Wellness Plans – Don’t Throw the Baby Out With the Bath Water

Many of today’s employers offer robust wellness programs, which, typically, offer employees incentives for certain types of behaviors in an effort to improve health and, ultimately, reduce employer medical costs. These rewards can include premium discounts, membership in gyms and cash.

Wellness providers promise high rates of return on an employer’s investment in employee wellness (three to ten times is typical, according to Forbes). A recent study by The RAND Corporation delivered some disappointing numbers regarding cost savings associated with the lifestyle management portion of wellness programs. Overall, the study found that wellness plans failed to deliver much financial benefit to employers. Although the report writers found a “statistically insignificant” cost savings from these wellness initiatives, they also predicted that as these programs continue, medical costs will decrease over time.

New Patient Protection and Affordable Care Act (PPACA) Changes Will Impact Employers

The PPACA recently proposed rules that will go into effect on January 1, 2014, which will impact how employers manage their wellness programs. When the PPACA goes into full effect in 2014, the Department of Labor indicates that wellness plans must do the following:

• Be designed to promote health and prevent disease. The program must consider individuals who cannot meet the standards based on measurement, test or screening. The employer must devise and offer different and reasonable ways for those individuals to qualify.
• Programs must be available to all similarly situated individuals. If an individual’s medical conditions make it unreasonably difficult to meet specified health-related standards, there must be some reasonable alternative way to meet that standard.
• All individuals must receive notice of the opportunity to qualify for the award through some other means.

Don’t Run Afoul of the Americans with Disabilities Act.

Even if an employer complies with the rule, the organization is not exempt from other federal laws such as the ADA and FMLA. The strong language of the act reminds employers that their employee wellness programs must “not be a subterfuge for discriminating based on a health factor.”

Employers are constantly challenged by the need to monitor emerging employment trends and stay abreast of current case law. Because these regulations are still so new, case law and administrative decisions by the Department of Labor can expose your organization to increased employment liability.

Don’t Throw the Baby Out with the Bathwater

Business leaders across America commented on the new rules prior to their passage. One theme communicated by the business community was that if wellness programs become too complicated to administer or increase an employer’s liability, businesses will stop offering them.

Over half of US employers with more than 49 employees now offer wellness programs, according to the RAND study. Although employers remain committed to wellness plans, the new PPACA rules combined with the RAND study may make employers rethink their wellness programs. The entire RAND report is available at this link free of charge.

Before you decide to delay implementing or to abandon your wellness program, contact us for more information. We can help you sort through the myths and realities surrounding employee wellness.

How Can Employers Control the Cost of Employee Benefits?

The ALS Group offers these three suggestions to control costs:

1. Carefully design your health and wellness plan.
2. Utilize intense case management on your costliest plan members.
3. Continue to strengthen your negotiation tactics with third-party vendors.

The ALS Group’s Human Capital Practice can help you build  a more robust employee wellness program that complies with federal law and reduces costs. If you would like to learn more about how your company can strengthen your wellness initiatives, or you need assistance with any other human capital related issues, please feel free to contact me at 732.395.4251 or asica@thealsgroup.com.