2013 is a Planning Year for the Affordable Care Act

Now that President Obama has been re-elected, The Patient Protection and Affordable Care Act (PPACA) should move forward with full steam. There are still questions about how the law will be implemented because state officials will control how various components of the law will be carried out in their own state. However, one thing that is certain are the law’s significant impacts on employer health and wellness programming. One survey suggests that employers are still unclear how the PPACA will impact them and employers have not made plans for implementation of the PPACA. 2013 is a year to create effective wellness programming to take advantage of new policies under the PPACA.

Wellness opportunities for employers starting in 2014:

1)      provide larger employee wellness incentives

2)      seek wellness grants

Employee Wellness Incentives

Starting January 1, 2014, the PPACA increases the incentive limits by permitting group health plans to give reductions of up to 30% of the total premium cost to employees who participate in such wellness programs. The incentive limit has the potential increase up to 50% (if approved by the Secretaries of Labor, Health and Human Services, and Treasury). Employer-based wellness incentive programs aim to reduce the overall cost of providing employer-sponsored healthcare coverage by giving enrolled employees incentives to follow healthy living habits and meet certain health-related goals, such as reducing body weight or stopping the use of tobacco. Incentives come in many forms including annual premium discounts, waivers of cost-sharing requirements, or benefits that would not otherwise be provided such as gym memberships.

The current limit for wellness incentives is 20% and multiple studies demonstrate the positive impact of using incentives to increase engagement in wellness programming and result in improved health outcomes. Additionally, surveys show that 73% of companies currently use incentives. Increasing the limit to 30% will result in greater engagement and improved health. The table below shows the average cost of coverage, based on Kaiser/HRET 2012 Employer Health Benefits Survey, and the amount of incentive for individuals and families under the new PPACA regulations.

 Incentive Variation Under 20%, 30%, and 50% Scenarios

Total Cost of Employer- Sponsored Coverage Amount of Incentive
20% 30% 50%
Individual  $5,615 $1,123 $1,684 $2,808
Family $15,745 $3,149 $4,723 $7,873

 
Increasing the incentive level enables employers to give back significant cash rewards to employees. Wellness incentives are a win-win for both employer and employee – reducing the costs of preventable disease while providing financial rewards to employees for adoption of healthy habits

In order to prepare for the incentive increase, companies need to think through creating an overall wellness strategy that will deliver the type of health results based on the needs of their workforce and one that fits with the culture of the organization. Once that strategy is set, companies need to seek the types of wellness services that will fulfill the needs of the population and deliver positive health outcomes including broad programming and targeted lifestyle interventions for people with preventable chronic disease.

Wellness grants

Federal wellness grants will provide $200 million over five years to employers including nonprofit employers who employ fewer than 100 full-time equivalent employees working and who were not providing a workplace wellness program on March 23, 2010. The Centers for Disease Control and Prevention’s Healthy Worksite Initiative will establish best practices for worksite initiatives. To qualify, wellness programs must be available to all employees and include the following: 

  • Health awareness initiatives, such as health education, preventive screenings and health risk assessments
  • Efforts to maximize employee engagement and encourage participation
  • Initiatives to change unhealthy behaviors and lifestyle choices (such as seminars, counseling, online programs and self-help materials)
  • Supportive workplace efforts, including policies to encourage healthy lifestyles, healthy eating, increased physical activity and improved mental health

Dana Wenter, MPH
Director, Wellness Consulting and Implementation, ConnectWell

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Comments

  1. Mitch Levinson says:

    Great overview of the impact of PPACA on wellness program incentives for employers. Do you have any references that can help me estimate the reduction in healthcare expenses my small company (<10 employees) resulting from implementation of a wellness program? I will need to justify this to my investors, and they are going to need to see an ROI. The company is still young, and I want to be prepared for growth.

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