agency overview presentation 1 - introduction & background

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

Content © 2008 Zywave, Inc.

Workplace Wellness: Creating an Effective Incentive Program

Wellness issues important to you – brought to you by the insurance specialists at StoudtAdvisors.

A well-crafted incentive program can effectively motivate your employees to act, consequently achieving positive health effects and a strong economic return for your investment. To design a solid incentive program at your facility, take the following steps:

1) Determine what actions of your employees you want to increase or decrease with the use of an incentive.

2) Determine which hindrances exist to prevent the adoption of the desired actions, behaviors or modifications.

3) Select the rewards that you want to offer. They should be feasible based on your existing wellness program, while also hopefully producing the greatest behavioral change amongst your workers.

a) Incentives should be congruent with your work culture.

b) Incentives should be valued by your work population and should vary to appeal to a wide audience.

c) Awards must be large enough to motivate employees to act.

4) Develop rules for your incentives.

5) Conduct focus groups or survey employees selected at random to test the selected incentives.

6) Create a communication plan to introduce the incentive program.

7) Test the inventive program on a small population within your workforce, and then evaluate its effectiveness. Modify your program based on the field test.

8) Put your incentive program into action and evaluate its effectiveness at least annually. Revise your program as necessary.

a) The rules of the incentives must be clear and easy to understand.

b) Senior management should strongly endorse the program by motivating others and by participating themselves.

c) Remind employees about the incentives frequently.

Top Ten Signs You’re a Wellness Leader

1. You know that it’s all worth it!2. You expect a “food police” joke at every gathering involving food 3. You get “busted” the one time you park close to the door and take

the elevator4. Your coworkers share too much information, but hide their snacks5. Everyone knows you as the "Wellness Girl" or "Wellness Guy"

instead of your real name 6. You have a love/hate relationship with pedometers7. You ask someone to put some clothes back on during a weigh in8. Someone comments on your lunch, “Wow, that actually doesn’t

look that bad”9. You seek out restaurants where you won't run into coworkers10. The most common words you say are balance, moderation,

choices, and actually

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

Content © 2008 Zywave, Inc.

Workplace Wellness: Creating an Effective Incentive Program

Wellness issues important to you – brought to you by the insurance specialists at StoudtAdvisors.

A well-crafted incentive program can effectively motivate your employees to act, consequently achieving positive health effects and a strong economic return for your investment. To design a solid incentive program at your facility, take the following steps:

1) Determine what actions of your employees you want to increase or decrease with the use of an incentive.

2) Determine which hindrances exist to prevent the adoption of the desired actions, behaviors or modifications.

3) Select the rewards that you want to offer. They should be feasible based on your existing wellness program, while also hopefully producing the greatest behavioral change amongst your workers.

a) Incentives should be congruent with your work culture.

b) Incentives should be valued by your work population and should vary to appeal to a wide audience.

c) Awards must be large enough to motivate employees to act.

4) Develop rules for your incentives.

5) Conduct focus groups or survey employees selected at random to test the selected incentives.

6) Create a communication plan to introduce the incentive program.

7) Test the inventive program on a small population within your workforce, and then evaluate its effectiveness. Modify your program based on the field test.

8) Put your incentive program into action and evaluate its effectiveness at least annually. Revise your program as necessary.

a) The rules of the incentives must be clear and easy to understand.

b) Senior management should strongly endorse the program by motivating others and by participating themselves.

c) Remind employees about the incentives frequently.

Developing a Healthy Plan Design Using Incentives

Best practices using contribution differentials to motivate participation and behavior change

March 19, 2009

Contribution Differential Incentive

Wellness Rewards 200915% Savings on employee medical contributions

Phase Completion Time Employee:

1 February Health Risk Assessment

2 February - October

Complete one of the following programsFreedom From SmokingWeight WatchersWalking ChallengeTelephonic CoachingGym Attendance

Market Trends

A 2008 report showed 50% of employees where wellness program are available don’t know about the programs or see them as relevant.

Among employers offering incentives, the average value is estimated to be just under $200 per person per year.

Participation Incentives

10%

9%

11%

11%

32%

35%

36%

35%

58%

56%

53%

53%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Financial Incentive for reaching a health goal

Financial incentive for taking an HRA

Financial incentive for participating in healthcounseling

Reduced insurance premiums forparticipating in health counseling

Discourage Neutral Encourage

Survey Question: “Regardless of whether your employer offers it, please indicate whether each of the following would encourage or discourage you to participate in a health improvement program at work.”

Forrester. Boehm E. Incentives Entice Employees Toward Wellness, June 2008.

