Since the 1980s, many employers have adopted the holistic approach to their employees’ well-being. They’ve begun sponsoring activities that encourage workers to improve their health.
New rules under the Affordable Care Act (ACA), which took effect on Jan. 1, 2014, allow employers to reduce the cost of employees’ health insurance premiums if they participate in wellness programs that encourage exercise, smoking cessation, weight loss and health screenings.
The rules say employers may offer premium reductions of up to 30% for participating employees. (Prior rules only allowed for incentives that trimmed 20% from employee premiums.) On the flip side, the rules allow employers to charge smokers up to 50% more for health insurance.
Wellness programs must be structured so “every individual participating” can “receive the full amount of any reward or incentive, regardless of any health factor.” That means participation is the key, not employee success in actually improving their health.
The rules address wellness incentives for two kinds of programs:
- Those in which all employees become eligible for incentives simply by participating. Examples include completing a health assessment or taking a wellness class.
- Programs that aim for achieving a specific health goal, such as trying to lose weight or reduce blood pressure. Those programs are further divided into activities that are “outcomes-based”—lowering cholesterol levels, for example—and “activity-based” programs that involve physical effort, such as a lunchtime walking club.
Note: If an employer offers monetary incentives for activity-based programs (like lunchtime walking programs), it must offer an alternative way to cash in for employees who are medically unable to participate.