Benefits and Compensation

ACA Will Make Wellness Even More Important

Your wellness program may get much more important under the Affordable Care Act (ACA), says Morris, a member of the firm Epstein Becker Green in its Washington, D.C., office who specializes in benefits.

There are already many benefits to wellness programs, but Morris is convinced they will become even more crucial as the ACA unfolds over the next several years.

Higher Premium Differentials Will Drive Wellness Popularity

Beginning in 2014, the ACA will allow for between 30 percent and 50 percent premium differentials for employer-sponsored healthcare coverage. The ACA may also remove the voluntary aspect of wellness program restrictions, predicts Morris.

Many more employees are likely to be swayed toward participation in wellness programs with that 30 percent to 50 percent premium differential as a carrot. To offer that substantial a difference, companies are likely to require significant participation, which should yield even more significant health savings than are being achieved now.

And, of course, if programs become mandatory, that could mean even bigger savings. (It may bring bigger headaches for HR as well, as those most-reluctant participants get dragged into the program.)

However, the biggest impact of wellness programs, Morris feels, will be on mitigating the impact of what’s been dubbed the "Cadillac tax." Beginning January 1, 2018, he explains, insurance companies and plan administrators of self-insured plans will face a 40 percent nondeductible tax on so-called Cadillac healthcare coverage. That’s any plan that costs at least $10,200 for an individual or $27,500 for a family, including both employee and employer contributions.

Such expensive plans may provide good care, but under the ACA, they’re simply too pricey.

The answer, Morris urges, is wellness programs to fill in the gaps and avoid those stiff employer taxes.

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How About an On-site Medical Clinic?

Here’s one more cost-saving option that Morris encourages employers to consider—on-site medical clinics. These clinics cost employees and employers far less and can offer more care than outside providers.

Think your company is too small to offer such an option? Consider your location: If you operate in a high-rise building or an industrial park, you may be able to cooperate with neighboring businesses to create a jointly sponsored clinic that would serve all your employees combined.

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