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Smart Benefits: Healthcare Reform—Big Rewards for Wellness in ‘14

Monday, June 03, 2013

 

New rules for wellness as part of healthcare reform involve greatly increased incentives for employees.

Starting January 1, 2014, employers will get to increase financial incentives for employees who participate in wellness programs. Specifically, they can offer employees up to a 30 percent premium differential for participating in wellness program activities such as health screenings and weight loss, and up to 50 percent if they don’t smoke or are trying to quit or reduce their smoking.

Added Benefits

Three governmental agencies, HHS, DOL, and the Treasury, worked jointly to finalize the just-released rules, which greatly expands, and in some cases, relaxes the rules around corporate wellness programs.

Besides increasing financial incentives, the new rules more clearly define existing guidelines on wellness plan design and implementation as well as clarify reasonable alternatives that must be allowed.

Key Rule Change Affects Alternatives

There are two main types of wellness programs: participation-based and standards-based. The former rewards employees for participating in activities, while the latter rewards them for changing behavior.

Under the final rules, an employee who does not hit a wellness program’s minimum target for a certain standard (i.e. not smoking) must be given a "reasonable alternative standard," which means that by participating in the alternative (i.e. smoking cessation program), the employee could still earn the incentive regardless of whether a medical condition or health status prevents them from achieving the target.

While this rule has been in practice since the initial rules were released, the final rules add that employees must be given additional time to comply if the alternative is a less stringent form of the initial standard. Also, an employee must be allowed to submit a second alternative standard based on recommendations of their physician.

Should You Act?

Just because employers are able to offer a bigger incentive doesn't mean they should automatically adjust their plans. Here are some things to consider:

  • Employers should match the reward to how much effort the employees give to each activity.
  • Employers should leave room for workers to grow with the program so as employees do more, they earn more.
  • Consider tying the reward to multiple activities staged throughout the year to keep the employees engaged and working toward a longer-term goal. Plus, it's more impactful if the reward ties several activities together.

 

Does Wellness Work?

Some critics argue that wellness programs have little impact. But it’s not the programs themselves that fall short, but participation. That’s why the key to their success depends on plan design and implementation.

And no matter how well-designed, employers shouldn’t expect too much, too soon. Experts state that employers should work toward 80 percent participation to achieve impactful behavior change in a population. The best approach to achieving this level is a three-year strategy that adapts and expands over time.

Other elements of a winning program:

  • Support the program with clear communication and engagement strategies to boost participation.
  • Keep programs dynamic. As employees get used to a program, they demand more so keep it geared to their changing needs.
  • The best wellness programs are tailored to the employee culture. Instead of cookie-cutter approaches, it's really about well- designed programs that meet the needs and interests of the employees.

 

Amy Gallagher has over 19 years of healthcare industry experience. As Vice President at Cornerstone Group, she advises large employers on long-term cost-containment strategies, consumer-driven solutions and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, is a member of local organizations like the Rhode Island Business Group on Health, HRM-RI, SHRM, WELCOA, and the Rhode Island Business Healthcare Advisory Council, and participates in the Lieutenant Governor’s Health Benefits Exchange work group of the Health Care Reform Commission.

 

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