10%

9%

11%

11%

32%

35%

36%

35%

58%

56%

53%

53%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Financial Incentive for reaching a health goal

Financial incentive for taking an HRA

Financial incentive for participating in healthcounseling

Reduced insurance premiums for participatingin health counseling

Discourage Neutral Encourage

Cost of Incentives

Survey Question: “Regardless of whether your employer offers it, please indicate whether each of the following would encourage or discourage you to participate in a health improvement program at work.”

$0

$50

$25

$50

Forrester. Boehm E. Incentives Entice Employees Toward Wellness, June 2008.

Types of Incentives Used

17%

41%

25%

18%15%

28% 26% 24%19%

14%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Gift Cards PremiumReductions

Cash Bonus Merchandise HealthAccount

Contributions

20072008

Source: IncentOne. Capps K, Harkey J. Employee Health & Productivity Management Programs: The Use of Incentives, June 2007 and 2008 Spring Surveys of NAM and ERIC membership

Survey of Incentives Offered in 2007 and 2008

Market Trends

Participation

Cost

Increase Participation

30%

85%

10% 3%0%

10%20%30%40%50%60%70%80%90%

HRA Online HealthCoach

Com

plet

ion

With Incentives

Without Incentives$100

$50

Source: Results from a 2007 UnitedHealthcare National Accounts client study

Common Cents

HRA Inc. ($25pp) $2500

Screens ($45pp) $4500

Programs $1500Prizes $1000

Snacks $500

Total $10,000

100 EE’s, 2009 Budget = 10K

HRA -

Screens ($45pp) $4500

Programs $4000Prizes $1000

Snacks $500

Total $10,000

Contribution differentials can generate significant participation and positive health outcomes:1. when matched to your culture and readiness.2. when adequately implemented.3. when all of the pieces of the puzzle are in place.

Contribution Differential Incentives

Contribution differentials can generate significant participation and positive health outcomes:1. when matched to your culture and readiness.


Culture & Readiness

Multiyear Approach % of employers

16%

38%

48%

Health Outcome-

Based Incentives

Completion-Based Incentives

Participation-Based Incentives

Source: IncentOne. Capps K, Harkey J. Employee Health & Productivity Management Programs: The Use of Incentives, June 2008

Year 1: Simple

Years 2-3: Moderate

Years 4+: Complex

Culture & Readiness

Plan Strategically Align with goalsChoose items that usually call for a bigger

incentivePrioritize & simplifySee the big pictureThink ahead

Culture & Readiness

Disease Management

Healthy

Moderate Risk Disease

Management

Spouses

Part-Timers

Languages

LocationsComputer Literacy

Perceptions

Locations

Capacity ExperienceUsual Non- participants

Interest

Completion Time Employee and Spouses:

By February 28 Online Health Risk Assessment


Simple

Phase Completion Time To Qualify for Reward:

1 January – February

Employees Participate in Onsite Health ScreeningsBlood PressureFinger-stick: Cholesterol & GlucoseBMI

2 February - March

Employees and Spouses take the Online Health Risk Assessment


Simple


1 January – February Employees and Spouses take the Online HRA

2 January - October

Employees commit to being tobacco-free for the year-Or-Attend an onsite Freedom From Smoking Class or complete the program online by October 1 (or request a reasonable alternative)


Simple

Simple


1 January – February Employees and Spouses take the Online HRA


Submit Proof of Participation in One of the Following:

• Weight Watchers• Tobacco Cessation Program Gym attendance- print out of 60 visits

in 2009• Completion of a health quiz: Heart, Stress, or Nutrition• Obtain preventive exam and basic testing appropriate for age/sex

as recommended on preventive schedule• Health Media program


Culture & Readiness

Complexity

Participation

Contribution differentials can generate significant participation and positive health outcomes:1. when matched to your culture and readiness.2. when adequately implemented.


Moderate

Phase Completion Time Employee:

1 February

Online Health Risk Assessment Onsite Health Screenings

Blood PressureFinger-stick: Cholesterol & GlucoseBMI


Complete 1 of the following programsFreedom From SmokingWeight WatchersWalking ChallengeTelephonic Coaching


Adequate Implementation

CommunicationKickoff: Set or reset expectations

Keep it positiveLet them know what the future holds

Make the value tangibleOrganize in stagesUse all possible streams

Moderate/Complex

Spouse Employee Steps

x x HRA

x xScreening• Blood Pressure Screening event OR • Submit proof of a physical exam by September of 2009

x xEducation• Attend at least one(1) education session OR • Complete a Wellness Quiz

xOnsite ActivityParticipate in one(1) of two(2) annual Employee Wellness Activities


Adequate Implementation

Manageability TrackingManpowerMultiple LocationsTeam Capabilities

Contribution differentials can generate significant participation and positive health outcomes:1. when matched to your culture and readiness.2. when adequately implemented.3. when all of the pieces of the puzzle are in place.


