Ultimate Results: DECREASED HEALTH CARE COSTS & INCREASED WORKER PRODUCTIVITY
Employers have long been able to vary the cost sharing of health care benefits with its employee based on each individual efforts put into their own health. Most Employers have been hesitant to do so because of possible HIPPA and Discrimination Laws.
I’m am pleased to inform you that a recently proposed rule, out of Obama Care, not only affirms the previous rule in 2006, but calls for increases in the severity and scope of the employers ability to adjust the employee responsibility even further.
Currently, The Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments) have implemented and approved health contingent benefit design programs by allowing benefits (including cost sharing), premiums, or contributions to vary based on participation in a wellness program, provided the wellness program adheres to their defined criteria to qualify. Based on the current rule, the Employer may vary the cost sharing on an Individual basis by 20%.
PHS ACT: Most of the principle and guidelines were adopted from the 2006 legislation, and in turn kicked it up a notch from there. These proposed regulations would increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan (and any related health insurance coverage) from 20 percent to 30 percent of the cost of coverage. The proposed regulations would further increase the maximum permissible reward to 50 percent for wellness programs designed to prevent or reduce tobacco use. Additionally, there is a provision that allows grandfathered plans to implement a qualified program of this sort without penalty or forfeiture of any clauses.
Hx has developed a program that meets the guidelines of all the governing agencies, established standards and protocols to handle any health issue that arises, and put in place a medical team to navigate your employee’s through the program.
Example 1. Facts. An employer sponsors a group health plan. The annual premium for employee-only coverage is $6,000 (of which the employer pays $4,500 per year and the employee pays $1,500 per year). The plan offers employees a health-contingent wellness program focused on exercise, blood sugar, weight, cholesterol, and blood pressure. The reward for compliance is an annual premium rebate of $600.
Conclusion. In this Example 1, the program satisfies the requirements because the reward for the wellness program, $600, does not exceed 30 percent of the total annual cost of employee-only coverage, $1,800. ($6,000 x 30% = $1,800.)
Example 2. Facts. Same facts as Example 1, except the wellness program is exclusively a tobacco prevention program. Employees who have used tobacco in the last 12 months and who are not enrolled in the plan’s tobacco cessation program are charged a $1,000 premium surcharge (in addition to their employee contribution towards the coverage). (Those who participate in the plan’s tobacco cessation program are not assessed the $1,000 surcharge.)
Conclusion. In this Example 2, the program satisfies the requirements because the reward for the wellness program (absence of a $1,000 surcharge), does not exceed 50 percent of the total annual cost of employee-only coverage, $3,000. ($6,000 x 50% = $3,000.)
Example 3. Facts. Same facts as Example 1, except that, in addition to the $600 reward for compliance with the health-contingent wellness program, the plan also imposes an additional $2,000 tobacco premium surcharge on employees who have used tobacco in the last 12 months and who are not enrolled in the plan’s tobacco cessation program. (Those who participate in the plan’s tobacco cessation program are not assessed the $2,000 surcharge.)
Conclusion. In this Example 3, the program satisfies the requirements because both: the total of all rewards (including absence of a surcharge for participating in the tobacco program) is $2,600 ($600 + $2,000 = $2,600), which does not exceed 50 percent of the total annual cost of employee-only coverage ($3,000); and, tested separately, the $600 reward for the wellness program unrelated to tobacco use does not exceed 30 percent of the total annual cost of employee-only coverage, $1,800.
Example 4. Facts. An employer sponsors a group health plan. The total annual premium for employee-only coverage (including both employer and employee contributions towards the coverage) is $5,000. The plan provides a $250 reward to employees who complete a health risk assessment, without regard to the health issues identified as part of the assessment. The plan also offers a Healthy Heart program, which is a health-contingent wellness program, with an opportunity to earn a $1,500 reward.
Conclusion. In this Example 4, the plan satisfies the requirements. Even though the total reward for all wellness programs under the plan is $1,750 ($250 + $1,500 = $1,750, which exceeds 30 percent of the cost of the annual premium for employee only coverage ($5,000 x 30% = $1,500)), only the reward offered for compliance with the health contingent wellness program ($1,500) is taken into account in determining whether the rules are met. (The $250 reward is offered in connection with a participatory wellness program and therefore is not taken into account. The health-contingent wellness program offers a reward that does not exceed 30 percent of the total annual cost of employee-only coverage.
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