Tucked inside one of the massive health care reform bills in the U.S. Senate is a provision that would raise financial incentives in corporate wellness programs based on health factors from 20% to 50% of the combined annual health insurance premium paid by the employer and employee.
Proponents of the measure believe it will help wellness programs be more aggressive about controlling costs and improving outcomes, while critics dismiss the approach as a loophole for insurance companies to penalize the most vulnerable segments of society.
In short, it’s a matter of perception. “One person’s carrot can look like somebody else’s stick,” says Kathryn Wilber, senior counsel for health policy at the American Benefits Council in Washington, D.C.
She says the amendment would put into statute a rule under the Health Insurance Portability and Accountability Act (HIPAA) prohibiting wellness program incentives from discrimination based on health status. The regulation “clearly took into account concern that there would be individuals who might not be able to achieve a particular goal on the first try, or even the second try,” she adds.
But an even larger question looms as to whether significantly raising financial incentives to promote healthy employee behaviors proposes a solution that’s worse than the problem it is attempting to cure.
“In some cases employers are paying up to $4,000 to get somebody to fill out a $10 health-risk appraisal (HRA),” notes Don Powell, Ph.D., president and CEO of the American Institute for Preventive Medicine in Farmington Hills, Mich. “That doesn’t make sense, particularly in these challenging economic times. Your incentives cost more than your wellness program.”
Reasonable accommodations
The amendment sponsored by Senators John Ensign (R-Nev.) and Thomas Carper (D-Del.) is included in
Although the Affordable Health Care for America Act passed by the House includes federal grants to small employers for qualified wellness programs, they may not have an incentive tied to premium discounts or cost sharing.
Incentives that are conditioned on a health status factor, such as attaining a certain cholesterol level or weight, may be delivered in the form of a lower deductible or premium, cash payment or gift as long as they must meet five requirements described in the final rules that comply with nondiscrimination regs under HIPAA.
They include the aforementioned 20% ceiling on any reward, a wellness program design that promotes health and prevents disease, an opportunity for program participants to qualify for a reward at least once a year, a “reasonable alternative” standard or waiver for obtaining the reward for employees who find it unreasonably difficult to satisfy the initial standard because of a medical condition and disclosure of all materials describing the program terms and availability of a reasonable alternative standard or waiver.
An example of a reasonable accommodation would be allowing
The fact is that some employees may be doing all the right things, but fail to meet certain healthy benchmarks, observes Jake Flaitz, director of benefits for Paychex in Rochester, N.Y. For example, he says a diabetic’s glucose level still could be elevated, even though they’re eating right and getting enough exercise.
Mindful of this dilemma, the payroll company’s wellness program requires completion of an HRA once a year and biometric screening every two years, as well as refraining from smoking or chewing tobacco products or joining a tobacco-cessation program at no cost to the participant. The estimated 10% of employees who have chosen not to follow these steps pay a slightly higher annual deductible, which at $300 Flaitz says is considered low by today’s standard. The point of this effort is to hold employees accountable for behavior that’s considered within their control, such as smoking.
Powell believes the amendment provides more reinforcement and greater incentive for
The average cash incentive in corporate wellness programs rose to $329 in 2009 from $204, according to a joint survey by the National Association of Manufacturers and Health2 Resources, while PricewaterhouseCoopers found that 64% of employers offer an incentive to encourage completion of an HRA, which is up from 57% in 2008.
Another form of discrimination?
Ann Kempski, director of health policy for the Service Employees International Union (SEIU) in Washington, D.C., objects to raising the ceiling on wellness incentives to 50% when the HIPAA rule wasn’t finalized until 2006 – a relatively brief time frame during which there hasn’t been enough experience to determine program effectiveness.
“There’s no evidence that employers have brought to Congress” suggesting they cannot achieve success without being able to reward or penalize employees “with a magnitude greater than 20% of the premiums,” she explains.
With health insurance premiums averaging $13,000 a year for family coverage, Kempski says there’s a tremendous amount of money at stake “to dangle in front of workers,” especially a lower-paid segment of the workforce represented by the SEIU that’s least able to afford the rising cost of coverage.
“There will be a discriminatory impact,” she surmises, “because there is a higher incidence of chronic conditions in lower-income workers who find it harder to hit attainment goals that employers are starting to put in wellness programs.”
There also could be occasions when the alphabet soup of employee benefits regulation doesn’t necessarily work in concert with one another. Powell cites HIPAA, the Americans With Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) as laws from various
Under GINA, for example, he notes that employers cannot inquire about one’s family medical history on a health-risk assessment (HRA), which is tied to many employee wellness programs and can, therefore, serve to undermine the use of incentives. He also says the U.S. Equal Employment Opportunity Commission recently ruled that ADA does not require that employees complete an HRA in order to receive money from an employer-funded health reimbursement arrangement, which runs counter to HIPAA.
“Congress is going to have to fix these inconsistencies due to its failure to monitor these legislative issues,” he says.
Guest blogger Bruce Shutan is a former managing editor of Employee Benefit News and a freelance writer based in Los Angeles.
