Experience the Eide Bailly Difference
Wellness  Industry update and
health reform rules
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Contents
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Introduction
Call to Wellness
Wellness Program Timeline
Wellness Program Initial Findings
Patient Protection Affordable Care Act
(Health Reform) Wellness Overview
Applicable Health Insurance Plans
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Participatory
Health-Contingent
Conclusions
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Introduction
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Why the call to wellness
Where is wellness today
Health Reform (ACA) regulations
Where is wellness going and why
Will / can wellness impact the health care
spend
Although Most Americans believe Wellness
will help, few participate because of the
unknowns around reward and see risk in not
meeting the goal
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Call to Wellness – Current HC
System
Health care cost per capita rising much
faster than other industrialized countries:
% of household income spent
on health insurance
40%
34%
35%
30%
25%
17%
20%
15%
7%
10%
5%
0%
1987
2006
2016
2010 uninsured rate = 20%
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Call to Wellness – Current HC
System
Is rising health care cost per capita causing
higher quality than other health care systems?
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Call to Wellness – Current Outcomes
America’s Health Rankings is a 20+ year national
survey conducted by United Health Group along
with other community partners. Below is a listing
of key challenges affecting the US:
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Obesity
• Diabetes
• Smoking
• Physical Inactivity
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Challenges Measures
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Challenges Measures (continued)
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Cadillac Tax
Excise tax on “Cadillac” plans
• Starting in 2018
• Essentially is a 40% excise tax on the
differential between a health plan’s total
premium and the applicable benchmark
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Single plan benchmark = $10,200
Non-single plan benchmark = $27,500
Example  $11,000 premium would be $800 over the
limit and have a $240 tax per each enrollee in that plan
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2013 RAND Report Findings
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50% of employers offer wellness promotion initiatives
• 72% characterize their program as combination of
screening activities and intervention
• 80% screen their employees for health risks
• 77% offer lifestyle management programs
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2013 RAND Report Findings
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50% of employers offer wellness promotion initiatives
• 58% offer disease management programs
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2013 RAND Report Findings
Displayed below is the participation rates in select wellness
program components:
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2013 RAND Report Findings
Displayed below is the BMI percentage distribution in the
RAND study:
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Staying@Work Report
More and more US employers are concerned lifestyle
risks are resulting in increased employee illness, rising
medical costs ,and lost productivity
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Staying@Work Report
Employers are becoming more and more
aware of the need to help their employees
address these lifestyle risk factors:
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49% of US respondents say wellness is essential
84% plan to increase support for these programs
over the next 2 years
70% identify developing a workplace culture to
better address lifestyle risk factors
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Staying@Work Report
Despite all this, participation remains low
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50% participation on average in health
assessment appraisals
20% for other lifestyle change and health
management programs
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Weight management
Tobacco cessation programs
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Staying@Work Report
Survey suggests there is 4 reasons for the lack of employee
engagement
• Lack of clear strategy
• Lack of employee accountability
• Lack of effectiveness
What is causing so much stress?
• Employers believe it is a lack
of work/life balance
• Survey suggests it’s the lack
of guidance and support from
managers and concerns over
low pay or low pay increases
What difference does the cause
have on wellness?
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Staying@Work Report
Following lists ways to build a culture of health
• Gaining commitment of senior leadership
• Developing a comprehensive strategy
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Identified population health issues, data, employee
engagement
Implementing employee engagement strategies
Engage managers as role models
Ongoing communication
Reduce employee stress
Ease access to high quality health care
Understand health and productivity outcomes
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Staying@Work Report
Why be highly effective in wellness?
• 25% lower BMI index
• 25% lower absenteeism
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Identified population health issues, data, employee
engagement
40% more likely to have improved financial
performance than their peers
$1,600 differential in annual health care costs
per employee between high and low performing
organizations
Harvard Bus Review - $4 return for each $1
spent on wellness
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Wellness Timeline
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1996 HIPAA – Premium discounts or rebates
or modifications to OOPs for wellness
programs in health plans
• 2006 DOL, HHS, & Treasury finalized
regulations on HIPPA nondiscrimination and
wellness provisions
• 2010 PPACA included additional wellness
provisions
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Notes:
– HIPPA: Health Insurance Portability and Accountability Act, Pub. L. 104-191, added section 9802 of the Code, section 702
of ERISA, and section 2702 of the PHS Act
2 – OOPs: Out of pockets which may include copayments, deductibles, and/or coinsurance
3 – 2006 Final Regulations: 71 FR 75014
4 – PPACA: Patient Protection and Affordable Care Act (Health Reform)
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Health Reform Wellness Provisions
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Increase the maximum reward under healthcontingent wellness program from 20% to
30%
• Increase maximum reward to prevent or
reduce tobacco use to 50%
• Clarify reasonable design of healthcontingent wellness programs and
reasonable alternatives
• Plan years beginning after January 1, 2014
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Wellness Program Overview
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There are two types of wellness programs:
• Participatory  Incentives for simple
participation (lower risk)
• Health Contingent  Incentives for action or
outcome based on health factors(higher
risk)
Health Factor was defined in the 2006 regulations as
an individual’s health status and/or medical condition
(medical condition is based on a culmination of claims
experience, receipt of health care, and medical history)
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Participatory Wellness Programs
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Wellness programs which do not provide a
reward nor include conditions for obtaining a
reward based on a health factor
• Examples of participatory wellness programs
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Reimbursement for employee gym membership
cost
Diagnostic testing program which rewards
participation – not results
