By Joya Banerjee, Manager, Membership and Advisory Services
We all know that prevention is better (and cheaper) than a cure. But it’s much harder to convince someone to eat a healthy diet or get on the treadmill than it is to prescribe a pill. While employers across the world are implementing wellness programs, until now there hasn’t been much official guidance on what those programs should include or how to get employees to participate.
Aiming to fill that gap, the Obama administration released rules this month on how to incentivize employee participation in workplace wellness programs through financial rewards. The Affordable Care Act will come into effect in 2014 and the new rules “support workplace health promotion and prevention as a means to reduce the burden of chronic illness, improve health, and limit growth of health care costs, while ensuring that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on health status.”
Why it’s more important than ever to protect the health of your workers
Increasingly, companies are turning to workplace wellness programs to reduce growing health care costs. In 1999, employer contributions to health insurance premiums averaged around $4,247 a year per employee. Since then, average contributions have skyrocketed to $10,944.
What kinds of programs are covered in the new rules?
According to the new rules, workplace programs are divided into two categories:
Participatory programs are those that offer benefits (such as reimbursing a gym membership or reducing health insurance premiums if someone participates in screenings for diabetes) regardless of whether or not the employee meets a certain health standard.
Regulations on health-contingent wellness-programs are more complicated. These programs can be either activity-only or outcome-based. Activity-only wellness programs require individuals to take action on their health such as, dieting or exercising to obtain the reward. The rulings provide guidelines to ensure that people who have medical conditions that prevent them from participating in a prescribed activity for example if they recently had surgery and cannot participate in a walking program are able to obtain the reward by performing a reasonable alternative.
Individuals in an outcome-based wellness program must attain or maintain a specific health standard to receive the reward. In these programs, employees are generally asked to complete an initial screening to determine their health status and/or fitness level. Those that meet the prescribed standard receive a reward and those who don’t are required to work towards that goal – usually by taking part in a program, such as a fitness course – in order to obtain the reward.
The new rules raise the limit on financial rewards for program participation from 20 percent to 30 percent of the cost of health coverage. When a program includes tobacco cessation, the reward can be as much as 50percent. The rules also protect employees from discrimination based on their health status if their personal physician states that they cannot meet certain health standards, and states that employees must be given the opportunity to qualify for any given reward at least once a year. The rules require employers to communicate their program to all their employees, and fully disclose reasonable alternatives and possible waivers.
News Release: Obama Administration Releases Final Rules on Employment-based Wellness Programs: http://www.hhs.gov/news/press/2013pres/05/20130529a.html
The Atlantic: The Future of Getting Paid to Be Healthy:
GBCHealth: Wellness for a Global Workforce: Workplace Wellness Initiatives in Low and Middle-income Countries:
Kaiser Family Foundation 2012 Employer Health Benefits Survey: http://kff.org/health-costs/report/employer-health-benefits-2012-annual-survey/
Economist: Getting on the Treadmill: A South African Company Has Some Bright Ideas for Promoting Health