Pieces of the Puzzle

Planning

Disease Management

Interventions

Evaluate

Supportive Environment

Data Collection

Cohesive Team

Senior Level Support

Consistency

Moderate/Complex

Steps Employees and Spouses:

1

Initial Assessment in FebruaryOnline Health Risk Assessment Onsite Health Screenings:

a.Blood Pressureb.Finger-stick: Cholesterol & Glucosec.Body Composition

2Take a Step Toward Weight ManagementMeet or make progress toward meeting recommended body weight by moving one block on the BMI chart by November(or) Participate in an approved weight management program

3Take a Step Toward Tobacco CessationCommit to being tobacco free (or)Participate in an approved tobacco cessation program by November

Wellness Rewards 2009*20% Savings on employee medical contributions

Additional guidelines in place to meet the legal requirements of a “bona fide wellness program”

Complex

1. All family members over age 18 on the plan take the online HRA2. Accept and participate in telephonic coaching if contacted (high risk

members) 3. Certify healthy eating habits 80% of the time 4. Certify participation in physical activity 3 times per week for 30 min.

or physician recommended regimen5. Meet or make progress toward meeting recommended body weight

by moving one block on the BMI chart6. Smokers are asked to participate in an approved tobacco cessation

program

*Additional guidelines in place to meet the legal requirements of a “bona fide wellness program”


Complex

Credit Requirements Qualify Disqualify

Participating Credit

• HRA• Identify & commit to eliminate controllable at risk behaviors• Set health related goals & objectives• Schedule & keep F2F appts.

1st of the next month

1st of the next month

Healthy Living

Reward

• BMI < 27.5• Total chol.<200, HDL>40 • BP < 140/90• Tobacco-free ≥

12 months

Annually during open enrollment

Annually during open enrollment


*Additional guidelines in place to meet the legal requirements of a “bona fide wellness program”

Legal Considerations

Participation-Only Wellness Programs:1. must be available to all similarly situated individuals.2. are NOT required to comply with any additional requirements

contained within the HIPAA Wellness Program Regulations.

Examples of this type of wellness program include:• Reimbursing employees for the cost of a health club

membership, without regard to health factors• Reimbursing employees for the cost of smoking cessation

programs, without regard to whether the employee quits smoking• Providing rewards for participation in a diagnostic testing

program

Legal Considerations

Outcome-Based Wellness IncentivesThe program MUST comply with the additional requirements contained

within the HIPAA Wellness Program Regulations:

1. Limit on reward2. Reasonably designed to promote good health or prevent disease3. Annual opportunity to qualify for reward4. Reward available to all similarly situated individuals and reasonable

alternative standard5. Disclosure requirements

Contribution differentials can generate significant participation and positive health outcomes:

• when matched correctly to your culture and readiness.

• when adequately implemented.• when all of the pieces of the puzzle are in place.


Legislative Brief Final HIPAA Regulations Governing Wellness Programs

* Health factors include health status, medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability.

The Health Insurance Portability and Accountability Act (HIPAA) was originally signed into law in August 1996. Although the HIPAA nondiscrimination regulations generally prohibit group health insurers (Insurers) or group health plans (Employers) from charging similarly situated individuals different premiums or applying different cost-sharing requirements based upon a health factor,* Employers and Insurers still have many opportunities to offer financial incentives in order to promote health and prevent disease through wellness programs.

This [b_officialname] Legislative Brief summarizes the final HIPAA Wellness Program Regulations that became effective for plan years beginning on or after July 1, 2007. Participation-Only Wellness Programs

Employers may offer wellness programs that provide a reward to all individuals that participate in the program, regardless of outcome. A participation-only wellness program must be available to all similarly situated individuals. However, this type of wellness program is NOT required to comply with any additional requirements contained within the HIPAA Wellness Program Regulations. Examples of this type of wellness program include:

Reimbursing employees for the cost of a health club membership, without regard to health factors;

Reimbursing employees for the cost of smoking cessation programs, without regard to whether the employee quits smoking; and

Providing rewards for participation in a diagnostic testing program.

Standard-Based Wellness Programs

Where a wellness program conditions receipt of the reward on an outcome, the program MUST comply with the additional requirements contained within the HIPAA Wellness Program Regulations. These requirements are:

Limit on Reward. Where the wellness program allows only the employee to participate, the reward must not exceed 20% of the cost of employee-only coverage (i.e., total amount of employer and employee contributions for the cost of employee-only coverage). Where dependents may participate in the wellness program, the reward must not exceed 20% of the cost of the coverage category in which the employee and dependents are enrolled (i.e., total amount of employer and employee contribution for the cost of family coverage).

