Employers, providers and many others are scrambling to figure out what effect the health reform law, the Patient Protection and Affordable Care Act, will have on their lives.
In an ongoing effort for simplicity, let’s look at a small piece of the health reform pie - wellness programs.
The Train Has Left the Station
Many employer-sponsored health plans took matters into their own hands a long time ago. They implemented wellness programs, primarily motivated by runaway health care costs.
Employers hopped on a train of health assessments, health screenings and added buzzwords like absenteeism, presenteeism and productivity to their vocabulary.
They took comfort in the recent Harvard study that showed a positive Return on Investment (ROI) for their efforts.
What impact the health reform law will have on existing wellness programs remains to be seen; however, the following is a brief recap of some of the provisions related to wellness.
The Tracks of Wellness
Some of the wellness provisions found in the health reform law start this year, while implementation of others occurs later. Let’s take a look.
Incentives – Current regulations from the Health Insurance Portability and Accountability Act (HIPAA) allow wellness incentives up to 20 percent of the total premium. The health reform law increased the allowance to 30 percent. Again, it is based on the total premium – not just the employee’s portion.
It is not clear how many employers currently reach the 20 percent maximum, but some very large employers have lobbied for an increase. The effective date for the higher incentives is 2014. The maximum may increase to 50 percent after federal agencies conduct a study on wellness programs.
Pilot Program – The study establishes a 10-state pilot program on wellness programs in the individual market that allows rewards for participation. A report is due within three years of enactment of the health reform law.
Grants – The law creates grants for up to five years to small employers (less than 100 employees) that implement wellness programs. The allocation of funds begins in 2011. A grant program for evidence-based wellness services, especially for rural areas, will be established. The focus will be on preventive measures and decreasing the incidences of chronic illness. The funds allocation begins this year.
Survey – Within two years of enactment, federal agencies will conduct a national survey for evaluating employer-sponsored wellness programs.
Public Fund – Beginning this year, the law establishes a public health fund for prevention, health screenings and wellness education. $7 billion is allocated for fiscal year 2010 through 2015, then $ 2 billion for each fiscal year after that.
Some cautionary notes – employers offering incentives for healthy behaviors must offer alternatives to employees who are unable to meet the standard due to physical limitations. For example, if a wellness program offers an incentive for individuals who walk 10,000 steps a day, it must provide an alternative method for reward for those employees unable to meet the walking standard.
Another provision of the health reform law is an excise tax (effective in 2018) on Cadillac plans. Those are high-value plans. What employers spend on wellness programs, such as financial incentives, increase the total value of the plan.
The excise tax is 40 percent of the value of the plan that exceeds the amounts set by the health reform law ($10,200 annually for individuals and $27,500 for families).
Undoubtedly, the wellness train, and health care in general, will encounter many hills and valleys as we chug along through the health reform law. Let’s try to keep it a pleasant journey.