Employee wellness plans can be great cost savers for both health insurance companies and employers in the long run, but with new proposed rules and regulations around wellness plans set to begin on Jan. 1, 2014, employers and insurers are going to have to be careful about following more legal requirements.
Through the Affordable Care Act, starting in 2014, group health plans and insurers will be able to offer higher financial rewards to participants achieving healthy behaviors – like lowering cholesterol levels or quitting smoking. At the same time, however, they will also have to be diligent in making sure these wellness plans do not discriminate against people based on health factors.
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“With the ACA, it was decided that there should be more structure around these wellness programs,” said Amy Bergner, managing director of PwC’s human resource solutions healthcare practice, and author of a recent study on the subject of wellness program regulations.
Bergner said there are five main wellness program requirements proposed by the ACA that both insurers and employers should be aware of:
- The amount of reward or incentive to employees for good health must be limited – to a certain extent. “The wellness rewards program must be limited – it doesn’t mean free coverage,” said Bergner. However, the rewards for wellness programs will actually be increasing in 2014 – from 20 percent to 30 percent of the total cost of coverage. For programs that include an incentive related to tobacco use, the reward can be up to 50 percent of the coverage cost.
- There must be an annual chance to earn wellness rewards. “In conjunction with annual enrollment in the program, those involved also have that annual chance for rewards, like participating in the health screening each year,” she said.
- The program has to be reasonably designed to promote health or prevent disease. “This is an easy test to meet for employers. Most programs encourage employees not to smoke, strive for improved biometric test results, or lose weight. All of these things have good evidence of promoting health and wellness,” said Bergner.
- The reward or incentive has to be available to all similar-situation individuals. “This means groups of employees, like those considered salaried employees and those considered hourly employees,” she said. Bergner added that employers also have to offer reasonable health incentive alternatives for those individuals that would never be able to meet certain health standards (like lowered cholesterol levels or losing a certain amount of weight) due to certain health problems or genetic factors. “The employer must help facilitate a reasonable alternative for those employees – maybe following some kind of diet plan instead,” she said.
- Employer-planned communications must inform both employees and their eligible family members about the wellness program benefits. “The information must be accessible,” she said.
Bergner added that because the new regulations do not go into effect until 2014, insurers and employers have time to plan ahead to create or alter their wellness programs to take full financial benefit of having such programs.
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