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Wellness programs flourish thanks to health reform

Heather Trese - BenefitsPro

Health care reform is changing many things about the insurance industry, and in some cases those changes are not in the broker's favor. But at least one area of the market is seeing a boon thanks to the Affordable Care Act — wellness plans.

The ACA includes several provisions that allow wellness plans to flourish. For example, the ACA allows employers to offer incentives to employees who participate in wellness plans and/or meet certain health standards. The law increases the reward amount beginning in 2014, when rewards may be up to 30 percent of the cost of coverage (currently at 20 percent), and the reward limit may be increased to 50 percent of the cost of coverage. 

[See also: More coverage on Wellness]

This is just one of the ways the ACA is allowing wellness programs to grow. But how can brokers get involved in this market, and how can they encourage employees to participate once the plans are put in place?

Changing plans, new strategies

Cindy LaQuatra, a senior consultant with Benefits Resource Group, says wellness plans are rapidly evolving to meet the demands of employers and workers alike.

"When you talk to employers now, most of them now say they have a wellness program, but the level of sophistication is all across the board," she said. "If they have a Biggest Loser program or a walking program they think they have a wellness program, and they do, but there are a lot more comprehenive programs available now, like biometic testing, on-site clinics ... programs that are targeted and tested for what’s most prevelanat in their population."

[See also: 10 key characteristics of wellness programs]

LaQuatra added that larger employers in particular are getting better at recognizing the specific health needs of their employee population and choosing wellness programs that match those needs.

Wellness plans are responding to the high cost of care, and the new evolutions in the plans are trying to bring the costs of the overall plan down by keeping populations as healthy as possible, says John Kaegi, chief corporate strategist with Healthstat, Inc.
But he also thinks the larger employers have different strategies than the small employers.
"Some of the more sophisticated employers think [health reform] is going to stay intact, so they’re doing everything now and thinking that maybe others will model the programs after them," Kaegi said. "The smaller plans, I don’t think they think about the correlation. They go to conferences and have people telling them over and over that the best way to reduce costs is to make your employees healthier ... so I think for them, that’s what’s driving the interest in health and wellness [more than the ACA]."

Incorporating wellness

For brokers who have never sold wellness plans before, or who are just starting out in the field, there is a lot to consider when introducing wellness plans to employer clients.
For example, Kaegi points out the issue of postive versus negative reinforcement, and how studies have shown that rewards can affect an employee's willingness to stick to a plan.
"If you say to someone, 'We're going to take $2,000 off your deductible if you stop smoking,' they'll stop smoking just long enough to get the discount, then they'll start again," he said. "But, if you say you'll add $2,000 [to the deductible] if they start smoking again, they are much less likely to go back. It's the same amount, but the reinforcement is different."
Kaegi adds that often the problem with discounts is that the people participating in the wellness program are the people who would have had those healthy habits anyway — you're not reaching the population you need to. But with the right incentives, you can make it work.
Ultimately, it comes down to choosing incentives that work with the specific population you are designing the plan for — not just choosing a one-plan-fits-all model. 
But LaQuatra discussed one strategy for brokers that's even more key than choosing the right types of incentives: partnerships. "Brokers need to partner with a wellness company that can go on site and do the biometrics and the educational sessions that are needed."

An uncertain future

LaQuatra says part of the reason wellness plans are getting more popular is that employers have no idea what the future will bring, and that concerns them.

"Employers today are very uneasy because they don’t have a good handle on how health care reform will impact them financially," she said. "Who knows what will happen, but employers are really struggling with how that will affect their cost. More than ever, they’re looking at ways they can better manage their health care plans. Slowly but surely, employers are starting to learn that it works the same way as workers comp...the more they can do to mitigate or control claims, the better the rates."