U.S. companies are increasingly penalizing workers who decline to join “wellness” programs, embracing an element of President Barack Obama’s healthcare law that has raised questions about fairness in the workplace.
Beginning in 2014, the law known as Obamacare raised the financial incentives that employers are allowed to offer workers for participating in workplace wellness programs and achieving results. The incentives, which big business lobbied for, can be either rewards or penalties – up to 30 percent of health insurance premiums, deductibles, and other costs, and even more if the programs target smoking.
Among the two-thirds of large companies using such incentives to encourage participation, almost a quarter are imposing financial penalties on those who opt-out, according to a survey by the National Business Group on Health and benefits consultant Towers Watson (For graphic see link.reuters.com/byr73w)
For some companies, however, just signing up for a wellness program isn’t enough. They’re linking financial incentives to specific goals such as losing weight, reducing cholesterol, or keeping blood glucose under control. The number of businesses imposing such outcomes-based wellness plans is expected to double this year to 46 percent, the survey found.
“Wellness-or-else is the trend,” said workplace consultant Jon Robison of Salveo Partners.
Incentives typically take the form of cash payments or reductions in employee deductibles. Penalties include higher premiums and lower company contributions for out-of-pocket health costs.
Financial incentives, many companies say, are critical to encouraging workers to participate in wellness programs, which executives believe will save money in the long run.
“Employers are carrying a major burden of healthcare in this country and are trying to do the right thing,” said Stephanie Pronk, a vice president at benefits consultant Aon Hewitt. “They need to improve employees’ health so they can lead productive lives at home and at work, but also to control their healthcare costs.”
But there is almost no evidence that workplace wellness programs significantly reduce those costs. That’s why the financial penalties are so important to companies, critics and researchers say. They boost corporate profits by levying fines that outweigh any savings from wellness programs.
“There seems little question that you can make wellness programs save money with high enough penalties that essentially shift more healthcare costs to workers,” said health policy expert Larry Levitt of the Kaiser Family Foundation.
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Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.
