ACA Allows Strong Wellness Incentives Should We Go There

ACA Allows Strong Wellness Incentives Should We Go There

Our Thinking / Healthcare /

ACA Allows Strong Wellness Incentives Should We Go There
Calendar26 March 2015

When the Affordable Care Act (ACA) raised the maximum allowable wellness program incentives from 20% to 30% of an employee’s total premium — and to 50% as an incentive for not using tobacco — it seemed to signal that the federal government approved of employers’ taking a more aggressive approach to improving workforce health.

But then the Equal Employment Opportunity Commission (EEOC) sued a large employer in late 2014, which sparked considerable confusion regarding what penalties or rewards might be used for participating in wellness programs that include biometric screenings, meeting health status targets, or exhibiting health-conscious behavior. Although the employer’s surcharges in the 2014 case were within the parameters of the ACA, the EEOC maintained that the programs could not be considered voluntary and thus violated the Americans with Disabilities Act (ADA).

Republicans in both the House and Senate recently crafted bills to clarify the discrepancy, arguing that ACA-compliant wellness incentives do not fly in the face of the ADA. Last week the EEOC sent a Notice of Proposed Rulemaking on the interplay of the ADA and the ACA with respect to wellness programs to the White House Office of Management and Budget for clearance. And just this week, the House held a hearing aimed at advancing the legislation. While these attempts to align regulatory and congressional intent are pending, employers need some sort of guidance to help them interpret the law and establish an appropriate strategy.

But this development may provide impetus to consider other means of building employee engagement that go beyond the use of cash rewards tied to a health plan. Research shows that while financial incentives may motivate employees to take short-term action, they’re not very effective for sustaining healthy behavior change over the long run. Behavioral science suggests that employers need to shift from extrinsic rewards like cash, gift cards, or lower premiums, to intrinsic motivation — helping employees uncover personal reasons for committing to healthy behaviors.

The fact is that people are motivated differently. Some prefer rewards, while others do better with camaraderie, competition, and game mechanics. There’s also a segment in every employee population that likes the idea of wellness activities that lead to a contribution to the greater good — for example, actions that result in corporate giving to a charity. The most successful programs may allow for individualized incentives for behavior change, rather than any one cookie-cutter approach.

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