Incentives for Nondiscriminatory Wellness Programs in Group Health Plans. Not exactly what you had in mind for some light summer reading, eh? You probably won’t be toting the 123 page Affordable Care Act (ACA) final wellness regulations document with you to the beach, but it’s still critical that workplace wellness programs understand the changes. You can read the full ruling here but we’ve summarized a few key things so you can still enjoy your summer.
The rules continue to support workplace wellness programs and help ensure employers do not use wellness programs as a way to discriminate. The regulations state there are two types of wellness programs: 1) Participatory and 2) Health Contingent.
A participatory wellness program functions in a way that the reward (or penalty) is based on participation only – so the employee does not have to meet a health standard. For example, providing a reward for attending a smoking cessation program or completing a HRA.
A health contingent wellness program requires an individual to satisfy a standard related to a health factor to obtain a reward. This standard may be performing or completing an activity relating to a health favor or it may be attaining or maintaining a specific health outcome. There are two types of health contingent wellness programs: activity-based or outcomes-based. The activity-based wellness program provides a reward if an individual performs an activity related to a health factor, but it does not require the individual to satisfy any specific health outcome. An example of this might be to require an employee to engage in a physical activity, like a walking program, but with no required outcome to receive the reward.
For the outcomes-based option, the user must attain or maintain a health standard such as body mass index, cholesterol, blood pressure, etc. or meet an alternative standard or qualify for an exemption.
Five Requirements for All Health Contingent Wellness Programs
A health contingent wellness program (whether it is activity-based or outcome-based) must meet five requirements under the Federal Regulations to be deemed nondiscriminatory under HIPAA.
- Frequency of opportunity to qualify.
Individuals must be provided with the opportunity to qualify for the reward under the program at least once per year.
- Size of reward.
The reward for compliance with a wellness program cannot exceed 30% of the total cost of employee only coverage (employer share + employee share) or 50% for a program promoting tobacco cessation.
- Reasonable design.
The program must be reasonably designed to promote health or prevent disease.
- Notice of availability of reasonable alternative standard.
You must provide notice of the availability of a reasonable alternative standard and this must be disclosed in all materials describing the terms of the wellness program. A sample statement: “Our goal is to help you be healthy by providing a wellness program that includes rewards. These rewards are available to all employees. If you think you might be unable to complete tasks required to earn a reward in the wellness program, contact us at [insert information] and we will work with you to modify the tasks so you can still qualify for the reward.”
- Uniform availability and reasonable alternative standard.
The program must permit an individual to achieve the reward through a reasonable alternative standard.
Activity-Based: The program must provide an alternative to achieve the reward to individuals for whom it is unreasonably difficult to satisfy the standard due to a medical condition or it is medically inadvisable to attempt to satisfy the standard. You may seek verification from an individual's physician that a health factor makes it medically inadvisable or unreasonably difficult to satisfy. A waiver can also be an alternative.
Outcome-Based: The plan must offer a reasonable alternative standard for all individuals who ask, regardless of whether the individual has a medical condition. A waiver can also be an alternative.
The final rules apply to health plans in both the insured and self-insured markets. They are effective for plan years beginning on or after January 1, 2014. You should review your current wellness program and health plan communications to make sure you are prepared.
