From the Blog

How to Incorporate Obamacare into Your Wellness Program, Part 1 of 2: Understanding the New Rules

When employees stay healthy, they do better work – and cost their companies less in health insurance payments, missed work and underperformance. This is why most large companies are investing in health, well-being, and productivity programs at work.

These programs have helped one company decrease smoking by 73%, saved of millions of dollars for multiple companies, and reward employees for participating. Wellness programs work. So how can your company design an effective one – and get employees to participate?

Some recently issued regulations change how wellness programs are governed, making it a great time to start a new program or expand an existing one. To help you understand the newly approved government regulations that define wellness programs under the Affordable Care Act, commonly known as Obamacare, we’ve outlined the key points you need to know:

  • You can increase the financial incentives for meeting health-related standards from 20% of a health plan’s total premium (including any part you pay) to 30%. This provides more power to reward employees for making healthy choices, which can increase the popularity and effectiveness of your program.

Note: What is not well publicized (and does not change under the new rules) is that companies can tie 100% of the cost of benefits to participation in certain wellness screenings or activities, as long as they provide the same approach to all similarly situated people and comply with relevant laws.

  • You can offer discounts of up to 50% of the total premium to reward people for not smoking. Smoking is both costly and a major health risk. Discouraging it can help companies regain significant productivity and improve employee health.
  • You still get to choose from “participatory” or “health-contingent” programs – but now health-contingent programs are divided into two types. As before, participatory programs require only engagement (get a screening or flu shot, or join a gym), with no rewards for specific outcomes. Health-contingent programs, once a single category, now may be either activity-based or outcomes-based. Outcomes-based programs typically require an employee to achieve a specific outcome (like lowering blood pressure, body mass index (BMI), or cholesterol or glucose levels). Activity-based programs include rewards for participation in healthy activities, like diet or exercise.
  • If you offer a health-contingent wellness program, you also need to provide a “reasonable alternative standard” for people who have trouble meeting the program requirements. Examples include rewarding milder forms of exercise for employees with physical limitations or offering a smoking cessation program if you reward people for not smoking. It’s also a good idea to recognize ANY improvements – like rewarding employees with extremely high blood pressure who lower their blood pressure, even if they don’t hit the standard target outcome.
  • If you offer a health-contingent wellness program, you must follow the Hippocratic oath and “First, do no harm.” In some cases, it is not medically advisable (or even possible) for an employee to pursue or achieve a particular health-related outcome, even with adjustments. In these situations, medical care (documented with a physician’s note) may be an acceptable alternative standard.

Ultimately, these new regulations give companies greater freedom and power to reward or penalize employees, while still ensuring all employees can participate. This means wellness strategies that are already working will be able to make that much more of an impact. And that’s excellent news – for employers AND employees.

We hope this post has helped explain the recent changes in wellness programs to you. Now, stay tuned for Part 2 on June 28. We’ll introduce some tips on how to communicate wellness program changes with your employees