Benefit Design with the Consumer in Mind:How to make wellness programs work for consumers Lydia Mitts, Villers Fellow Families USA, January 19, 2012
Overview Wellness programs in today’s workplace Concerns with certain wellness program designs Changes to wellness programs in the ACA Wellness programs and ACA affordability provisions Consumer protections in wellness programs moving forward
What is a Wellness Program? Meant to be a positive benefit for workers Aim: Support healthy behavior changes and improve health of workers Added bonus: Lower health care costs, increase productivity Common Targets: Weight loss, smoking cessation, prevention of chronic disease Nutrition classes, gym membership, health coaching, web-based health resourceEssential to wellness is access to affordable health coverage and care
Wellness Incentives How can you get the incentive? Participation: Complete a smoking cessation course, web-based seminar Meet a Health Outcome: Benchmark BMI, glucose, cholesterol or BP level; tobacco free What is the incentive? Non health care based: Extra paid vacation time, gift cards Health care based: Premium discount or surcharge, variation in deductible or cost-sharing Incentives tied to health care costs and outcomes can jeopardize access to affordable coverage and care
Outcome-Based Health Care IncentivesHIPAA REQUIREMENTS: Incentives can vary health care costs up to 20% of total cost of premium Program must have a “reasonable chance” of improving health and not be “overly burdensome,” but no clear definitions are provided Threat of premium surcharge for not meeting a health outcome qualifies as a program Right to an alternative standard or waiver from outcome requirement if medically unsafe or inadvisable. Must be made more specific to ensure adequate protection
Outcome-Based Incentives: Back-Door Medical Underwriting? Wellness Program Medical Underwriting Enrollee completes health risk Applicant completes underwriting assessment, provides info about form, provides info about health health status status Submit biometrics (eg. blood and Submit biometrics (eg. blood and urine samples) urine samples) Premium increased if BP, cholesterol, Premium increased if BP, cholesterol, glucose above normal (at wellness glucose above normal program deadline) Doesn’t matter if incentive is structured as reward or penalty (surcharge or discount)- still makes coverage comparatively more expensive for those with greater health risks.
Participation-Based Health Care Incentives No limits on how much incentives can vary health care costs Problematic for workers who face personal barriers to participation Barriers disproportionately affect low-income workers No explicit HIPAA right to an alternative standard or waiver from participation requirements Still a potential barrier to affordable coverage
Changes to Wellness Programs in ACA§ 2705(j) of PHSA Maximum outcome-based incentive will increase to 30% of total premium starting in 2014 HHS, Labor and Treasury have authority to increase maximum incentive to 50% of premium§ 2705(l) of PHSA 10 State Individual Market Demonstration Project – July 2014 Wellness incentives allowed in individual market/exchanges Max. outcome-based incentive applies Option to expand to other states starting July 2017
What This Could Mean for the Average Worker…Employee Contributions to Coverage with 30% and 50% Wellness PlanPremium SurchargesType of Average Average Annual 30% Surcharge 50% SurchargeCoverage Annual Employee Premium, Contribution, 2011* 2011* Size of Employee’s Size of Employee’s Surcharge Total Surcharge Total Premium Premium Contribution ContributionIndividual $5,429 $921 $1,629 $2,550 $2,715 $3,636Family $15,073 $4,129 $4,522 $8,651 $7,537 $11,666*Data from the Kaiser Family Foundation/HRET 2011 Employer Health Benefits Survey.
Wellness Programs and ACA Affordability ProvisionsWellness programs intersect with key affordabilityprovisions:2.Eligibility for premium tax credits/employer “firewall”3.Calculating premium tax credits4.Calculating cost-sharing assistance5.Eligibility for exemption from individual mandateWhether or not these affordability provisions adequately assist families hinges on properly counting wellness incentives
Wellness Incentives and Premium Tax CreditsEligibility for Premium Tax Credits/ Exchange Coverage Employer coverage firewall threshold = 9.5% of household income What happens if the threshold is crossed due to a wellness incentive?Calculating Premium Tax Credits: ACA requires premium tax credits be calculated based on cost of benchmark premium before wellness discount – Good, but not enough Statute does not explicitly address surcharges but requires demonstration projects to: 1. Not result in decrease in coverage 2. Not result in an increase in cost to federal government
Priorities for Regulations on Affordability Priorities for Final Premium Tax Credit Regulations: Explicitly include any wellness costs to employees in the value of their premium contribution for affordability tests Explicitly prohibit premium surcharges in wellness demonstration projects Priorities for Future Regulations Regulations on individual responsibility must clarify that individuals receive an exemption if the cost of a wellness incentive makes coverage unaffordable (>8% of income threshold) Cost-sharing assistance regulations must ensure that wellness incentives that vary cost-sharing in exchange plans do not violate cost-sharing assistance thresholds in statute.
Strengthening Consumer Protections in Wellness ProgramsHIPAA requires that a wellness program has: “a reasonable chance of improving the health of participants and is not overly burdensome, is not a subterfuge for discriminating based on a health status factor, and is not highly suspect in the method chosen to promote health or prevent disease”This should mean that programs must include: Supports to help achieve measured outcome, free of charge- can’t be incentives alone First-dollar coverage of health services necessary to achieve measured outcome Evidence-based justification, including for using health care- based incentives
Strengthening Consumers’ Right to an Alternative Standard or Waiver Current requirement: Alternative standard or waiver from wellness requirement for those who cannot safely meet a health outcome goal Future regulations need to strengthen requirement: Better notification standards Protection of medical privacy Individualized Plan Expanded eligibility: Participation-based programs; Non-medical barriers
Key Takeaway Wellness programs that enable healthy behavior change and increase access to healthy living supports = GOOD!! Medical underwriting and insurance discrimination disguised as wellness programs = BAD!!Consumer-friendly wellness programs don’t affect workers’ access to affordable health coverage and care