With wellness programs becoming such an important tool in managing long-term health benefit costs, employers are investing more heavily in wellness-related incentives. The 2012 Mercer health benefits survey found a significant uptick for the third year in a row in the use of incentives or penalties to encourage higher participation in wellness programs and to reward results. Nearly half of large employers now use these incentives or penalties, up from one-third in 2011. The most common incentive is a reduction in health insurance premiums for participating in these programs. The median reduction is $260 per year for employee-only coverage. With the use of incentives growing, employers will be looking closely at the wellness incentive provisions under the Patient Protection and Affordable Care Act (PPACA), aka health care reform, which take hold on January 1, 2014. The first thing employers need to know that is that PPACA increased allowable health-based incentives from 20% of the cost of health coverage to 30%. Programs designed to prevent and reduce the use of tobacco can offer rewards worth as much as 50% of the health coverage costs. How employers can structure these wellness programs is the subject of the proposed regulations recently released by the U.S. Department of Labor (DOL). The proposed rules cover both outright incentives for participating in wellness programs and how employers can implement “nondiscriminatory health-contingent wellness programs.” In a health-contingent wellness program, employees would only receive an incentive in the form of a premium reduction when they stop or reduce their tobacco use, reach a certain weight or show that they have a certain medical condition under control, including their cholesterol levels. Employees who do not meet these criteria may also be eligible for an incentive if they take certain additional required actions. For example, if employees undergo biometric screening or complete a health risk assessment that reveal certain medical conditions or risk factors, such as high cholesterol levels, high blood pressure, unhealthy weight, or high blood sugar, the employer can offer rewards to those employees who are within a normal or healthy range on these measurements. Employees who are outside the normal ranges on these measurements or considered at risk for certain conditions would have to take some action before they could receive the same reward, including meeting with a health coach, taking a health or fitness course, adhering to a health improvement action plan and complying with a health care provider’s plan of care. Interested parties have 60 days to comment on the regulations. Anyone who would like to comment on the proposed regulations can do so on or before January 25, 2013, by clicking here. The full text of the regulations is available here, and a fact sheet on the regulations is available here. The DOL has also released a report that evaluates employer-provided wellness programs, the wellness marketplace, the impact these programs have had so far and the role of incentives in wellness programs that is worth a look.