BUSINESS INSIGHTS | FALL 2011 EFFECT
Wellness Incentives Under Health Reform
What can employers do to help solve the rising cost of health care? One way is to pursue a credit in the health reform law that offers small businesses a financial boost if they initiate a wellness plan. These programs are aimed at helping employees focus on preventive care in order to reduce long-term, high-cost health care claims down the road. Health care reform also gives employees a financial incentive to make smarter choices.
The wellness idea itself is not new; it already exists through the Health Insurance Portability and Protection Act (HIPPA), which allows businesses to impose 20 percent higher premiums for medical coverage to people who don’t achieve certain health index levels. Under reform, his amount increases to 30 percent in 2014, and could grow to 50 percent. The idea is to reward healthy individuals by waiving of deductibles or through a discount or rebate on health insurance premiums. It’s similar philosophy to discounted insurance premiums for clean driving records. The law substantially raises the financial stakes for people to be and stay healthy.
Workplace wellness efforts are one way to help employees achieve their health targets. These endeavors are sometimes derided for not changing employee behavior for the long term. A popular example is the three-month holiday weight loss challenge, inspired by the “Biggest Loser” television show, in which employees try to lose weight and attend “weigh ins.” While many contestants in such programs achieve their weight goal, they often gain back the pounds when the motivation (in this case the contest itself) ends.
A better way to structure a wellness program is to tie it to your medical program with premium discounts. Doing so helps incorporate accountability into personal health and sustain long-term behavior change. The health reform law provides an outline on how to structure these programs and the U.S. Department of Health and Human Services (HHS) will issue $200 million in grants for small businesses to initiate wellness offerings in their organization. Already, HHS has provided $10 million in funds. Employers are eligible for grants if they have no more than 100 employees who work at least 25 hours per week and did not have a program in place on March 23, 2010 (the date the health reform law was enacted).
Two ways to incorporate wellness into your health plan
An employee reaching all levels can buy down their deductible to $500.
One idea is to connect financial incentives to high-deductible medical plans. Let’s take a $1,000 deductible for a single individual as an example. In this case, an employee could “buy down” the deductible if he/she hits certain wellness targets, such as abstaining from tobacco or keeping blood pressure, cholesterol, or body mass index (BMI) within a healthy range. For each health criterion achieved, the employee gets a reduction in the $1,000 deductible. So if your business provides five health criteria levels and attaches $100 to each, an employee reaching all levels can reduce his/her deductible to $500.
Another option is that an organization could contract with a vendor to perform a simple health test on interested employees. In the first year, participants get tested for blood pressure, cholesterol, glucose, and tobacco usage. The combined result equals a person’s baseline health index score and helps identify risk areas. Participants receive a 20 percent reduction in their contributions to health insurance.
Case Study: Wellness in Action
The human resources director for an 825-person call center noticed rising health insurance claims, and raised the question: what can we do to help prevent these claims? This is where the company's wellness idea began. More
The vendor would then offer online and/or telephone coaching programs to help employees improve their scores in one of their identified risk areas. At year-end, employees go through the biometric testing again. If they improve their health indexes from the year before, their premium contributions remain 20 percent lower. (For those that test healthy in their first year, they just need to maintain that healthy status to achieve the discount.) The testing and incentive process continues each year to keep employees accountable for improving or maintaining their health status.
Wellness programs are not the sole solution to containing health care costs, but they are a start. Employees take ownership of their health and get the resources and support to make life-altering changes. Employers gain productivity and reduce medical and worker’s compensation costs. And when these programs are integrated into medical plans, they encourage employees to take ownership over their well-being—and their health care costs.