Lunchtime yoga. Health fairs. Flu shot clinics. Fresh fruit and vegetables in the break room. You do right by your employees. But what effect will the Affordable Care Act, going into effect in 2014, have on your company wellness program?
It could mean more stringent regulations or stricter reporting requirements if your program is connected to insurance premiums, said Kate Ulrich-Saracene, who heads the health and welfare employee benefits team at San Francisco-based law firm Nixon Peabody LLP.
If your company’s wellness program is already compliant with wellness laws under the Health Insurance Portability and Accountability Act (HIPAA), you will probably be fine.
“A lot of these concepts existed before, but employers didn’t have to be quite as involved as they do now,” she said. “If someone is complying with HIPAA, they just need to make their program more detailed to comply with the ACA.”
Consider these six key regulatory changes under the ACA and what they may mean for you.
A High Bar to Clear — For Some
The main thing to know is that you’re likely to have to adjust your program only if it links wellness to medical care in some way — say, providing flu shots, screening employees for blood pressure and diabetes at the office health fair, or linking outcomes like body mass index (BMI) or blood pressure to insurance premiums. If your wellness program mostly consists of a lunchtime yoga class that doesn’t have anything to do with insurance incentives, the rules stay pretty much the same.
If your plan does connect outcomes to premiums, however, you can expect six main changes to your program.
1. Ditch the physician’s letter
There have always been employees who can’t participate in your wellness activities because of health issues. It used to be that if Sally wanted the premium reduction that came with reducing her BMI but didn’t want to use the walking club you’ve established, she’d need a letter from her doctor explaining that she ought to swim instead
“Employees don’t need to have a physician’s advice anymore that it’s unwise to do this wellness program,” said Steve Wojcik, vice president of public policy at the National Business Group on Health, a trade group representing large employers on health policy issues. “They can just decide on their own if they don’t want to use your program to reach that health goal.
2. Choose an alternative
Under the old rules, Sally would have to find a local pool, the cost of participation, and bring that option to you, her employer, for approval. Previously, some companies did provide that service for employees, but now they are required to seek out alternatives.
“You don’t have to decide in advance what the alternative will be,” said Ulrich-Saracene. “You can decide on the fly, but the employer has to find the alternative and then set it up for the person.”
3. Notify Employees that Alternatives are Available
Every time an employer communicates with employees about their wellness program, they must also notify the employee in writing that alternatives are available.
4. Update Biometrics Each Year
If you’re going to offer insurance discounts or other medical care rewards to employees for having a healthy BMI, you will need to re-test employees at least annually, said Ulrich-Saracene.
“You can’t say, ”˜This employee’s BMI was good in 2013, so they get a discount forever,’” she said. “Every year, employees have to have a new opportunity to qualify.”
5. Separate Individual Discounts from Family Premiums
Perhaps the most complicated change resulting from the ACA is that employers that offer discounts for biometrics must parse discounts carefully. It was always true that employers couldn’t offer a premium discount to a whole family unless the whole family could participate in the program, said Ulrich-Saracene. The difference now is that when the whole family participates and only some of them reach the biometric goals, the company can’t apply the discount uniformly. Each family member must be given a portion of the discount they qualify for while excluding the family members who don’t qualify.
And it’s not a matter of insurance companies doing the prorating. Usually, it’s the employer who applies the incentives, so it will fall to the employer to make sure all the charges and discounts are correct, said Ulrich-Saracene.
6. Greater Premium Reductions Allowed
as 30 percent under the new rules. The old rules limited incentives to 20 percent.
But Wojcik doubts it will have much effect. “Yes, you can go up to 30 percent of premiums but most employers aren’t even at 20 percent right now,” he said.
Think Before You Make Changes
If you are unsure of whether your company needs to change its wellness program to meet the new guidelines, it’s best to consult with an attorney who specializes in employee benefits.
The new ACA regulations come at a time when some are questioning the return on investment of corporate wellness programs. The non-profit think tank Rand issued a report in 2013 that found that wellness programs have a mixed impact on the health habits of employees. The effort of bringing your own wellness program into compliance may have you reevaluating your wellness offerings.
While the new regulations may seem onerous, think before revamping your program, said Henry Albrecht, CEO and founder of the corporate wellness company LimeAde. After all, when you talk about insurance — and wellness programs that affect the premiums your employees pay — you’re really talking about compensation.
“When you change compensation, you have to implement it and communicate it in a way so as not to have a revolt,” he said. “You need to take a positive but plainspoken and honest approach.”
That’s what Albrecht did when he found out LimeAde’s health insurance costs were going up by 44 percent this year. His leadership team sat down everyone at the 100-employee company and asked them what they most valued and what they wanted their compensation to look like. While the company does contribute to employee’s health savings accounts, what they found was that people valued time off more than anything. So the employees decided to take the insurance premium increase in exchange for more paid time off (PTO) and a change in how PTO is accrued.
“One of the really good things about the ACA is that it’s forcing benefits managers and HR professionals to do a better job of communicating than they did before,” he said. He believes that the ACA changes to wellness programs will lead companies to make perhaps tough choices about what’s important, and how wellness programs can reflect and reinforce a company’s culture, mission, and goals
Despite the increased regulations, however, Albrecht said he didn’t expect many of his clients to drop or change their wellness programs significantly. There are too many other good reasons to keep them — retaining valuable employees and keeping employees healthy and productive on the job chief among them — then to throw out the programs because of increased regulation.
Regulation is a cost of doing business, he said.
“What we need to focus on is what we can control,” he said. “There’s so much that companies and individuals can do that I view the regulatory environment as just that: the environment. What we do with that environment is what’s under our control. That’s the locus of power and change.”
Heather Boerner is a health journalist living and cooking in San Francisco. Her work has appeared in Better Homes and Gardens, Prevention, AARP.org, and the San Francisco Chronicle.