The Affordable Care Act (ACA) established new guidelines to regulate and encourage the use of workplace wellness programs. In 2014, these rules allow employers to increase incentives or rewards offered as part of a health-contingent wellness program, provided the program follows certain guidelines.
While it is important to note that companies must follow specific guidelines if they choose to offer a wellness program, the ACA does not require any company to provide a program to employees.
Types of Wellness Programs
Not all wellness programs are the same. Some offer incentives to all enrollees, while others concentrate on rewarding specific health or fitness goals. The incentives available to employees can differ significantly depending on the type of wellness program you choose to put in place at your company.
The ACA divides workplace wellness programs into two general categories: participatory wellness programs and health-contingent wellness programs.
Participatory workplace wellness programs are open to any employee who wishes to participate. If rewards are offered, employees don’t have to meet specific goals to obtain them. Instead, they receive the reward simply for enrolling.
Participatory wellness programs can include:
- Smoking cessation programs (regardless of whether the employee quits smoking)
- Gym membership reimbursement
- Undergoing diagnostic testing and screenings (regardless of outcomes)
- Health education classes or seminars
These types of programs can be reimbursed, subsidized, or incentivized by employers as a reward if they choose to do so. There is no limit to the type of reward given for participating, as long as the reward is not dependent on an outcome.
- Health-contingent workplace wellness programs are programs that reward employees for achieving a specific health goal. There are two types of health-contingent wellness programs:
- Activity-only wellness programs require employees to perform or complete a health-related activity to obtain a reward (for example, walking, diet, or exercise programs). While activities must be completed to obtain rewards, the reward is not contingent on the achievement of a specific health outcome, like losing weight or reducing blood pressure.
- Outcome-based wellness programs require employees to attain or maintain a certain health outcome, like meeting exercise targets or not smoking, in order to obtain a reward. Generally, these programs have two tiers: a measurement, test, or screening as part of an initial standard, and a larger program that then targets individuals who do not meet the initial standard with wellness activities.
Health Contingent Wellness Program Rewards
Under the ACA, there is a maximum reward that can be given to employees under a health-contingent wellness program. For 2014, rewards for most programs and goals can equal up to 30 percent of the cost of the employer’s health coverage for an employee and his or her dependents. However, if the program is specifically designed to prevent smoking, the total amount of incentives offered can equal up to 50 percent of an employee’s cost of health coverage.
If you are interested in creating a culture of wellness, contact us to help guide you through the process.
