be offered to those who cannot participate due to medical conditions.
- Uniform availability - Program must be reasonably designed and available to all similarly situated individuals.
- Reasonable standard/design - Program would have to offer a different, reasonable means of qualifying for incentives to any individual who doesn't meet the standard based on the measurement, test or screening. The program must have a reasonable chance of improving health or preventing disease and not be overly burdensome for individuals.
Where can employers find more information on these programs?
Wellmark is here to inform, lead, assist and support you through all of the ACA changes. For more information, call your Wellmark representative, broker or agent about Wellmark coverage options that best meet the ongoing needs of you and your employees. Continue to monitor WeKnowReform.com for updates.
1The Factors Fueling Rising Health Care Costs 2008 (Price-Waterhouse-Coopers, December 2008).
Wellmark is not providing any legal advice with regard to compliance with the requirements of the Affordable Care Act (ACA) or the Mental Health Parity Addiction Equity Act (MHPAEA). Regulations and guidance on specific provisions of the ACA and MHPAEA have been and will continue to be provided by the U.S. Department of Health and Human Services (HHS) and/or other agencies. The information provided reflects Wellmark's understanding of the most current information and is subject to change without further notice. Please note that plan benefits, rates, renewal rate adjustments, and rating impact calculations are subject to change and may be revised during a plan's rating period based on guidance and regulations issued by HHS or other agencies. Wellmark makes no representation as to the impact of plan changes on a plan's grandfathered status or interpretation or implementation of any other provisions of ACA. Any questions about Wellmark's approach to the ACA of MHPAEA may be referred to your Wellmark account representative. Wellmark will not determine whether coverage is discriminatory or otherwise in violation of Internal Revenue Code Section 105(h). Wellmark also will not provide any testing for compliance with Internal Revenue Code Section 105(h). Wellmark will not be held liable for any penalties or other losses resulting from any employer offering coverage in violation of section 105(h). Wellmark will not determine whether any change in an Employer Administered Funding Arrangement affects a health plan's grandfathered health plan status under ACA or otherwise complies with ACA. Wellmark will not be held liable for any penalties or other losses resulting from any Employer Administered Funding Arrangement. For purposes of this paragraph, an "Employer Administered Funding Arrangement" is an arrangement administered by an employer in which the employer contributes toward the member's share of benefit costs (such as the member's deductible, coinsurance, or copayments) in the absence of which the member would be financially responsible. An Employer Administered Funding Arrangement does not include the employer's contribution to health insurance premiums or rates.