Resolutions & Regulations: Incentivizing Your Wellness Program

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Resolutions & Regulations: Incentivizing Your Wellness Program

The start of a New Year guarantees two things in the workplace: (1) lots of new regulations to learn about and comply with in HR and (2) lots of New Year’s resolutions to get healthy among your employees.

In 2014 these two certainties are closely intertwined as new rules for employer wellness programs are among several ACA related regulations now on the books as of January 1, 2014. So with many of your employees undoubtedly working hard on their New Year’s resolutions, and HR working hard to keep up with the regulations, now is a great time to take a look at what types of wellness related benefits organizations are offering in the region and how these programs need to be structured moving forward.

What does the new regulation say?

The new ACA regulations related to wellness programs apply specifically to outcome-based programs that include incentives. Unlike participatory programs, outcome-based programs require that employees reach certain measurable wellness or health related goals. Under the new rules, these incentives can cover up to 30% of the cost of coverage if the desired outcomes are achieved. In the case of tobacco cessation programs, these incentives can now go as high as 50%.

In addition, these outcome-based programs must include “reasonable alternatives” for any employees who are unable to meet the specific health related requirements due to their own medical conditions. By requiring that employers offer an alternative method of achieving the incentive to those employees who would be otherwise medically unable to do so, the guidance suggests that this alternative rule, “is intended to ensure that outcome-based programs are more than mere rewards in return for results…and are instead part of a larger wellness program designed to promote health and prevent disease.”

Participatory vs. Outcomes Based Programs

Based on the results reported in the 2013 ERC Wellness Practices Survey, the new regulations appear to only apply to about 21% of organizations- those offering incentives as part of an outcomes-based wellness program. Interestingly more than twice that number of local employers are offering incentives to their employees just for participating in their organization’s wellness program.

The Wellness Practices Survey found a wide variety of incentives in use, ranging from discounts on insurance premiums to lunches to gift cards to sessions with a personal trainer. Each policy also varied significantly in terms of the level of detail and formality behind the policies. The following figure includes more detailed examples of the range of incentives and the range of the plan designs under each type of program structure:

Participatory Outcomes Based
Credits are awarded for participation in a variety of activities through the year, 1 point for attending a Lunch-n-Learn seminar, 3 points for running a 10K, etc. All employees reaching 36 total credits receive a $200 cash payout. The program emphasizes participation and does not require specific results to be achieved. Percentage off premiums for BMI < 30, Blood Pressure < 140/90, Glucose within recommended limit, Cholesterol < 240
Individuals that complete a health assessment and biometric screening receive a $600 discount on their individual health care contribution for the following plan year. Incentives in the form of wellness credits for outcomes based measures. Employees can receive up to a 20% reduction in their contribution level.
Gift cards are given for participation. Very informal at this point. Mostly raffles for participants. Refund of fees for those who meet outcomes. Nothing formalized.


View the Wellness Practices Survey

This survey report summarizes the results of ERC’s survey of organizations throughout Northeast Ohio on practices related to health care and wellness.

View the Results