How Wellness Programs Affect Affordability and Minimum Value Calculations | New York Employee Benefits
We field a lot of questions from employers about wellness programs and how they comply with PPACA. Here are two of the most common ones from UBA’™s â€œFrequently Asked Questions (FAQ) About Wellness Programs’™ Legal Requirementsâ€:
Q: How does a wellness program affect affordability calculations?
A: The proposed regulations provide that when deciding if the employeeâ€™s share of the premium is affordable (less than 9.5% of the employeeâ€™s safe harbor income), the employer may not consider wellness incentives or surcharges except for a non-smoking incentive. In other words, the premium for non-smokers will be used to determine affordability (even for smokers). Any other type of wellness incentive must be disregarded.
Example: Acme has a wellness program that reduces premiums by $300 for employees who do not use tobacco products or who complete a smoking cessation course. Premiums are reduced by $200 if an employee completes cholesterol screening during the plan year. The annual employee premium is $4,000. Employee B does not use tobacco and completed the cholesterol screen, so the cost of his actual premium is $3,500 [$4,000 – 300 – 200]. Employee C uses tobacco and does not do the cholesterol screen, so the cost of her actual premiums is $4,000. For purposes of affordability, Acme will use $3,700 as the cost of coverage for both Employee B and Employee C [$4,000 less the available $300 non-smoker discount].
Q How does a wellness program affect minimum value calculations?
A: When calculating minimum value, if incentives for nonuse of tobacco may be used to reduce cost-sharing (i.e., the deductible or out-of-pocket costs), those incentives may be taken into account when determining minimum value. Other types of wellness incentives that affect cost-sharing may not be considered.
For nearly 50 frequently asked questions and answers about wellness programs United Benefit Advisors (UBA) request UBAâ€™s â€œFrequently Asked Questions (FAQ) About Wellness Programsâ€™ Legal Requirementsâ€. For general highlights about wellness programs, download â€œHighlights of the Wellness program Requirementsâ€.