How The Affordable Care Act Will Impact Business Wellness Programs

 Julieann Hansen

Why Wellness Programs?

The rising cost in health insurance, the poor health of Americans and the growing rate of chronic disease has created a need for workplace wellness programs. In 2011, 67% of companies offered some type of wellness programs, while 20% said they were planning on starting a wellness program within the next year. Employers know that wellness programs help reduce absenteeism, employee turnover and insurance premium costs.

Even though companies recognize how important wellness programs can be in a workplace, many are unsure how to structure and design the program itself, specifically with regards to incentives. Differing opinions exist on whether program participation, individual goal achievement, or other specific metrics should be incentivized. Fortunately, the ACA provides regulations to help standardize programs and incentivization.

Wellness Program Regulation

In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA), which added provisions regarding nondiscrimination in wellness programs, prohibiting companies from discriminating against individuals based on their health. In 2006, more regulations were added that divided wellness programs into two categories:

  1. Programs that do not require individuals to meet a health standard in order to receive an incentive or offer no incentive. (Fitness center reimbursement programs, smoking cessation programs.)
  2. Programs that require individuals to meet a health standard in order to receive an incentive. (Incentives tied to biometric screenings, or participating in a challenge to receive an incentive.)

HIPAA laws pertain specifically to the second type of wellness program. In order to meet the nondiscrimination requirements, these programs had to meet a number of conditions: how much of an incentive can be offered, reasonable design, frequency of opportunity to qualify, reasonable alternative standards and an alternative way to qualify for the incentive. The ACA has amended some of these nondiscrimination rules.

The New Rules

The proposed rules within the ACA maintain most of the 2006 regulations, with a few changes. The ACA clarifies each type of wellness program by providing solid definitions for “participatory wellness programs” and “health-contingent wellness programs.” Participatory wellness programs include programs that are based solely on participation, such as fitness center reimbursements, group challenges, weight-loss programs, on-site fitness centers and classes, or nutrition programs. Health-contingent wellness programs include biometric screenings, flu shots, or goal-oriented programs that base rewards on reaching goals.

With regards to the new rules, health-contingent wellness programs will be especially affected. The ACA has identified four standards that health- contingent wellness programs must follow in order follow the nondiscrimination requirements:

  1. Frequency of opportunity to qualify – A wellness program must give individuals the opportunity to qualify for the reward at least one time each year.
  2. Size of reward – The ACA increases the size of the reward from 20 percent of the total cost of employee-only coverage under a health plan to 30 percent, except tobacco cessation programs, which must reach 50 percent. For companies who are providing cash incentives, this rule does not apply.
  3. Reasonable alternative standards – A waiver or a reasonable alternative standard must be made available to all employees. This would apply to individuals who have a medical condition which inhibits their ability to qualify for the incentive.
  4. Reasonable design – The wellness program and the ability to earn incentives must be of reasonable design, not be overly burdensome, and not be highly suspect in method. Further clarifications on what reasonable design is and what a successful wellness program includes will be provided by the ACA.

What This Means to Your Organization

Currently, the majority of wellness programs do not fall under the definition of health-contingent wellness programs. It’s estimated that over 60% would qualify as participatory wellness programs, which include gym memberships, weight loss programs, and smoking cessation resources. Only a minority of employer wellness programs involve financial incentives for employee participation and very few come close to reaching the 20 percent limit that was established in 2006.

If your company decides to move to a health-contingent wellness program, these rules will apply to your program. Evidence suggests that incentive-based wellness programs that are tied to achieving health goals are much more successful and provide a higher return on investment than programs that are participation focused. These rules are not meant to hinder the implementation of an outcome-based wellness program, but to provide appropriate guidance and ensure there is no discrimination in the program.

The ACA will continue to adapt and to provide clarifications on these provisions. In January 2014, the ACA goes into full effect and may lead to further questions, requests and regulations. A few things to keep in mind as you plan for 2014 are:

  1. What kind of program will you sponsor? Base your wellness program off your company culture, employee population and company goals. The ACA is not creating a “one-size-fits-all” wellness program, but to provide guidance and directions on creating successful programs. It is still up to employers to determine what would work best in their specific setting.
  2. How will you motivate employees to participate? With both types of programs (health-contingent or participatory), employers must determine what the appropriate incentives are. Remember when setting up your program’s incentives that they must be sustainable over time.
  3. How will you communicate information to your employees? Communication strategies and plans are critical for a successful wellness program, especially if new elements are added.
  4. Plan ahead! Start thinking about 2014 and organize your plans, thoughts and committees now.
Incentives for Nondiscriminatory Wellness Programs . (2012). Health Policy Alternatives.

Labor, D. o. (2012). Incentives for Nondiscriminatory Wellness Programs. Federal Register, 70620-70642.Julieann Hansen is an ACSM Certified Personal Trainer, Certified Yoga Instructor, Certified ACE Group Fitness Instructor, Certified Spin Instructor, Certified Workplace Wellness Specialist and has her Masters in Public Health. She has been in the fitness and wellness industry for nearly 10 years.

She currently serves on the Exam Development Team for ACSM’s Committee on Certification and Registry Boards (CCRB). Julieann writes for a few online magazines and blogs, including and Patriots Fitness Magazine. Julieann currently works as the Wellness Specialist for Rocky Mountain Health Plans and loves helping employer groups implement their wellness programs. When Julieann isn’t working, she loves music, the outdoors, and running.