Reasonably Designed To Promote Good Health or Prevent Disease. Wellness programs must be designed to promote good health or prevent disease. If a wellness program has a reasonable chance of improving the health of participants and is not overly burdensome, is not a subterfuge for discriminating based upon a health factor, and is not highly suspect in the method chosen to promote health and prevent disease, the wellness program will satisfy this requirement.

Annual Opportunity to Qualify For Reward. Wellness programs must give individuals an opportunity to qualify for the reward at least once per year.

Reward Available to all Similarly Situated Individuals and Reasonable Alternative Standard. In general, the reward provided by the wellness program must be available to all similarly situated individuals. For example,

Legislative Brief Final HIPAA Regulations Governing Wellness Programs

a reward could be offered only to employees and not retirees, or only to employees and spouses and not dependent children. The wellness program must also provide a reasonable alternative standard for obtaining the reward for certain individuals. This alternative standard must be available for individuals for whom it is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard, or for whom it is medically inadvisable to attempt to satisfy the otherwise applicable standard. A program does not need to establish the specific reasonable alternative standard before the program commences. It is sufficient to determine a reasonable alternative standard once a participant informs the plan that it is unreasonably difficult for the participant due to a medical condition to satisfy the general standard. The final regulations include an example demonstrating that a reasonable alternative standard could include following the recommendations of an individual’s physician regarding the health factor at issue.

Disclosure Requirements. All wellness program materials must include a description of the general standard and disclose the availability of a reasonable alternative standard.

Example of a Compliant Wellness Program:

In conjunction with an annual open enrollment period, an Employer distributes a form to all individuals that, if signed, certifies that they have not used tobacco products in the preceding twelve months. Employees who do not provide this certification are assessed a surcharge that is 20% of the total cost of employee-only coverage. Individuals that are unable to reasonably meet this standard due to a medical condition (e.g., addiction to nicotine) are not assessed the surcharge so long as these individuals participate in a smoking cessation program. The material used to describe the wellness program includes the following disclosure:

If it is unreasonably difficult due to a medical condition for you to achieve the standard for the reward under this program, or if it is medically inadvisable for you to attempt to achieve the standard for the reward under this program, call us at (444.555.1212) and we will work with you to develop another way to qualify for the reward.

If they have not yet done so, Employers should take the opportunity to review their wellness programs prior to their next plan renewal. The preamble to the regulations discussed several studies, including one published by Hewitt Associates, which found that many wellness programs currently in place do not comply with the HIPAA Wellness Program Regulations. The Department of Labor has released a step-by-step “Wellness Program Checklist” to help determine whether a wellness program complies with the final regulations.** Before the applicability date of the final regulations, good faith compliance with the rules was enough to avoid enforcement action. Now that the final rules are effective, federal agencies may choose to take enforcement action where wellness programs do not comply with the requirements described within this article.

Please contact your [B_officialname] representative with any questions. ** DOL Field Assistance Bulletin (FAB) 2008-02. 03/07, EAM 11/08 This [b_officialname] Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. Content copyright © 2007-2009 Zywave, Inc. Images copyright © 2007 Getty Images, Inc. All rights reserved.

Choose the Right Incentive Type: Consider the Pros and Cons

Reward Type Pros Cons

• High consumer demand • Taxable to employee in most cases Gift Cards • Consumer’s ease of use • Be careful not to spoil employees with

large amounts • Minimal expiration policies, if any

• Taxable to employee in most • Free of spending purpose cases and may have expiration time frame Cash or limitations • Cash does not carry brand recognition and may discourage guilt-free spending

Debit Cards • Consumer’s ease of use

• Restrictive redemption • Supports multiple-event campaign • Taxable to employee (not typically full

value) in most cases • Removes the general spend — promotes guilt-free self-rewarding

Merchandise • Typically more expensive due to setup/management

• Fixed budget cost control at employer level • Additional legal considerations to account

for • The right items up for grabs allow for excitement and buzz

Sweepstakes • Limited reinforcement in rewarding a consumer with a “chance” to win

• Potentially not as appealing to employees as cash or gift cards — more appealing to employer group

• Actively engages the employee in health care cost management HRA

Deposits • Costs more than gift cards unless rewards are greater than $125 to $150 annually

• Tax advantages to employer and employee allow for greater value

• Risk of over-contributions (tax • Actively engages the employee in event) health care cost management HSA • Real dollars (not employer-owned) Deposits • Tax advantages to employer and employee allow for greater value • Potentially not as appealing to

employees as cash or gift cards

• Some employees will take an all or nothing approach

• Low or no cost to the employer • Rewards ongoing participation Shift

• Needs consistent and appropriate communication

• Shifts some responsibility to the employees

Employee Contributions

• Legal requirements

agency overview presentation 1 - introduction & background

Documents