PAYDAY Workforce Solutions Blog


Health, Wellness and the ACA Rules

The healthcare and wellness target goals for the new Affordable Care Act rules taking effect in January 2014 include improved health and better cost control of health care spending for Americans. Lowering chronic disease such as diabetes and heart disease and improving wellness levels through programs to assist weight loss and smoking cessation can improve overall health, resulting in lower health care costs for public and private organizations. The ACA creates new incentives for employer wellness programs and encourages wellness programs that protect consumers with rules governing both participatory and health-contingent wellness programs.

ACA Rules Effective January 2014

The new ACA rules for wellness programs mean employers are allowed to offer premium discounts and other incentives for those who participate in health and wellness programs. They can also charge higher premiums in certain circumstances. Employees now have choices to make regarding healthy decisions that affect their health care premiums.

The new rules include employers’ ability to provide incentives to participate in wellness programs, and distinguish between types of wellness plans. Incentives in the form of premium discounts can be between 20 and 30 percent of the total cost of medical coverage and can go as high as the maximum of 50 percent with smoking cessation programs. Wellness plans are either participatory or health-contingent, but the ACA holds employers accountable for employee eligibility in their wellness initiatives and incentives, which must be without consideration of health status, previous medical care or claims, genetic profile, physical and mental state, or disability.

Requirements for Wellness Plans

Participatory wellness programs rewards can only be based on employee participation, such as health club discounts and incentives for completing health assessments. Participatory wellness programs have no maximum limits on rewards.

Health-contingent plans have the potential to improve health by prompting behavioral changes, but they come with more requirements for employers. Health-contingent wellness plans are categorized as active-only or outcome-based, and both must be “reasonably designed” to either promote healthy lifestyles or prevent disease through participation.

Active-only wellness programs provide rewards for activities such as exercising or dieting; outcome-based wellness programs provide incentives for meeting designated goals such as lowering cholesterol, lowering body mass index or giving up smoking. A main component of health-contingent plans is that employees who are unable to participate in the wellness program can request a reasonable alternative to earn the incentives and employers must make arrangements for it. The alternative wellness activity requirements must be something the requesting employee can safely do. If not, and an employee’s doctor reports that the alternative is not safe or healthy, the employer must design another alternative that meets the doctor’s approval.

Effectiveness of Wellness Plans

Although the ACA is designed to promote health and wellness and healthy lifestyle activities, Reuters, RAND Corporation found that U.S. employee participation in health and wellness programs is low. Reuters also found that wellness programs haven’t delivered the targeted results of smoking cessation, weight loss and other health goals, which raises questions about the ACA's approach to wellness.

Whether or not wellness programs actually produce long-term savings as expected, they are beneficial for employees and employers alike. Employer health and wellness programs provide employees the opportunity to lower their medical insurance premiums and participate in low or no-cost activities that are healthy and that they might not otherwise participated in. The ACA rules make sure employers are not discriminating against employees because of their health status and that the rewards and incentives are fair.

PAYDAY's latest Smart Solution, Beneforce Insurance Solutions, can offer wellness programs and health insurance.  Beneforce can also help ensure ACA compliance and get your employees off to a great start!


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