By Staff Report
Sep. 7, 2011
Dear Health Conscious:
Innovative companies want to encourage healthy behavior, but realize that off-the-shelf wellness programs rarely produce results or a financial return. Enlightened companies start by identifying specific health risks that will drive future health care spending. Next, they evaluate various total health management opportunities and assess the extent of behavior change required to reduce health risk, improve the management of chronic disease and guide participants to higher-quality health care. Only then do they develop population health management initiatives and specify the health metrics.
Some organizations establish elaborate point-system incentive plans. They provide taxable cash awards based on point totals for “easy-to-measure” health metrics: not smoking, participating in fitness programs, wellness classes, wearing seatbelts, completing health-risk appraisals, biometric screening, disease-management programs (if a viable candidate), and so on.
Cash-based incentives tend to work well. For many workforces, a cash incentive of $100 or more will enhance participation as long as there is no charge for the wellness program activity. Other companies design health reimbursement arrangements to permit tax-free receipt of the incentive, provided it is used for IRS-qualified health care expenses.
One approach is to require employees and spouses to select an activity to improve their health from a short list of qualifying activities. For wellness, they might complete a health risk assessment or participate in a weight management program. Those suffering from chronic illness might complete a telephone assessment with the company’s disease management vendor, or actively participate in the disease management program for three months. Participants who don’t complete the qualifying health activity are subject to penalties, including potentially higher premiums or cost sharing. Any program that includes a penalty has to meet the HIPAA standards for wellness programs (see below).
Covering more of the cost of medical plan coverage for workers who comply with the specific wellness plan requirements also is a popular strategy. Sometimes these are simple arrangements with two medical plans. Examples of wellness program requirements used for benefit plan differentiation may include completing a health risk appraisal or participating in a disease management program.
Some companies are more subtle, designing incentives and keeping them separate from their medical plan. Examples might include charging less money for healthy foods in the company cafeteria than for other foods, providing access to fitness centers near work or providing online information about health to employees.
Innovative companies initiate these programs with a “keep it simple” strategy to maximize participation. The health metrics are not stagnant. The performance bar can be raised going forward to improve health further. Incentive amounts are adjusted to produce the desired health management results.
Designing these plans to comply with HIPAA wellness program requirements published December 13, 2006, is very important. The federal Department of Labor provides an easy-to-use checklist for designing a wellness program that meets the HIPAA standards. Key considerations are that the value of the incentive/penalty cannot exceed 20 percent of the value of the medical coverage, and that reasonable alternative measurements must be available for individuals who cannot satisfy the metric because of a medical condition.
SOURCE: Christopher Goldsmith and Christopher Mathews, the Segal Co., February 20, 2008.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.
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