New Wellness Program Rules Create Hurdles For Employers

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A recent expansion of nondiscrimination rules for workplace wellness programs could curb the ability of businesses to use incentives for improving employee health care outcomes.

Last May, the Department of Health and Human Services (HHS) set final regulations under the Patient Protection and Affordable Care act that broaden protections for employees who are medically or otherwise incapable of completing activity-based or outcome-based objectives to earn rewards or avoid penalties under worker wellness programs.

Under the new rules, beginning in 2014, employers must provide a “reasonable alternative standard” through which workers can still earn an activity-based wellness incentive if a medical condition prevents them from completing the activity. Employers will also be required to provide reasonable alternative standards for employees who can’t meet a health outcome plan target— such as a percentage reduction or benchmark in their body mass index, cholesterol, or weight.

There’s no way to tell how many employees will use these broader alternative standards, and/or if the reasonable alternative programs can work as well as the initial programs in terms of health outcomes. The additional discrimination protections tied to outcome-based incentives could make it harder for employers to use rewards as a way to drive engagement in health management, or gauge how well the programs are working if significant percentages of employees use alternative methods to obtain these rewards.

Says one employment law expert, “It’s very difficult to design a reward for the outcome that you want your employees to achieve if anyone who doesn’t meet that standard, regardless of whether they’re capable of doing so, is given an alternative means of getting that reward.”

To learn more about implementing the new HHS regulations in your workplace, just give us a call.