BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Employers: Get Fiscally Fit with Wellness Programs

Following
This article is more than 10 years old.

Recent surveys reveal that 67 percent of employers with three or more employees and who offered health insurance had at least one wellness program in place. More than half offered wellness benefits to employee dependents. Eighteen percent of large employers offered financial incentives for achieving or maintaining health standards and 15 percent offered lower premiums to non-tobacco users. While savings will vary depending on the type and plan design of insurance programs as well the demographics of the covered population, there is growing evidence that wellness programs drive employer medical costs down and reduce employee absenteeism for illness. One study showed average employer medical costs falling $3.27 for each dollar spent on wellness and a $2.73 reduction in employer costs associated with absenteeism (including sick leave, workers compensation, and disability costs).

Employers thinking of establishing or improving a wellness program should carefully evaluate both the goals and the design of their program. The reason is simple. Under regulations to become effective in 2014, these programs offer possible savings on health premiums and increased employee health and resulting efficiency. Careful design will minimize risks for claims of discrimination and encourage universal participation by the employer’s entire workforce.

Such employers should focus both on existing law as well as the proposed regulations for the Affordable Care Act (ACA).

Wellness programs established pursuant to HIPAA initially fell into two categories:

  1. Programs made available to all similarly situated individuals that do not require participants to meet any particular health standards (examples were gym memberships or weight loss counseling with no required targets); and
  2. Programs that required employees to meet specific health targets to obtain a reward (examples were reduced employee premiums or elimination of employee surcharges).

The ACA’s proposed regulations, to be effective January 1 2014, follow this general two-pronged scheme but with one significant change: maximum permissible rewards will increase to 30 percent from the previously permissible 20 percent for general wellness programs, and to 50 percent for programs designed to prevent or reduce tobacco use. The proposed regulations provide examples of reasonable alternatives that must be offered to avoid charges of discrimination on program design. Two examples illustrate what is necessary:

  • medical plan offers a reward to individuals who achieve a count of under 200 on a cholesterol test. Individuals who fail to meet this target must receive a second chance at the same reward through an alternate program. The regulations suggest a program of diet and exercise administered through a nurse. The program must not be “unreasonably difficult” or “medically inadvisable” for the individual.
  • health plan offers a reward to individuals with a Body Mass Index (BMI) at or below 26. Employees who fail to meet this BMI target would still get the reward if they participate in a walking exercise program of 150 minutes per week. The example in the regulations goes one step further and states that if the walking requirement is “unreasonably difficult” due to a medical condition, the same reward should be made available where an employee’s personal physician proposes an alternative program and the employee follows it.

To reiterate, carefully evaluate the goals and the design of such program, to maximize the chances for savings on health premiums and for increased employee efficiency, minimize the risks of discrimination claims, and attract universal participation by all employees.