Connecticut employers looking to ramp up employee wellness programs to reduce health care costs are getting a boost from the Affordable Care Act.
Unlike many provisions of the federal healthcare law that have been delayed, new rules that will allow employers to offer more lucrative financial rewards to employees who improve their health are scheduled to go into effect Jan. 1.
The new rules allow employers to increase the reward or penalty — typically in the form of discounted or higher insurance premiums — for workers who meet or fail to meet certain health standards like a normal cholesterol level or weight.
"This gives employers flexibility to design wellness programs that align and reward employee behavior," said Mike Thompson, a principal with accounting and consulting firm PwC.
Employers incentivizing workers to change their health habits is an increasingly popular trend, Thompson said. Businesses are looking for ways to keep employees healthier to reduce healthcare costs and boost productivity by reducing absenteeism.
Employer wellness programs can include offering free health risk assessments and screenings for high cholesterol, to incentivizing employees to join a fitness center, smoking cessation program, or health education seminar.
Incentives range from cash rewards and gift cards to discounted insurance premiums or co-payments.
About 41 percent of U.S. companies with 200 or more workers offer some type of wellness program, while 10 percent of smaller firms offer them, according to a recent survey by the Kaiser Family Health Foundation.
Now, experts say, wellness programs could become more widespread or aggressive under the ACA.
Specifically, the health reform law raises the maximum discount employers can offer workers who meet certain health standards from 20 percent to 30 percent of the total cost of insurance coverage. In some cases, like wellness programs aimed at reducing or preventing tobacco use, discounts can go as high as 50 percent.
The ACA, however, also puts in safeguards to prevent discrimination, which has been a major concern of worker advocates. The law requires employers to offer a "reasonable alternative" to employees who are unable to meet certain health benchmarks due to some type of medical condition.
Workers who are unable able to reach a normal body mass index, for example, could be offered an incentive to join a walking program. Many employers have shied away from wellness programs that penalize employees, opting to use participatory or voluntary programs instead.
That could change under the ACA, experts say, now that there is more clarity on how to deal with workers who have medical conditions preventing them from meeting normal health standards. "These new limits give employers more leeway," Thompson said.
As employers contemplate adding wellness programs, however, there is a debate about return on investment. Financial savings, experts say, don't churn out overnight, and there is a risk for companies that experience high employee turnover not to see a huge return.
Paul Coppola, head of wellness program strategy and development at Hartford insurer Aetna, said it can take a firm three to five years to see a return on their investment in a wellness program, but there are short-term benefits.
"Even in an organization with high turnover, it helps boost productivity right away and decreases health risk factors within the organization," Coppola said.
Coppola said the Affordable Care Act likely will get companies to focus more on preventative services like weight loss and tobacco cessation programs.
Hartford insurer The Phoenix Cos. has had a multipronged wellness program since 2010, which has included offerings like free health risk assessments, biometric screenings, in-house yoga classes, and education seminars, said Suzette Louro, the company's assistant vice president of employee services.
Each year, Phoenix retools its wellness program. The 2013 theme is improving the health, wealth, and knowledge of employees, Louro said. At the start of the year the company brought in a nutritionist to educate workers on healthy eating. They also offered $25 to employees who wanted one-on-one coaching. Phoenix has brought in experts to talk about retirement planning and career goals and opportunities as well, Louro said.
All told, the Phoenix offers employees up to $375 in cash reimbursements or incentives for participating in various wellness programs. And they don't impose penalties on employees who choose not participate, offering a carrot without the stick, Louro said.
About 75 percent of Phoenix workers now do an annual health risk assessment, while 60 percent do biometric screenings.
Meanwhile, Boehringer Ingelheim Pharmaceuticals, which has its major U.S. operations in Ridgefield, is consolidating its wellness programs to focus on fewer initiatives that have greater financial incentives.
Jamie Eden, Boehringer's vice president of compensation and benefits, said the company has traditionally focused on participation-based programs, steering clear of initiatives that reward or penalize employees for meeting certain health standards.
He said the Affordable Care Act won't dramatically change Boehringer's wellness plan strategy for now, but it could have a significant impact on other employers.
"For some employers the financial incentives available could be very important and quite material," Eden said.