In addition to helping your organization gain "employer of choice" status, workplace wellness programs can help employers contain health care costs, and improve both productivity and retention. Wellness programs have increased in popularity in recent years, with the 2012 Mercer health benefits survey indicating nearly 50 percent of large employers now use incentives or penalties to encourage higher participation in such programs, and to reward results achieved. 

Health care reform supports employers' wellness programs, incentives

In addition to helping your organization gain "employer of choice" status, workplace wellness programs can help employers contain health care costs, and improve both productivity and retention. Wellness programs have increased in popularity in recent years, with the 2012 Mercer health benefits survey indicating nearly 50 percent of large employers now use incentives or penalties to encourage higher participation in such programs, and to reward results achieved.

"The new rules state that PPACA will allow employers to reward workers up to 30 percent of the employee's cost of health care coverage for outcomes-related wellness programs, and up to 50 percent specifically for tobacco-cessation programs."

- Jennifer Piliero, Ceridian


"It's been proven that risk detection, intervention and coaching programs have high success rates for lowering organizational health care costs over time," said Jennifer Piliero, Ceridian's senior product manager for LifeWorks EAP, work-life and wellness services. "And when you add financial incentives, the impact on employee behavior increases dramatically."

The Mercer study stated that the most common incentive offered is a reduction in health insurance premiums, and the median reduction is $260 per year for employee-only coverage. This amount may increase in the coming years as health care reform allows employers to offer even greater incentives.

Health care reform increases wellness incentives

"The Patient Protection and Affordable Care Act (PPACA) encourages employers to add wellness programs to their group health plans as part of a national effort to get costs under control," Piliero said. The Departments of Health and Human Services (HHS), Labor and the Treasury released new proposed rules on wellness programs in late 2012, as well as a fact sheet explaining them. The new rules will be effective for plan years beginning on or after Jan. 1, 2014.

"Most notably, the new rules state that PPACA will allow employers to reward workers up to 30 percent of the employee's cost of health care coverage for outcomes-related wellness programs, and up to 50 percent specifically for tobacco-cessation programs," Piliero said. Prior to health care reform, workplace wellness program incentives were limited to 20 percent of the cost of coverage.

Rules for nondiscrimination

The new rules under PPACA build upon and clarify prior rules that were designed to protect consumers from unfair practices or discrimination. For example, health-contingent wellness programs — those that link rewards or penalties to health status or program outcomes — must offer alternative means to earn rewards for individuals who either do not meet the health standards or who cannot, for medical reasons, participate in the program. For example, a health plan that ties an incentive to a target body mass index (BMI) must offer the same incentive to a participant who does not meet the BMI target but who complies with a reasonable alternative.

The new rules state that employers must notify plan participants of the opportunity to qualify for the same reward through other means, and provides sample language for this purpose:

  • Your health plan is committed to helping you achieve your best health status. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at 1-800-729-7655 and we will work with you to find a wellness program with the same reward that is right for you in light of your health status.
Start planning now

Piliero said, "Even though the rules take effect next year, now is the time for employers to begin planning for changes or enhancements they would like to make to their programs in light of the new rules." If you are thinking about adding a new program or expanding your organization's current program, ask your Ceridian representative for information about LifeWorks wellness services, such as health risk assessments, health coaching, outreach and engagement services, and incentive programs.

For more information:

  • Read the proposed rules
  • Read the fact sheet