Let’s start by acknowledging the fact that there are employers in the market today who abuse the system and structure their wellness plans with cost-shifting in mind. Those short-sighted employers miss the entire value of what wellness can provide for both the company as a whole and for individual employees. Cost-shifting to employees is not the job of wellness.
Regulations are specifically designed to help prevent this very thing from happening. The ADA has noted that wellness incentive plans must be “reasonably designed” and “not merely cost-shifting schemes.” Similar language was used by the DOL, IRS and HHS in the HIPAA and ACA regulations. In order to have a compliant and fair plan, it is essential that you follow both the letter and spirit of the law.
Cost-shifting is a relevant topic when discussing workplace wellness though, especially since it has been a trend in most benefit plans nationally over the past 20 years. If you look at most employer-sponsored health plans, they have been slowly increasing employee contribution levels over the past few decades to cover the rising cost of the plan.
A recent report from The Towers Watson-National Business Group on Health states, “The average [medical and drug] costs continues to climb at a greater rate than the Consumer Price Index (CPI) and wages—to $9,560 in 2014, compared to $9,157 in 2013, up 4.4 percent. That’s nearly 28 percent more than employers paid just five years ago. During that same period, however, employee costs have risen 32 percent.”
On average, an employee’s share of their health plan’s costs is increasing faster than the average cost of their health plan.
That sounds like cost-shifting! The only difference is that the brunt of the increase has been equally spread among the employees, regardless of whether they are taking a proactive role in their health or not.
The ACA has established minimum required coverage and the maximum cost an employer may charge an employee to enroll. These guardrails are established to help prevent cost-shifting. However, when employers decide to go above and beyond and either offer plans far more generous than required or charge far less than what is required, ACA allows employers to incent employees with lower premium contributions or higher employer HSA contributions if they take proactive steps in reducing health risks. This empowers employers to drive a culture of shared responsibility around health instead of the traditional model of asking those who take proactive steps to minimize their risks to shoulder the cost for those choosing not to take a proactive role in their own health.
From our perspective at Bravo, the true role of wellness is to stop the cost-shifting trend that’s already been taking place for decades and better align the interest (and contribution levels) of everyone benefiting from employer-sponsored health insurance.
Consider this case study from Ardent Health Services, a client that accumulated savings of $57.7 million over the past five years through the wellness program. Click here to download the full case study.