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To many employees, the impact of health benefit-based wellness incentives must feel like a whack upside the head. As health premiums continue to rise in double-digit percentages, many employers are taking drastic steps to stop the bleeding. Local companies are offering everything from cash to paid time off to persuade employees to participate in healthy lifestyle activities. A growing number of employers are tying participation in wellness programs to reduction in employee contributions to health insurance, all in effort to improve health and relieve the heavy burden of health benefit costs.
According to Mercer's National Survey of Employer-Sponsored Health Plans, American companies have experienced double-digit medical cost increases every year since 2001. These increases are expected to continue for the next five years. If this trend continues, employers could be facing health care cost increases close to 20 percent.
The news in Milwaukee is worse. A recently released study by the Government Accountability Office showed health care costs in Milwaukee were 27 percent higher than the average across all other metro areas in the analysis. Other studies over the years have shown health care costs are considerably higher in Milwaukee than in most other markets.
Many companies are convinced that having healthier employees is one of the most effective long-term strategies in reducing this trend. Yet, experience shows us that most Americans do not think about their health until faced with a health care crisis, either personal or financial. In the past, changing employee health behaviors has been a long and difficult process. However, with health care being one of the highest costs for employers, many companies are taking immediate action.
Tying incentives to the health benefit
A rapidly growing strategy among employers is to use a monetary incentive approach to employee health insurance. Included are programs in which employees earn points for participation in health risk appraisals (HRAs), achieving certain scores on HRAs, and participation in wellness program activities and preventive care. These points are then tied to awards such as cash, paid time off work, gifts or a reduction in the employee contribution to their health insurance.
There is a belief that the quickest and most effective incentives are tied to the health benefit. However, reaction to these methods varies among employees. Although the reduction in contribution to the health plan is designed to reward and reinforce positive lifestyle behaviors, to some employees, it may feel more like a penalty.
Let's look at an example. If a company's standard deductible for the family health plan is $500, but this year it will be raised to $1,500, it will most likely get people's attention. But if you and your spouse participate in the health risk appraisal, you will pay last year's rate of $500. If you are used to meeting your deductible, and you participate in the HRA, this could look like cash in your pocket, or it could look like you are being forced to participate in a program that under other circumstances you would not choose.
Here is another example. Your monthly insurance premium contribution is based on your HRA score. If you score high, between 86 and 100 points, you pay only 20 percent of the total premium. If you score low, under 70 points, you pay 35 percent of the premium. Under this system, knowing that you will lose 24 out of 100 points of your total score for smoking, and maybe another 15 points for elevated body fat percent and cholesterol, you may be motivated to quit smoking and cut out the fast food. However, the pressure of having to make these sudden changes may cause you to feel overwhelmed and angry.
Know the rules
So how do employers keep the motivation positive? How do you reward, not punish?
"An incentive structure in your wellness program should be designed to reward and reinforce positive lifestyle behaviors and behavior change," says Cheryl Mealey, manager of health and wellness strategy for Frank F. Haack & Associates, a Wauwatosa-based insurance brokerage.
Mealy advises employers to "keep the emphasis on the positive." Linking incentives to benefit plan design is a somewhat new frontier. To protect consumers, Uncle Sam has stepped in and created provisions to prohibit employers and health insurers from imposing a "penalty" for unhealthy behavior. These provisions are outlined in HIPAA's nondiscrimination provisions.
Under HIPAA, group health insurance plans may establish premium discounts or rebates, or modify copayment or deductibles in return for, "adherence to programs of health promotion and disease prevention." HIPAA refers to these programs as "Bona Fide Wellness Programs." A proposed regulation laying out the parameters for these programs has been issued, and a final rule is expected to be published in 2005.
Until then, employers can rely on the following proposed requirements, which stipulate that if you tie an incentive reward to a specific program score or standard:
¥ The rewards that are offered to an individual must be limited to a percentage of premium. It has been suggested that 10 to 20 percent is an appropriate level, but this percentage has not yet been finalized.
¥ The program must be reasonably designed to promote good health or prevent disease for the individuals in the program and must give individuals the opportunity to qualify for the reward at least once per year.
¥ The reward must permit any person for whom it is unreasonably difficult due to a medical condition to meet the wellness program standard to satisfy a reasonable alternative standard. For example, if the standard for cholesterol is 200 or below but the employee is unable to reach that standard due to genetic factors, a letter from their physician stating such will allow them to satisfy the standard.
¥ All plan materials that describe the terms of the wellness program must disclose the availability of a reasonable alternative standard.
We all know through previous experience with HIPAA that these government regulations can have us running in circles. Mealey recommends working with your benefits consultant, an attorney or an external vendor for advice on your wellness incentive program structure.
Connie Roethel, RN, MSH, is president of Complementary Health & Healing Partners (CHHP), a corporate wellness and health promotion services company with offices in Mequon. She can be reached at (262) 241-9947.
October 15, 2004, Small Business Times, Milwaukee, WI