Defining Nondiscriminatory Wellness Programs Remains a Work in Progress

Paul E. Terry, PhD

The Department of Labor has issued new guidelines concerning the wellness provisions of the Affordable Care Act (ACA) that relate to the use of financial incentives, and the Office of Health Plan Standards and Compliance Assistance is seeking public comment. This document proposes “amendments to regulations, consistent with the Affordable Care Act, regarding nondiscriminatory wellness programs in group health coverage." These regulations increase rewards for wellness participation or outcomes from 20 to 30% or up to 50% related to reducing tobacco use. (Federal register)

In the past several years, StayWell Health Management has published several studies concerning the use of financial incentives in wellness programs, so my colleagues, Drs. David Anderson, David Gregg, and I, felt obliged to offer some reactions to the proposed new language. All public comments will be posted at: By way of summary, we commended the department for its painstakingly earnest attempt to placate the detractors of the original proposal who believe that incentives could too readily become a subterfuge for insurance underwriting. Still, we believe their attempt to divide incentives into participation based or health contingent models may well shed more heat than light on the matter.

Proposed regulations

The proposed regulations regarding a health-contingent wellness program include a provision that appears to say members must be offered the total reward even when they have no medical condition that would make it unreasonably difficult to meet the health standard or medically inadvisable to attempt to do so, based solely on meeting a participation-based alternative standard. StayWell believes this effectively negates any substantive programmatic difference between a participation-based and health-contingent wellness program. Participation in a wellness program by an individual is, in effect, a default option for anyone who is not inclined to make an effort at even making reasonable progress toward the standard, much less achieve it. In effect, the health-contingent wellness program is fundamentally a participation-based program with a provision that allows an employer to waive the participation requirement for individuals who already meet the health standard.   

Conversely, we believe a health-contingent wellness program should be clearly differentiated from an essentially participation-based approach by establishing a progress-based alternative standard for those who do not meet the health standard but are not granted a waiver because it would be unreasonably difficult to meet the health standard during the time allotted or medically inadvisable to attempt to do so. We believe the progress-based alternative standard should be individually tailored and supported by a health coach working under medical supervision to ensure that the progress-based goal aligns with health guidelines and does not pose increased risk to the individual.

Health Enhancement Research Organization

StayWell collaborated with the Health Enhancement Research Organization, often known as HERO, along with the American College of Occupational and Environmental Medicine; the American Cancer Society and the American Cancer Action Network; the American Diabetes Association, and the American Heart Association to bring together the views and concerns of the consumer (in this case the employee) and of the employer as represented by our member organizations. Through a collegial process, we added our support to developing a joint consensus statement on designing employer-sponsored wellness programs using outcomes-based incentives, which provides guidance to employers either considering or embarked on providing health-centric wellness programs regarding what should be considered in their plan.

StayWell concurs with much of what the HERO organization offered by way of response to the Department of Labor; that a worksite wellness program should be tailored to achieve improved health outcomes for individuals and populations.

Our industry experience to date indicates that in some organizations, an opportunity to receive a lower premium tied to a health factor standard, so long as it is not overly burdensome, may be an incentive to change behavior. In other organizations, however, some premium differential designs may have unintended consequences, such as deterring certain high-risk individuals or groups from engaging in programs. The dearth of evidence about the potential effect of these new ACA regulations makes a one-size-fits-all approach premature. Furthermore, because there is limited research in this area, any policy-setting approach is unsubstantiated at best. Accordingly, we will continue to urge transparency and data sharing in our professional network to identify and promulgate best practices.

Organizational culture

As importantly, our research has shown that incentives work best when bolstered by an organizational culture that makes healthy choices the easy choices for employees. Dan Buettner, a scholar who has researched longevity worldwide, summarized the vital role of culture nicely in an article in the New York Times Magazine titled, The Island Where People Forget to Die.

Buettner wrote: “For people to adopt a healthful lifestyle, I have become convinced, they need to live in an ecosystem, so to speak, that makes it possible. As soon as you take culture, belonging, purpose or religion out of the picture, the foundation for long healthy lives collapses. The power of such an environment lies in the mutually reinforcing relationships among lots of small nudges and default choices.”

Paul E. Terry, PhD, is CEO of StayWell Health Management

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