Courtesy Bond, Schoeneck & King
By Suzanne Smith
With so much uncertainty about the future of the Affordable Care Act (ACA), employers may be in a holding pattern with respect to their health insurance plan design. And, this is understandable.
While waiting to see what healthcare changes are coming under President Trump’s administration, employers will generally want to maintain the status quo.
But, with the increasing costs of health insurance premiums, co-pays, and deductibles as well as the increase in the cost of prescription drugs, employers may be wondering what they can do to help employees with their healthcare circumstances.
One strategy that many employers are considering is a workplace wellness program. The theory is that if a wellness program helps employees improve their health, then the wellness program may help employees control their health care spending.
A workplace wellness program is a plan designed to promote health or prevent disease. Generally, the wellness program will be incorporated into your employer group medical plan and offered to the medical plan participants or integrated into your employee assistance program (EAP) and offered to all employees.
Many wellness programs offer some kind of reward to encourage employees to participate or achieve a particular health goal. However, a reward system is not a required component of a wellness program, and many programs do not offer any reward whatsoever.
Wellness programs are generally divided into two types:
• Participatory wellness programs. These are programs that are generally made available to all employees. If a participatory wellness program chooses to offer a reward, the reward must not require employees to satisfy a health standard or condition to obtain the reward.
For example, a reward can be given for attending educational or exercise sessions, but the reward cannot be related to attaining a certain health outcome, such as losing weight, quitting smoking or lowering blood pressure. Examples of participatory wellness programs include:
Reimbursement for the cost of membership in a fitness center; monthly free health education seminars with a reward for employees who attend; a health risk assessment program for employees that only asks employees to complete a health assessment with no further action; a smoking cessation program that does not offer an incentive
• Health-contingent wellness programs. These programs require individuals to satisfy a standard related to a health factor to obtain a reward. Examples of health-contingent wellness programs include:
An activity-based program that requires employees to do a certain amount of exercise weekly to earn an incentive; biometric screening program that rewards participants for reducing their blood pressure or cholesterol level; a smoking cessation program that rewards smokers who reduce their smoking activity
The benefit of these programs is that they can help employees improve their health, which in turn can help employees reduce their medical expenses.
As with other employee benefits, there are a myriad of laws that impact wellness programs including rules on nondiscrimination, confidentiality and required notices. Unfortunately, the laws, which are written by different federal agencies with different agendas, are not fully aligned. As a result, there are some inconsistencies that can make compliance tricky for wellness plans.
In particular, there are new rules that became effective this year relating to the amount of the incentive if a wellness program makes a disability-related inquiry or includes a medical examination.
This means that wellness plans that provide incentives to employees for completing a health risk assessment or biometric screening must comply with the incentive limits. Smoking cessation programs are also subject to new incentive rules that differ depending on whether or not a nicotine test is required to obtain the incentive.
There are also new rules for wellness programs that request an employee’s genetic information, such as a disease or disorder that runs in an employee’s family members, such as high blood pressure or diabetes.
Also, once an employee receives an incentive, employers are responsible for making sure the benefit is taxed properly and the IRS has addressed the tax rules for wellness program incentives.
For employers with existing wellness programs, it’s a great time to review your plan’s compliance with the new rules.
For employers looking for a way to help employees to potentially reduce their health care costs, there are a variety of wellness programs that can be designed to fit your needs, comply with the rules and give your employees the opportunity to improve their health. Wellness programs can be a true “win-win” for employers and employees alike.
Smith is a senior counsel of Bond, Schoeneck & King.