By JoAnn Volk, Georgetown University Center on Health Insurance Reforms
Improving one’s health usually makes the top ten list for New Year’s resolutions so as we all hit that make or break time on our personal resolutions, let’s take a moment to focus on the proposed workplace wellness rules. The Departments of Health and Human Services, Treasury and Labor issued the proposed rules in late November and comments are due January 25th . We summarized that rule in an earlier post so in this post we want to take a closer look at what the rule means for families – the spouses and dependents of workers whose employers may tie premiums and cost-sharing to attainment of health goals based on biometrics like BMI and cholesterol levels.
Workplace wellness programs that use premiums, deductibles and co-pays (either as a “carrot” or a “stick”) to motivate workers to achieve health goals must meet certain standards to ensure the program is not discriminating against workers based on health status. Programs that tie financial incentives to meeting a health standard are called “health contingent programs.” The proposed rule would increase the allowable size of the reward or penalty beginning in 2014 – from 20% to 30% of the total premium, and up to 50% of the premium for health contingent programs that target tobacco use.
The proposed rule, like the 2006 rule that currently governs workplace wellness programs, allows employers to vary premiums or cost-sharing for family coverage, not just employee-only coverage, if family members are eligible to partiicpate in the wellness program. However, regulators invite comments on whether the reward or penalty should be prorated for the family members that fail to meet the standard. Similarly, the proposed rule on market reforms seeks comment on whether the tobacco surcharge should be prorated for family members who use tobacco.
If a surcharge is applied to the full cost of family coverage, rather than limited to family members who fail to meet the standards, the cost of coverage can become prohibitively expensive. Family premiums in 2012 averaged $15,745. A health-contingent program that applies the allowable maximum surcharge for the full cost of coverage could add a whopping $4,723 to a family’s share of the premium, and up to $7,872 for programs that target tobacco use.
Another area of the proposed rule that affects families is the requirement that health-contingent programs provide participants a “reasonable alternative standard” when it is “medically inadvisable to attempt to satisfy” the standard, or it would be “unreasonably difficult due to a medical condition.” The proposed rule offers two clarifications to this requirement: that the standard can be waived, rather than substituted with another standard, and that a reasonable alternative standard would have to be provided upon request, and that participants cannot be required to pay additional costs for the alternative standard, such as program fees. Perhaps most importantly, the Preamble notes, “The Departments intend that these clarifications with respect to offering reasonable alternative standards will help prevent health –contingent wellness programs that provide little to no support to enrollees to improve individuals’ health.”
Other than providing confirmation that financial rewards and penalties can be applied to family coverage premiums and inviting comment on whether to prorate the penalty, the proposed rule doesn’t explicitly address how programs should be designed for family members. The statute says the penalties or rewards can be applied to family coverage if families can participate “fully” in the wellness program, so they would have the same protections that apply to all participants. However, given the potentially significant financial impact on family premiums, and the additional challenges of effectively supporting family members participating in a workplace wellness program, demonstrating “reasonable design” and adhering to the requirement for reasonable alternative standard are especially critical for families.
My colleagues at CCF and many consumers have concerns about how these programs will administer the “sticks” for workers and their families who don’t measure up to their employer’s health standards and plan to submit comments.