Rewards employees for attending a no cost health
education seminar
Completing a health risk assessment and disclose
results – irrespective of results
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Participatory Wellness Programs
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Comply with HIPAA nondiscrimination if the
program is made available to all similarly
situated individuals regardless of health
status
• Similarly situated individuals defined by:
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Bona fide employment-based classifications
May also distinguish between plan participants
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Employees
• Dependents
• Spouses
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Health-Contingent Wellness
Programs
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Require an individual to satisfy a standard or
outcome related to a health factor to obtain a
reward
• Activity Only – Require employees to perform
or complete an activity related to a health
factor to obtain a reward
• Outcome Based – Require employees to
attain or maintain a specific health outcome
to obtain a reward
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Activity Only Wellness Programs
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Examples include walking, diet, or exercise
programs
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Not however required to attain or maintain a
specific health outcome (participation only)
Some individuals may be unable to
participate in or complete the program due to
a health factor
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May be unable to participate in a walking program
• Final regulations require these individuals be given
reasonable opportunity to qualify for the reward
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Outcome Based Wellness Programs
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Examples include:
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Smoking cessation programs
Attaining certain results on biometric screening
Maintaining or improving certain medical condition
based on a health risk assessment (results matter)
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High cholesterol
High blood pressure
Abnormal BMI
High glucose levels
Rewards employees who are within a normal
or healthy range while requiring employees
outside normal to take additional steps
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Health-Contingent Programs –
Nondiscrim
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5 requirements in order to qualify as a
nondiscriminatory Program:
Frequency of Opportunity to Qualify: Opportunity
to qualify for the reward is at least 1 time per
year
2. Size of Reward: Reward cannot exceed 30% of
total costs / 50% if tobacco wellness is included
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Total cost by plan type: single | single plus dependent |
family
Plans and issuers have flexibility to determine
apportionment of reward amongst family members,
reasonable requirement
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Health-Contingent Programs –
Nondiscrim
Reasonable Design: reasonably designed to
promote health or prevent disease
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Reasonable chance of improving health or preventing
disease
Not overly burdensome
Not a subterfuge for discrimination based on health
factor
Not highly suspect in method chosen
Based on relevant facts and circumstances
CDC’s Guide to Community Preventive Services
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Best Practice
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Health-Contingent Programs –
Nondiscrim
Uniform Availability and Reasonable Alternative
Standards: Same reward be provided to an
individual performing a reasonable alternative
standard vs. the standard program
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Same full reward must be available under a reasonably
alternative standard
Plans and issuers have flexibility to determine whether
to provide the same reasonable alternative standard for
an entire class of individuals or on a individual-byindividual basis
Alternative Plan
Less Effort
Less
Reward
Initial Plan
More Effort
More
Reward
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Health-Contingent Programs –
Nondiscrim
Uniform Availability and Reasonable Alternative
Standards: some examples of alternative plans
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Education program  plan or issuer must make the
education program available or assist the employee in
finding the program – may not require individual to pay
Time commitment  must be reasonable
Diet program  Plan or issuer is not required to pay for
cost of food but must pay membership or participation
fee
Physicians  if doctor says plan standard is not
medically appropriate, the plan or issuer must provide a
reasonable alternative accommodating the doctor
Every individual participating in the program should be
able to receive the full amount of any reward or
inventive regardless of health factor!
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Health-Contingent Programs –
Nondiscrim
Notice of Availability of Reasonable Alternative
Standard:
5.
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Disclosure of availability of a reasonable alternative
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Contact information
Statement that recommendations of an individual’s
personal physician will be accommodated
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Wellness Program Application
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Group health plans: both fully insured and
self insured group health plans
• Grandfathered and non-grandfathered plans
• Excludes individual health plans
• Begin for plan years starting on or after
January 1, 2014
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Honeywell, etc.
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Government sues Honeywell over wellness program
(Star Tribune 10/29/14)
• Agency filing the suit said Honeywell violated the
Americans with Disabilities Act and the Genetic
Information Nondiscrimination Act
• Employees will be penalized if they or their spouses
do not take biometric tests
• Penalties
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Loss of $1,500 HSA contributions
$500 medical surcharge
$1,000 tobacco surcharge & additional $1,000 spouse
surcharge
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Conclusions
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Low participation in today’s wellness programs
Those participating are seeing positive results in
bending the health care cost curve
Most wellness programs today are participatory
only and not outcome-based
PPACA enhanced incentives for outcome-based
wellness programs from 20% to 30% | 50% for
tobacco in a push to move towards this method
Enhanced nondiscrimination rules for outcomebased programs – “reward for effort”
Much room for growth in wellness programs!
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Thank You
Questions
References:
1) The Commonwealth Fund: Health system performance
and cost
2) America Health Rankings
3) Workplace Wellness Program Study: RAND Corporation
4) 2013/2014 Staying@Work Survey: Towers Watson
These seminar materials are intended to provide the seminar participants with guidance in understanding the wellness
incentives programs available through health reform. The materials do not constitute, and should not be treated as professional
advice regarding the use of any particular wellness program.
Every effort has been made to assure the accuracy of these materials. Eide Bailly LLP and the author do not assume
responsibility for any individual's reliance upon the written or oral information provided during the seminar. Seminar
participants should independently verify all statements made before applying them to a particular fact situation, and should
independently determine the implications of any particular wellness program before implementation.
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