How the ACA guidelines affect workplace wellness programs

Workplace wellness is not a new concept. Many employers offer wellness programs to keep employees active and productive. Every bit as important, however, is the long-term goal of reducing health care costs as a result of healthier lifestyles and behaviors. But not all wellness programs are the same. The Affordable Care Act (ACA) established new guidelines to encourage and regulate workplace wellness programs.

The incentives available to employees can differ significantly depending on the type of wellness program offered.

“Rules now allow employers to increase incentives and/or rewards that are offered as part of some wellness programs as long as certain criteria are met,” says Amy Broadbent, vice president, JRG Advisors. “The ACA separates workplace wellness into two general categories — participatory wellness programs and health-contingent wellness programs.”

Smart Business spoke with Broadbent about the types of wellness programs that companies may offer at their sites.

Who can enroll in participatory wellness programs?

Participatory wellness programs are open to any employee who wants to participate. Rewards are not based on achieving specific goals or meeting specific criteria, but simply enrolling in the program.

These programs typically include smoking cessation programs, gym membership discounts or reimbursement, diagnostic testing/screenings and health education classes.

Programs can be reimbursed, subsidized or incentivized if the employer chooses to do so. There is no limit to the type of reward that is given as long as the reward is not dependent on any specific outcomes.

Which employees can enroll in health-contingent wellness programs?

Health-contingent wellness programs reward employees for achieving specific health goals. There are two types of health-contingent wellness programs, the first of which is an activity-only wellness program that requires the employee to perform or complete a health related activity in order to obtain a reward (walking, diet or exercise programs, for example).

While employees are obligated to perform an activity to gain a reward, they do not have to achieve and/or maintain a specific health outcome such as losing weight or reducing blood pressure.

The second type of health-contingent wellness program is an outcome-based wellness program. These programs require employees to achieve and maintain a certain health outcome in order to obtain a reward. Examples of outcome-based programs include meeting exercise targets, weight loss goals or not smoking.

There are maximum rewards that can be given under health-contingent wellness programs. For 2014, rewards for most programs and goals can equal up to 30 percent of the cost of the employer’s health coverage for an employee and their covered dependents.

Furthermore, if a program is specifically designed to prevent smoking, then the total incentive amount offered can equal up to 50 percent of the employee’s health coverage cost.

Are there alternative standards for employees with a medical condition?

Employers are required to offer alternative standards for employees who cannot reasonably be expected to complete health-contingent programs due to a medical condition.

For activity-only wellness programs, health plans can require employees to have a physician verify that their health status or condition make it medically inadvisable to participate in the program.

For outcome-based programs, health plans cannot ask a physician to verify that the initial standard is medically inadvisable or potentially too difficult due to a medical condition.

If you offer workplace wellness programs currently or if you are interested in doing so in the future, be sure to disclose the availability of the alternative in your employee wellness campaign materials.

 

Insights Employee Benefits is brought to you by JRG Advisors