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Sunday, 07 July 2013 22:00

New federal rules raise reward cap for participation in wellness plans

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New federal regulations allow employers to up the ante to drive employee participation in workplace wellness programs, while making it easier for individual employees to earn an incentive.

In issuing the new rules, the U.S. Department of Health and Human Services seeks to support “participatory” or activity-based wellness programs that are made available to employees regardless of health status and offer financial incentives for participation such as completing a health-risk assessments, undergoing health screenings, attending health education classes or exercising regularly.

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The rules, issued in late May and scheduled to take effect Jan. 1, 2014 as part of the federal Patient Protection and Affordable Care Act, provide a new framework under which employers can fashion their wellness programs. One of the biggest changes is an increase in the maximum financial reward for wellness from 20 percent to 30 percent of the cost of the premium for a health policy. The incentive can go to 50 percent if it’s designed to help someone quit smoking or is tobacco-related.

Employers must still offer a “reasonable alternative” for employees who are unable to meet a specific health outcome — losing weight, lowering their cholesterol or blood pressure, for example — to receive a reward.

Seeking to prevent discrimination based on health status, the new rules would no longer allow outcomes-based wellness programs to require that employees have a “medical reason” for not achieving a health outcome that’s linked to receiving a reward.

“You have to issue an alternative, even if the person fails to meet the qualifications and there’s no medical reason for them doing so,” said Marti Lolli, director of health care reform at Priority Health in Grand Rapids.

The provision remains, however, for activity-based wellness programs that require people to participate in activities such as a walking or exercise program to receive a reward. However, it does not set a specific health outcome for them to achieve.

Employers can still require employees to obtain verification from a doctor that they have a medical reason for not participating in a wellness activity. Even then, the employer still needs to provide a reasonable alternative for workers to qualify for the reward.

At first glance, the new rules are “probably a little frightening” for employers, said health benefits attorney April Goff of Warner Norcross & Judd LLP in Grand Rapids.

Goff advises employers to consult with their legal counsel or wellness provider and make any changes in their program as needed.

“It’s not that complicated once you delve into it,” Goff said.

The new wellness rules also limit the ability of employers to penalize employees who simply decline to participate in a wellness program. They make it harder to put employees into a lesser benefits package if they do not participate in wellness activities and to provide a higher level of benefits to those who do.

“The employer can’t do that. They have to offer you this alternative,” Lolli said. “What you’ll see is it will probably be a little more confusing for the employees, a little more confusing for the employer, and then there’s never a repercussion for not complying with the program. So it’s a little harder for employers to use a ‘stick-type’ approach that will get the attention of their employees and motivate some behavior changes.”

In 2012, 43 percent of the West Michigan employers that responded to the annual cost survey by the Alliance for Health and The Employers’ Association said they offer an employee wellness program, compared to 40 percent in 2011 and 33 percent in 2010.

Financial incentives are a common element of wellness programs that many employers have added to their health benefits to drive participation or reward employees for improving their health. Financial incentives range from cash and gift cards at local retail stores to reducing a participating employee’s share of a policy premium.

In recent years, employers have turned more to incentives for employees who meet a defined health outcome, rather than just those who participate in wellness programs.

A survey of employers who attended a May health care seminar sponsored by benefits consultant Advantage Benefits Group in Grand Rapids found that in the next three to five years, 61.5 percent of respondents intended to require employee participation in their wellness programs “beyond basic screening and health risk assessment.”

Limiting the ability of employers to peg rewards to individual employee health outcomes will likely make workplace wellness programs “more administratively intensive” to operate and “make it easier for participants to satisfy the requirements” to receive a reward, Lolli said.

Despite the increased administrative burden, Lolli doubts the new federal regulations will deter employers from moving down the wellness road or disrupt present market trends.

“Employers will want to have a healthy workforce because it benefits them on so many fronts,” she said. “But it is disappointing there isn’t more license for employers to implement outcomes-based programs that give them more flexibility in this regard.”

Raising the maximum reward to 30 percent of a premium, however, may encourage more employers who have not already done so to incorporate wellness into their health benefits with a larger incentive to drive participation, Lolli said.

“With that increase in incentives, it will generate some new interest,” she said. “It’s a bigger carrot that motivates the employee to comply.”

Read 3609 times Last modified on Friday, 19 July 2013 11:53

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