January 1, 2014 is indeed a big day in our space, mostly for the way employers will be impacted by the individual mandate. The non-mandated provisions on wellness incentives also take effect (proposed regulations), increasing the allowable incentives and cementing the growing trend for wellness programs to require proof of healthy habits rather than just a pledge to try. Do the waters feel safer now to put some serious bait out there for employees? We think so.
Where we are today
More and more companies are willing to put real money at stake to motivate employees and their dependents toward healthy habits. Most employers have started off with participatory programs (take an assessment, get a discount off your premium) as the first step in a long-term wellness strategy. Now, measuring employee health is the new normal. Health-based incentives (get a biometric screening, get an incentive for healthy cholesterol and blood pressure) make participation important but so do results. The National Business Group on Health reports that 30% of large employers link health outcomes and financial incentives).
How ACA changes the ballgame
ACA allows health plans to increase the incentives for individuals who meet specific health metrics from 20% of the cost of coverage to 30%. And, for programs related to tobacco use, the incentive can be as high as 50% of the cost of coverage. There are no changes to the five non-discrimination provisions that apply to any health-based incentive program about the “frequency of opportunity to qualify, size of reward, uniform availability and reasonable alternative standards, reasonable design, and notice of other means of qualifying for the reward.”
The proposed regulations suggest that the new provisions impact grandfathered and non-grandfathered plans the same way.
Now what?
Will employers clamor for higher incentives? Asked another way, how much is it worth to you to avoid another participant with lung cancer, adult onset diabetes or avoid a triple-bypass heart surgery? In hard dollars via claims costs, absenteeism and higher group rates—and in less tangible results like company culture, individual happiness?
Let’s look at the ROI question. The Department of Labor, in developing their proposed regulations, ordered a study of the current wellness practices and results. Researchers found five peer-reviewed studies citing ROI ranging from $1.65 to $6 for each dollar spent on wellness programs.
Big numbers like that often bring up the question of engagement. Will I only encourage healthy people to stay healthy? We’ve seen a balanced strategy—of wellness program incentives, simple program administration and an engaging communication strategy yield employee participation topping 90%. To get it right, you’ve got to be aware of the readiness for change at your organization. According to a recent National Business Group on Health survey, two out of three employees didn’t think participation in a wellness program should be required to get health insurance. And a still higher percentage said they don’t want to be charged more for coverage if they don’t meet specific health goals. It’s no surprise that we’d advocate for some communication when implementing a health-based incentive program, but these statistics spotlight the importance of listening and considering current employee and spouse attitudes to make your strategy a success.
The wellness road map doesn’t change
- Participation still counts. Sustained behavior change occurs when intrinsic motivators are at play—things that cause us to make a change in our lives. Or, if you prefer—we need an “aha!” moment to make lasting change. But lasting change begins with awareness—and introducing a wellness program could be just the thing to open an individual’s eyes.
- Being healthy is a choice. Employees still cite privacy concerns as a reason for non-participation in a wellness program. Perhaps it’s the biometric screening that sets off alarm bells for some. You’ll always need to stress that individual participation is a choice and comes with rewards—for personal health and personal finances. For the ROI equation to work, you’ve got to use all the levers available to motivate everyone to choose health. Not just the already healthy and motivated.
- Disclosure requirements are still present. As before, we will continue to have to tell participants about alternatives to participation and other disclosures. The regulations differentiate between plan documents and communication meant simply to promote a wellness program. “If plan materials merely mention that a program is available, without describing its terms, this disclosure is not required. For example, a summary of benefits and coverage (SBC) required under section 2715 of the PHS Act that notes that cost sharing may vary based on participation in a diabetes wellness program, without describing the standards of the program, would not trigger this disclosure.” Perhaps we’re reading too much between the lines, but that seems to say the DOL appreciates that communication (without the legalese!) is important.
- Our broad culture is working against us. When 68.8% of Americans are obese and more and more kids are too, it’s clear that healthy eating habits aren’t easy to develop or sustain. We will always advocate for individual responsibility—but not without an appreciation for how hard it is to make healthy choices in the face of real life circumstances. Between travel for work, the second shift (either a paying second job or a non-paying childcare job), food marketing—just to name a few obstacles—employers need to stay creative and flexible in the ways they support employees on the road to wellness.
- Simple administration is critical. No matter how hefty the financial incentive, no matter how elegant the announcement mailer, if an employee can’t navigate the administration of a program, it will fail. For instance, how exactly will biometric data get to the administrator? Is it as simple as showing up for a health fair onsite at all locations? Or will the majority of your population need to self-administer the blood sample, (I want to faint just thinking of it!) then enter it into a website after establishing a new account with a new password? Map out all the possible scenarios before you begin to promote a program. All the barriers you can remove will pay dividends in participant rates!
What’s next?
The regulations invite comments about how to prorate incentives when family members are invited to participate and how to define programs targeted at tobacco use. If you have strong opinions on where these regulations should offer increased flexibility or better protect employees, the commenting period is open till January 25, 2013. Just search for “Wellness.”
More resources
- Review the DOL fact sheet
- HIPAA’s nondiscrimination rules
