Premium Incentives to Drive Wellness in the Workplace

In this paper, Georgetown University researchers discuss the phenomenon of employers increasingly turning to workplace wellness initiatives to curb rising health care costs and the growing prevalence of chronic conditions.

Workplace wellness programs can take many different forms, from on-site flu shots and smoking cessation programs to programs that impose significant financial penalties on employees who do not participate or fail to meet health goals, such as employer-defined body mass index, cholesterol, blood glucose or blood pressure levels. Recent changes enacted in the Affordable Care Act (ACA) allow employers to link greater financial incentives to the achievement of these and other clinical targets.

The authors note that while wellness programs, if properly designed, hold the potential to improve health and encourage healthier behaviors, there is also limited evidence of what works. If poorly designed, workplace wellness programs can shift costs to those with the greatest health care needs; run afoul of federal anti-discrimination and privacy laws and the ACA’s prohibition on health status rating; and potentially affect which workers remain in employer plans and which end up in the new health insurance exchanges, possibly with a federal subsidy.

As more and more employers implement wellness incentive programs for their workers, the authors argue that it will be important to establish standards at the state and federal level for consumer protections to guard against those programs that inappropriately punish workers in poor health, are overly coercive, or create perverse financial incentives that result in poorer health outcomes. It is unclear how many wellness programs link financial incentives to health outcomes, but regulators may consider regulations that require workplace wellness programs to include:

  • Health benefits that help pay for any required services such as nutrition counseling and disease management for targeted health conditions such as diabetes;
  • Multi-pronged programs that go beyond tying premiums to biometric measures and include support for improving behavior and health outcomes;
  • A reasonable time for participants to meet program goals, with incentives to make progress toward those goals;
  • Protections to ensure workers’ premiums are not rendered unaffordable because they cannot satisfy the employer’s health targets;
  • Safeguards to ensure such programs do not serve as a subterfuge for health status discrimination or result in adverse selection against insurance exchanges; and
  • Requirements for employers and vendors to report on incentives and other program elements, in order to identify best practices and any adverse consequences for employees.