Why should you implement a wellness program?
As your benefits professional, our goal is to lower your costs while at the same time maintain employee engagement. According to MetLife’s 9th Annual Employee Benefits Trend Study, 50% of medical costs could be changed by improved employee behavior and lifestyle. This 50% in controllable costs is where wellness programs can make a difference. Not only can wellness programs decrease your health care costs, but they also increase productivity and employee morale. As an example, according to the CDC, more than 72 million Americans suffer from obesity which costs employers an estimated $130 billion per year in absenteeims, decreased productivity and STD-related costs. But, be careful – poorly implemented programs will drain your company resources.
Why all the fuss about a wellness program? As you know, under HIPAA, health plans cannot discriminate based on a health factor (of course, you also have to make sure you don’t violate any other laws, such as the ADA). However, plans can discriminate if they comply with the wellness regulations and offer a “wellness program.” Keep in mind, a program is only subject to the nondiscrimination rules if it is part of group health plan. Giving your employees pedometers to encourage exercise, providing healthier food choices in your cafeteria and banning smoking on your facility are just some of the things employers can do that are not considered part of a group health plan, and would not be subject to the nondiscrimination rules under HIPAA. Also, certain types of plans and benefits are not subject to the group health plan nondiscrimination requirements, such as dental, vision, LTC. Whether you simply offer wellness benefits through your carrier, or a full-fledged wellness program, you are likely to see results.
Reward vs. Non-Reward Based Programs
There is a difference between wellness benefits and wellness programs. Only wellness programs that offer a reward that is based on satisfying a standard related to a health factor must comply with the wellness regulations. You may offer a program where you don’t give out a reward, or where the reward given is not based on satisfying a standard related to a health factor. For example, if you provide a health coaches or provide a diagnostic testing program and reward all those who participate, you would not have to comply with the wellness regulations. A reward may include the following:
- Rebate of premium or contribution
- Waiver of all of or part of a cost-sharing mechanism (deductible, copayment, coinsurance)
- Absence of surcharge
Other examples of programs where the reward is not based on satisfying a standard related to a health factor include waiving the copayment or deductible requirement for the cost of well baby visits, reimbursing all or part of the cost for membership in a fitness center, reimbursing employees for the cost of smoking cessation programs whether they quit or not, and rewarding employees for attending monthly health education seminars.
If your program is reward-based, it must satisfy the following criteria:
- The amount of the reward must not exceed 20% of the cost of employee-only coverage under the plan.
- The program must be designed to provide good health and prevent disease
- Participants must be given the opportunity to qualify for the reward at least once per year
- The reward must be available to all similarly situated individuals and must allow a reasonable alternative standard anyone for whom it is unreasonably difficult due to a medical condition or medical inadvisable to satisfy the standard for the reward.
- All plan materials describing the terms of the program must disclose the availability of a reasonable alternative standard or possibility of a waiver.
The penalty for violating the HIPAA nondiscrimination requirements, which includes the failure of a wellness program to meet the applicable requirements under the regulations, is $100 per day per individual. The plan sponsor is liable for the penalty.
Wellness under Health Care Reform
Among the many provisions of the Affordable Care Act were some that affect wellness programs. The reform raises the cap on rewards offered through wellness programs to 30% (from 20%), and may even raise it as high as 50% in the coming years. Also, the reform provides that, beginning in 2011, small businesses that didn’t have a wellness program as of March 23, 2010 will be able to apply for a federal grant to help them establish a comprehensive program. Employers with less than 100 employees who work at least 25 hours per week would be eligible for these grants, which will be available for up to 5 years. No guidance has been issued yet regarding these grants and we will provide you with information when it becomes available.
What to Look for in a Wellness Program
Although wellness programs come in many different shape and sizes, the following are elements that warrant consideration when designing a wellness program:
- Assessment: include activities to get a baseline to determine whether employees are healthy or unhealthy
- Communication materials: Ensure that communication is ongoing and consistent
- Self-Help programs: many employees are more comfortable changing their behavior on their own time and in privacy
- Health coaching: assign employees a health coach to guide them through the process of changing their behaviors
- Self-Care: teach employees to seek professional help when necessary and use self-care for things that can be treated at home
- Address all employees: make sure your program addresses both high and low risk employees
- Incentives: offer incentives such as lower contributions, premium discounts, and awards
- Evaluation: be sure to evaluate your program including a review of financial data
When designing your wellness program, you will likely need assistance. In some instances, your carrier may already have wellness programs in place. In those instances, it’s best to begin by asking your carrier whether there is any free money or any free services they provide, such as biometric screening or health risk assessments. If their programs don’t fit with your company, you may also want to seek out a wellness vendor. We can help with your selection, and can offer you a comprehensive request for proposal to use in your search.