Employee premiums can be reduced by 30 per cent – 50 per cent for smoking cessation
The Affordable Care Act, signed into law in 2010, will allow U.S. employers to increase the rewards they offer employees who participate in workplace wellness programs. The goal is to improve employees' health by helping them quit smoking or achieve a healthy weight, and thereby control medical spending.
Critics argue that workplace wellness programs do not curb health-care costs or make employees healthier. A report to Congress by the Rand also casts doubt on the programs' benefits.
Under the rules issued May 29 by three cabinet-level departments — treasury, labour and health and human services — employers must structure wellness programs so "every individual participating" can "receive the full amount of any reward or incentive, regardless of any health factor" — a requirement that some experts say could cause employers to stop offering health coverage.
The rules are intended to make sure workplace wellness programs are not "a subterfuge for discrimination," for instance, penalizing smokers who cannot kick their nicotine addiction, a senior administration official told reporters.
Starting in 2014, the rules will allow companies to reward employees who participate in workplace wellness programs by reducing their health insurance premiums up to 30 per cent, which could be thousands of dollars a year. Under current law, employers can discount the health-care premiums by 20 per cent, but most offer rewards of three per cent to 11 per cent.
The incentives could increase to 50 per cent for programs designed to prevent or reduce smoking.
On the other hand, companies can penalize their employees by charging higher premiums for workers who do not participate in a wellness program. Smokers could pay 50 per cent more for their health-care than their non-smoking co-workers.
Some health-care advocates fear that provision could be unfair.
"It could be a way of charging someone in less-than-ideal health more for insurance, which is something health-care reform is trying to move away from," said Kathleen Stoll, director of health policy at Families USA, a non-profit group that supports health-care reform.
The rules do not require that wellness programs provide scientific evidence that they work. That, Stoll said, raises the possibility that workers could be penalized for spurning programs that are ineffective.
Some employer groups worry that the rules would be so generous they would dilute any health or financial benefits from workplace wellness programs.
The final rules require employers to reward any so-called "participatory wellness programs" that they offer. These reimburse employees for costs such as gym memberships and offer monetary rewards for attending a free health seminar or filling out a health risk assessment. Employees could be rewarded even if they do not attain a healthy weight.
Similarly, if an employer rewards workers who stop smoking, it will also have to reward those who attend a smoking cessation seminar "regardless of whether the individual quits smoking," the rules state.
Busines sgroups fear that could offer a way to game the system.
"It's questionable whether this broader allowance for offering incentives is going to work or not," said Steve Wojcik, vice-president for public policy at the National Business Group on Health, which represents large employers. "If the employer has to offer rewards, even without evidence that an employee is trying" to improve his or her health, "it might decide to end the wellness program."
Or the rules might drive some companies away from offering employer-based insurance, instead paying the penalties that the health-care law imposes for doing so, said Tom Emerick, president of Emerick Consulting and former vice-president of global benefits at Walmart: "With these regulations, large companies who are trying to decide whether to pay or play will get more reasons to pay and not play."
