Obamacare Employer Guidelines

Beginning Jan. 1, many Americans will become more proactive about their health because their bad habits could hit them in the pocketbook. 

On Wednesday the Obama administration released a new set of guidelines for employers hoping to provide employees with incentives to get healthy under the Affordable Care Act (ACA).

The guidelines allow employers to charge employees up to 30 percent more to cover the cost of group healthcare plans. On the flip side, it increases the maximum permissible reward for things like smoking cessation to 50 percent.

While employers are allowed to charge employees with unhealthy lifestyles more, they are obligated to make reasonable concessions in an effort to not punish people with less than perfect health, so long as they are making strides to improve their wellness.

“The final rules support workplace health promotion and prevention as a means to reduce the burden of chronic illness, improve health, and limit the growth of health care costs, while ensuring that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on health status” according to a release from the Dept. of Health and Human Services.

The government also released a study from the RAND Corporation that examined companies with pre-existing wellness programs. It found that participation incentives, like those offered under the ACA, are effective in getting employees to comply, though the healthcare cost savings will take time to materialize. 

“Consistent with prior research, we find that lifestyle management programs as part of workplace wellness can reduce risk factors, such as smoking, and increase healthy behaviors, such as exercise,” the study concluded. “We find that these effects are sustainable over time and clinically meaningful.”

The New Guidelines for Employee Health

The guidelines focus on helping American employees be more active and make better health decisions, with a primary focus on obesity, high blood sugar and pressure, and tobacco use, all of which are risk factors for long-term health problems.

The 123-page document—developed by the U.S. Departments of Labor, the Treasury, and Health and Human Services—may appear intimidating, but policymakers have made it abundantly clear that the measure isn’t intended to be punitive.

The magic phrase used throughout the guidelines is “reasonable alternative standard,” in that rewards and programs should be designed for each employee based on “all the relevant facts and circumstances.”

“These final regulations state that a wellness program is reasonably designed if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals, and is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease,” the document states. 

While the guidelines are meant to improve public health, regulators are careful to not discriminate against those with health conditions that may keep them from exercising. One example they offer is that if a company institutes a running program but certain people, such as employees with arthritis, cannot complete it, participation in a walking program would be suitable to meet the federal guidelines.

For smokers, the guidelines acknowledge the ups-and-downs of addiction and that quitting may take a few tries. For example, taking smoking cessation classes may be enough to meet the requirements, even if a person still smokes.

“The intention of the Departments in these final regulations is that, regardless of the type of wellness program, every individual participating in the program should be able to receive the full amount of any reward or incentive, regardless of any health factor,” the regulations state.

Different Types of Wellness Programs

The new regulations define different types of wellness programs employers can use, including participatory wellness programs, which offer no reward, but involve reimbursing an employee for a gym membership or offering a diagnostic testing program, for example. 

A health-contingent wellness program, however, either requires ongoing activity or a measurable health outcome, such as lower body mass index (BMI), lower blood sugar level, or other factors in order for employees to receive an award. For an employer to use such a program, it must be reasonably designed, uniformly available to all employees, and open for qualification at least once per year. 

Again, no matter the program used, the federal guidelines are adamant that reasonable standards of health should be measured on an individual basis.

It doesn’t allow for employers, for example, to expect an overweight employee to be ready for the Ironman triathlon in six weeks.

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