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HIPAA Wellness Programs


Group health plans and insurers are prohibited from discriminating against individuals due to health factors under the HIPAA rules which includes application to wellness plans. The wellness rules apply to both insured and self-insured group health plans, regardless of grandfathered status. A wellness program should be designed to improve employees health and to reduce health care costs for the group health plan. In addition, some wellness programs may also ask employees to change behaviors to improve their health such as quitting smoking, becoming more active and/or eating better.

 

Wellness programs may have two different designs, both of which are discussed below.

 

Participatory Wellness Program

A participatory wellness program is a program which does not provide a reward based on the participant receiving a certain standard related to a health factor. Examples of participatory wellness programs are as follows:

 

​Reimbursement of Fitness Center Costs

​Diagnostic testing program rewards for participating

​Smoking cessation reward for participating in a program but does not require quitting

​Rewards for attending a no-cost health education seminar

​Rewards for completing an annual health risk assessment

​Waiver or copayments or deductibles for participating in well visits

 

Health-Contingent Wellness Programs

A health contingent wellness program may be classified as either activity based or outcome based. These wellness programs require that a participant receives a certain health standard to earn a reward. Beginning with plan years on or after January 1, 2014, health plans were permitted to increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20% to 30% of the cost of coverage. The reward may be increased to 50% for wellness programs designed to prevent or reduce tobacco use.

 

Examples of activity only wellness programs are as follows:

 

​Walking for a certain period of time

​Diet changes

​Exercise programs

​Attend a certain number of educational classes

 

Examples of outcome based wellness programs are as follows:

 

​Quitting Smoking following program

​Attain certain results for Biometric Screenings

 

Those health plans which choose to offer an outcome based wellness program are required to have an alternative available to individuals who do not meet the outcome. The individuals must be offered a reasonable alternative such as an educational program or alternate activity.

 

Any health contingent wellness plan must satisfy all of the following requirements:

 

  • Provide an opportunity once per year to qualify;
  • Program must be designed to promote health and prevent disease;
  • Reward must not exceed 30% of the total cost of employee only coverage or 50% if tobacco is included;
  • Rewards must be available to all similarly situated individuals or allow alternatives;
  • Plans must disclose in all materials that alternatives are available; and
  • contact information for obtaining alternatives must be provided on all materials describing the plan.

The Department of Labor has provided sample language which may be used by health plans to advise that there is an alternative method available to obtain rewards. Examples of this language can be found in the final regulations and state as follows:

 

Your health plan is committed to helping you achieve your best health. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at [insert contact information] and we will work with you (and, if you wish, with your doctor) to find a wellness program with the same reward that is right for you in light of your health status.

 

It is important to note that any rewards that are offered as a result of a wellness plan are subject to be taxable to the individual receiving the benefit. The taxable nature of the reward is determined on the value of the reward, type of award being given and the frequency of the reward among other factors to be determined by the Internal Revenue Service (IRS).

 

ADA Concerns

Any health plan which offers a wellness program should be aware of ADA concerns when developing their wellness plan. If the discounts or rewards are not available to all individuals, including those with disabilities, the plan may have ADA violations.

 

The EEOC has issued final guidance imposing additional requirements for a ADA voluntary employee health plan exception to apply:

 

​An employer may not require employees to participate or take action for not participating

 

​Plans must give clear notice that explains what information is required and how it will be used

​Any information obtain must be kept confidential and not disclosed to allow for identity of the member

 

​The program must be reasonably designed and not cause any undue burden to the member

 

What makes a program voluntary?

 

​Employees are not required to participate

​Employees who do not participate are not denied eligibility in any group health plan or option offered by the employer

​The employer may not retaliate against employees who do not participate

​Employee must receive notice indicating what information will be obtained, how it is used, restrictions on the disclosure, who it will be shared with and that the information will be protected

 

In addition, rewards are capped at 30% of the total cost of health plan coverage and would apply for both a participatory program and a health-contingent program. In the event a health plan merely asks whether a participant smokes is not a disability-related inquiry which would trigger application of the ADA and the 50% reward may continue.

 

GINA Concerns

Recently, the U.S. Equal Employment Opportunity Commission (EEOC) issued final guidance to amend the Genetic Information Nondiscrimination Act (GINA) for purposes of wellness programs. The rule allows an employer to offer, as part of its health plan, a limited incentive (in the form of a reward or penalty) to an employee whose spouse meets the following criteria:

 

1.  the spouse is covered under the employee's health plan;

2.  the spouse receives health or genetic services offered by the employer, including as part of a wellness program; and

3.  the spouse provides information about his or her current or past health status. In order to request information regarding health status, the plan must have a reasonable chance of improving
     the health of, or preventing disease in, participating individuals.

 

Incentives may be offered to a member's spouse who chooses to share their health status information. These incentives are be subject to the limits under the wellness rules that are in effect today and discussed above.

 

Wellness Comparison

 

 

 

ACA Wellness Rule

 

ADA Wellness Rule

 

GINA Wellness Rule

Applicability Date

 

January 1, 2014

 

May 17, 2016 and the Notice and Incentive Provisions first day of the plan year beginning on or after 1/1/17

 

May 17, 2016 and the Notice and Incentive Provisions first day of the plan year beginning on or after 1/1/17

Applicability

 

All programs part of a Group Health Plan, regardless of funding

 

All programs part of a Group Health Plan, regardless of funding but ONLY if the program asks disability related questions or requires medical examinations

 

All programs part of a Group Health Plan, regardless of funding but ONLY if the program asks disability related questions or requires medical examinations

Reasonable Design Requirement

 

Yes, for Activity and Outcome Based Programs.

No, for Participatory Programs

 

Yes, for Participatory, Activity and Outcome Based Programs

 

Yes, for Participatory, Activity and Outcome Based Programs

Reasonable Alternative Standard Requirement

 

Yes, for Activity and Outcome Based Programs.

No, for Participatory Programs            

 

Yes, for Participatory, Activity and Outcome Based Programs

 

No Provision

Voluntary Requirement

 

No Provision

 

Yes, for Participatory, Activity and Outcome Based Programs

 

Yes, for Participatory, Activity and Outcome Based Programs

Limitation on Incentive Amount*

 

30 % of the cost of coverage, plus an additional 20% for tobacco cessation

 

30% of the cost of coverage, including tobacco cessation (if testing for use) Up to 50% if only asking if tobacco is used

 

30% of the cost of coverage, including tobacco cessation (if testing for use) Up to 50% if only asking if tobacco is used

Notice Requirement

 

Yes, for Activity Based and Outcome Based Programs

 

Yes, for Participatory, Activity and Outcome Based Programs

 

No Provision

Confidentiality Requirement

 

No Provision

 

Yes, for Participatory, Activity and Outcome Based Programs

 

No Provision

 

*Incentive is based on the lowest cost plan, of the total cost of self-only coverage.

 

This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.