October 30, 2015

Tone up your knowledge on wellness compliance

Employer wellness programs and the Affordable Care Act (ACA) are both highly debated topics on their own, but employers are also discussing the links between the two topics and what that means for the design of their wellness benefits. Employees of organizations that offer wellness programs are driving these conversations, particularly around participation and privacy issues.

First, let’s take a step back and refresh what we already know about the Affordable Care Act, which aims to provide Americans with access to quality and affordable health insurance. In addition to employer requirements to offer health care insurance to their workforces, the law encourages employers to offer wellness programs designed to improve health and prevent disease.

We’re frequently asked about the rules that help shape wellness program design and how to establish the right incentives for their employee base and the different types of incentives that can be offered. The ACA demands certain requirements of wellness programs. To remain compliant, employers need to know the difference between health-contingent wellness programs and participation-based programs:

  • Participation-based programs: Incentives are offered to similarly situated employees who participate in a wellness program, such as a health risk assessment. Participation-based programs are about participation, not obtaining a specific outcome.
  • Health-contingent, activity-only: Incentives are offered for completing an activity wherein an employee’s ability to participate may be limited due to a health factor. In this case, employers may ask for physician verification that it is unreasonably difficult or medically inadvisable for an individual to participate in an activity prior to granting an alternative standard.
  • Health-contingent, outcomes-based: Incentives are offered for attaining or maintaining a specific health outcome, such as tobacco-free or BMI. The ACA states that alternative means must be offered to an individual who does not qualify by meeting the target outcome.  

For either type of health-contingent wellness program, the ACA specifies four other requirements in addition to the availability of a reasonable alternative. For more on determining whether your wellness program follows ACA guidelines, click here.

The rules provide guidance on basic design to ensure that programs are not discriminatory, which is an important aide more than it is a hindrance. These regulations not only enable the employer to offer a carrot (or a stick) to promote participation, but also help to assure employees that their health information is protected. The more transparent you are in your communications about privacy and the value of these efforts, the more likely you are to gain followers.

That said, a solid design with an attractive incentive isn’t necessarily the magic bullet for wellness program participation. Perhaps the bigger driver of positive change and sustained well-being in an organization is its culture as measured by employee engagement scores. According to a Gallup poll, employees who have strong overall well-being are twice as likely to be engaged in their jobs compared to employees with moderate well-being. And, highly engaged business units boast a 37 percent decreased absenteeism, 25 percent lower turnover and 22 percent higher profitability. It’s hard to say if there is a cause and effect relationship, but we do know that high engagement plus high well-being yields the best results. For more statistics on how wellbeing, engagement and success are related in the workplace, click here to view our infographic.

As the New Year approaches, be sure to brush up on the laws so that you can clearly communicate the scope of your wellness program to your employees and ease their concerns about participating. At the same time, remember to create a greater value proposition in your message. Rather than center the call to action around the reward or penalty at stake, emphasize the end goal of working together to create a culture of well-being and engagement, which ultimately solves the problem of rising risks and costs.

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