Looking to boost participation in your company’s wellness programs?
You’ll welcome the federal government’s new Affordable Care Act rules[i], which allow employers to increase both financial rewards for participating and penalties for opting out. By offering employees more incentives to sign up, you might just find your HR department busier come enrollment time.
The new rules apply to group health plans and go into effect January 1, 2014. Here’s a summary of key points.
- The maximum allowable reward for wellness programs unrelated to tobacco jumps from 20 percent to 30 percent of the total cost of coverage. For smoking-cessation programs, you can reward employees up to 50 percent of the total cost of coverage. Let’s say your annual premium is $6,000, of which an employee pays $1,500, and you offer quit-smoking program. You could assess a penalty of up to $3,000 — 50 percent of the $6,000 total coverage cost — for smokers who opt not to enroll the program. If, instead, you offer a program to help employees maintain a healthy weight or blood-sugar level, you could offer a premium rebate of up to $1,800 for employees who participate.If you offer both a wellness program and a quit-smoking program, you’d need to adjust the reward and/or penalty downward so that together they don’t exceed $3,000.At The ReFit, our experts can help you create premium differentials that hit the sweet spot for your company, offering sufficient incentive to employees while making financial sense for you.
- The term “rewards” refers both to financial incentives and disincentives. In other words, the rules apply to premium discounts, rebates, and additional health benefits as well as penalties or surcharges. The ReFit can help you decide whether rewards or penalties — or a combination — will suit your company best. It’s important for employees to feel motivated rather than coerced.
- Wellness programs are divided into two categories: participatory and health contingent. With participatory programs, employees need only take part to earn the reward or avoid the penalty. For example, a premium discount could be tied to simply getting a blood-pressure check or joining a smoking-cessation program rather than successfully quitting. By contrast, a health-contingent wellness program ties a reward to meeting a designated health standard, whether it’s quitting smoking (“outcome based”) or walking 5,000 steps a day (“activity based”).
- Wellness programs must not discriminate. If, for medical reasons, an employee can’t participate in a wellness program that has a reward attached or requires meeting a health standard, your company must offer an alternative standard or a waiver.You must explain this policy to employees. You might state, for example: “If you believe you are unable to complete tasks required, contact us at ReFit, and we will work with you to modify the tasks so you can qualify for the reward.”
- For programs involving rewards, eligible employees must have the opportunity to qualify at least annually. Also, the programs must be “reasonably designed” to promote health or prevent disease.
The U.S. government believes wellness programs can prevent disease and lower the cost of employer-sponsored health insurance. ReFit strongly agrees. We can advise your company on how to follow these new regulations in innovative ways, improving the health of your workforce and your company’s bottom line.