The COBRA Blog

PPACA Update: Employers Getting Tough On Wellness In 2014

Posted by Robert Meyers on Tue, Apr 02, 2013 @ 15:04 PM

The changing landscape of health care has many employers redefining their health care management strategies. A growing majority are turning to wellness incentives and penalties to proactively keep their employees healthy. In fact, the number of employers planning to implement wellness programs next year is expected rise considerably according to a forthcoming 2013 health care survey by Aon Hewitt due out in April.

With the Patient Protection and Affordable Care Act (PPACA) underway, wellness programs may prove to be an effective way to reduce benefit costs by enhancing the health of employees and their families. But in an effort to improve the interest and participation in these types of programs, many employers are offering a variety of incentives, as well as imposing nonparticipation penalties including premium rate increases. Earlier this month, CVS Pharmacy, Inc. announced it was planning to increase premiums by $50 to group healthcare participants who refused to voluntarily submit healthcare risk assessments by May 1, 2013.

Important findings from the Aon Hewitt survey indicated that while 83 percent of employers already offer some type of incentive such as smoking cessation, weight loss, biometric screening, and other health management programs, only 5 percent currently impose specific health insurance premium increases and penalties, while 16 percent use a combination of both. However, according to the survey many employers plan to take a tougher stance on wellness.

Key Survey Findings

Out of the 800 employers surveyed, 58 percent plan to impose some type of wellness program nonparticipation penalty over the next three to five years in an effort to encourage and motivate employees to improve their health. Other findings include:

  • 24 percent of employers plan to offer incentives for progress toward lower blood pressure, weight loss, and lower cholesterol levels.
  • More than 66 percent of employers indicated they will consider incentives based on improved health outcomes over the next few years.
  • 84 percent said that they currently offer incentives for voluntary participation in health risk questionnaires.
  • The percent of employers who used monetary incentives to promote participation increased from 37 percent in 2011 to 59 percent in 2012.

Additional studies also support that many companies recognize that the use of incentives, as well as penalties, will persuade and encourage employees to take more of a proactive stance in healthcare maintenance. A survey conducted by Towers Watson & Company, recently reported that nearly 18 percent of employers already have noncompliance policies in place, prompting employees to participate in health management programs, with more than 36 percent planning to impose penalties for nonparticipation in 2014.

The results of these surveys are meant to raise awareness as to how employers are using various deployment methods to encourage the overall health of their workforce to achieve success in cost deduction and improve productivity.

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Tags: ppaca, cobra administration, cobra blog, COBRA solutions, PPACA compliance, COBRA outsourcing, wellness programs

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