Are Gated Health Plans the Way of the Future?

July 22nd, 2014 by

The post below is a guest blog from Steve Byrd who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

hcw 7 14As employers continue to identify new ways to control their health plan costs, many employers are considering gated health plans as an option. A “gated” health plan, offers a different spin on the traditional wellness incentive that employers and employees have become used to.  Instead of offering employees lower payroll deductions through the completion of a health assessment or completion of a biometric screening, employers are now considering the option of offering richer benefits as well.

In a recent survey, more than 1,000 employers were asked to disclose current plan designs and changes they expect in the next three to five years. It’s a way for employers to control costs and reward employees for their healthy lifestyles.

52 percent of employers said their current health plan focuses on traditional trend mitigation approaches, such as employee cost shifting. Interestingly enough, it dropped to 21 percent when asked if this would be their preferred approach in three-to-five years.

Employers are beginning to lean more towards plans that require employee action.

In the upcoming years, over 60 percent of employers plan to introduce a gated plan, where employees must complete a task to obtain access to richer design options, compared to only 20 percent who “gate” their employees today. In the past we’ve seen incentives to help lower payroll deductions, but now with gated plans, there is an option to improve benefits.

Employees are also considering implementing the following tactics to mitigate health costs:

  • 72 percent of employers are or will be reducing subsidies for dependents
  • 52 percent of employers anticipate using unitized pricing—where employees pay per person and not individual versus family—up from 5 percent today
  • 42 percent of employers are considering offering high-deductible health plans as a full replacement plan, up from 15 percent today
  • 24 percent of employers plan to offer employees tools to guide decisions in plan selection and utilization, up from 19 percent today
  • 92 percent plan to offer cost transparency tools, up from 49 percent today

While employers are evaluating these new options, and continuing to ask their employees to become more engaged, it is important they evaluate their plan designs carefully.  These new gated plan options are permissible under HIPAA wellness rules.  However, it is very important to ensure they are designed correctly, as they must be carefully structured to comply with both ADA and GINA requirements.  Also, these plans would need to provide a reasonable accommodation to anyone who can’t participate due to a disability, as restricting eligibility in a plan based on participation could be seen as more of a penalty than a monetary premium differential.

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