Since its enactment in 2010, the Affordable Care Act (ACA) has garnered a great deal of attention, political and otherwise, for the far-reaching changes that it brings health care and health insurance. However, as stakeholders across the country prepare for its implementation, some of the law’s provisions have escaped widespread notice. Among these are rules that allow employers to reward their workers for actively pursuing a healthier lifestyle.
“Wellness initiatives are a big, but often overlooked, part of health care reform,” says Sheryl Kashuba, chief legal officer and vice president of Health Policy and Government Relations at UPMC Health Plan. “There is a growing interest in wellness programs on the part of employers, and the ACA provides new flexibility to create incentives for employees who participate in programs.”
Smart Business spoke with Kashuba about the ACA’s impact on wellness programs.
Will the ACA impact the growth of wellness programs?
The ACA has the potential to promote the continued growth of wellness programs. Employers have increasingly shown interest in a variety of wellness initiatives as a way to reduce employee absenteeism, boost productivity and slow employee turnover. Many have also found that successful programs can decrease their health care costs over time with reduced incidences of illness and chronic disease.
As of 2014, the ACA will increase the ability of employers to reward employees for wellness program participation and achievement of health goals. Under current law, the maximum ‘wellness reward’ offered cannot exceed 20 percent of the total cost of health plan coverage. This limit will increase to 30 percent for most programs and 50 percent for programs focusing on tobacco cessation. The ACA also authorizes federal regulators to make additional increases later. These new limits increase employers’ ability to offer financial incentives or consequences, both of which can increase participation.
How widespread are wellness programs?
According to the Kaiser Family Foundation, 67 percent of employers with three or more employees offered at least one wellness program with their employer-sponsored health benefits. More than half of those also offered wellness programs to employees’ spouses or dependents. And the larger the company, the more likely it is to have a program. Ninety-two percent of employers with 200 or more employees offer a wellness program, while virtually all companies with 1,000 or more employees offer one.
What do wellness programs consist of?
Most programs offer health risk assessments and screenings for chronic disease markers such as high blood pressure and cholesterol; behavior modification programs such as tobacco cessation, weight management and exercise; health education; and subsidized fitness club memberships. When integrated within a comprehensive program that promotes overall employee health, these initiatives have reduced employee medical costs and absenteeism, while also offering a better quality of life for employees.
Are there different, distinct types of wellness programs under the law?
Wellness programs generally fall into two categories. In ‘participatory wellness programs,’ rewards are available without regard to an individual’s health status. These might include reimbursement for fitness club memberships or financial rewards for completing a comprehensive health risk assessment. ‘Health contingent wellness programs’ require participants to achieve a specific health status or goal, such as rewarding employees who quit smoking or achieve a specific cholesterol goal. The ACA’s expanded flexibility applies to both.
Are some incentives unfair to employees?
Important safeguards ensure that wellness programs are fair for all employees. For example, an employer offering a health contingent wellness reward is required to offer a ‘reasonable alternative,’ a means of earning the reward if the required activity would be unreasonably difficult to complete because of a medical condition. The law gives employers the option to offer a widely applicable alternative standard or tailor the alternative to an employee’s situation. An employer can even waive a program requirement if no reasonable alternative can be put in place.
Sheryl Kashuba is a chief legal officer and vice president of Health Policy and Government Relations at UPMC Health Plan. Reach her at (412) 454-7706 or [email protected].
Find more information about the Affordable Care Act and wellness programs.
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