Is the Affordable Care Act encouraging or discouraging wellness programs in group health plans? For plan years beginning after 2013, the maximum reward/penalty for all health-status based programs other than tobacco use can be up to 30% of the total premium; the new maximum reward/penalty is 50% if the additional reward/penalty is based solely on tobacco use. There continues to be no maximum reward/penalty for participation-only wellness programs (such as completing a confidential health risk assessment). So, employers can give employees a greater incentive to participate in wellness programs, right?
Unfortunately, proposed regulations on the "affordability" of your group health plan require you to determine an employee's cost of group health plan coverage as if the employee did not qualify for a reward (or did get hit with a penalty) under a participation-only wellness program or under a wellness program based on any health-status factor other than tobacco use. For example, your plan requires an annual screening for four biometric factors (blood pressure, cholesterol, blood glucose, BMI), and an employee who hits the "normal" ranges for each biometric factor gets a 30% reduction in his or her required contribution. When determining if your group health coverage is "affordable" for that employee, the employee's cost is measured as if the employee did not receive that 30% reduction (even if the employee does qualify for the reduction). However, if you grant a reward or impose a penalty based on tobacco use, you can measure the employee's cost as if the employee received the award (or avoided the penalty).
For plan years beginning before 2015, the proposed regulations generally allow the "affordability" determination for any employee to presume that the employee qualified for any reward (or avoided any penalty) from any wellness program (participation-only or health-status based) in effect on May 3, 2013. Unless the final regulations extend this treatment beyond 2015 (and the comment period for the proposed regulations is open until July 2, 2013), employers may be forced with choosing between their wellness programs and avoiding one of the employer shared responsibility penalties by offering "affordable" coverage.