One of the many provisions buried in the Affordable Care Act is the ability for employers to set up workplace wellness programs that incentivize employees to take better care of themselves. A healthier workforce doesn’t just reduce insurance premiums. It’s also a workforce that is more productive when it’s at work and that takes fewer days off when ill.
There are two different types of workplace wellness programs. A participatory wellness program is a program that provides a reward to employees that perform an action. Some examples of participatory programs include when a company provides access to a fitness center for anyone who chooses to use it, provides a bonus for taking a diagnostic test or incentivizes employees to attend health-related educational programs.
A workplace wellness plan can also be structured as a health-contingent program. These programs are more specifically based on employees’ individual health issues and can also come in two types:
- Activity-Based Health-Contingent Programs
- Outcome-Based Health-Contingent Programs
If a company chooses to implement a health-contingent program, it can offer a reward equivalent to up to 30 percent of an employee’s cost of health coverage. A program that is tied to stopping smoking can have a reward of up to 50 percent of a worker’s insurance coverage cost.
Activity-Based Workplace Wellness
An activity-based program is a program that focuses on getting an employee to take a certain activity towards improving their health. While a participatory program might include company support towards the cost of a gym membership, an activity-based program would require that worker to go to the gym on a predefined basis to earn the reward. Another example would be a reward tied to successfully completing a dieting program or committing to walk a certain number of times per week for a certain number of minutes per session.
Outcome-Based Workplace Wellness
Outcome-based programs focus on what a worker achieves rather than on what he does. An outcome-based plan starts with measuring a worker’s health. It can then set a goal for the measured standard. These programs can be tied to lowering cholesterol, lowering blood pressure or to reducing body-mass index. In these programs, the result is more important than the inputs that go into achieving it.
Whether a company chooses an activity- or an outcome-based program, the rewards are calculated the same way. Rewards are based on the total cost of coverage, spanning both the employer’s and the employee’s payment .For instance, if an employee’s coverage costs $4,800 per year and the employer offers a 30 percent rebate, the employee would receive a bonus of $1,440. She would receive the bonus regardless of whether she pays $1,200, $2,400 or more of her total healthcare cost.
Alternate Routes to Rewards
Workplace wellness programs must comply with other federal laws, including the Americans with Disabilities Act. This means that they must have an alternate path for employees to earn a reward if they are unable to comply with the initial terms of a reward. For instance, an employee in a wheelchair won’t be able to participate in a program that incentivizes walking, so some other type of incentive must be put in place for them.
The rules underlying both activity- and outcome-based workplace wellness programs are complicated. Adding in the additional risks of legal exposure that come with creating incentives that are meaningful but also available to every employee makes the process even more challenging. However, the benefits to be reaped from a healthier workforce are also well worth it in the long run.
Dana Rostro is the Director of Employee Benefits Sales and Operations at Texas Associates Insurors. Dana is ACA certified and has helped clients develop the best strategies for their operations within the new healthcare legislation.