Wellness programs after the Affordable Care Act (Part I)In our May 2. Benefits Alert, “What’s new with the Affordable Care Act?” (see link at bottom of page), we provided an overview of the proposed wellness program regulations under the Affordable Care Act (“ACA” or “health care reform”), and described the impact of wellness program financial incentives on the determination of whether a group health plan meets the ACA’s “minimum value” and “affordability” requirements. Recently, the departments of Treasury, Labor, and Health and Human Services (the “Departments”) finalized the ACA nondiscrimination rules for wellness programs offered in conjunction with group health plans. For employers, the final rules are a mixed bag.
In our May 20, 2013, Benefits Alert, “What’s new with the Affordable Care Act?” (see link at bottom of page), we provided an overview of the proposed wellness program regulations under the Affordable Care Act (“ACA.
In 2010. Placed new rules on premium increases and gave consumer new rights to appeal insurance company decisions. In 2011. Required insurance companies to spend 80 percent to 85 percent of premiums on medical care; provided. Fact Sheet The Affordable Care Act and Wellness Programs. Printer Friendly Version. Implementing and expanding employer wellness programs may offer our nation the opportunity to not only improve the health of Americans, but. Background. In 2013, the Departments of Treasury, Labor, and Health and Human Services (the “Departments”) finalized the Affordable Care Act (“ACA”) nondiscrimination rules for wellness programs offered in conjunction. All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon. Affordable Care Act Topics. Individuals and Families; Employers; ALE Info Center; Tax Professionals; What's Trending; News; Health Care Tax Tips; Questions and Answers; List of Tax Provisions; Legal Guidance and Other. U.S. Department of Labor | Frances Perkins Building, 200 Constitution Ave., NW, Washington, DC 20210 www.dol.gov | Telephone: 1-866-444-EBSA (3272) | TTY | Contact Us. Patient Protection and Affordable Care Act; Long title: An act entitled The Patient Protection and Affordable Care Act: Acronyms (colloquial) PPACA, ACA: Nicknames: Affordable Care Act, Health Insurance Reform, Healthcare.
The Affordable Care Act provides Americans with better health security by putting in place comprehensive health insurance reforms that will: Expand coverage, Hold insurance companies accountable, Lower health care costs.
While the rules allow employers to increase the monetary incentives for healthy behavior, they also make it easier for participants to qualify for the incentives at the employer’s expense, and in most cases, the monetary incentives count against the employer when determining whether its health coverage is “affordable” for employees. Background. The Departments last issued final rules regarding nondiscrimination in wellness programs in 2. Health Insurance Portability and Accountability Act (HIPAA). Those rules generally prohibit group health plans and insurers from discriminating against participants as to eligibility, benefits, or premiums based on a health factor. An exception to this general rule allows premium discounts, rebates, or modification of cost sharing (e.
The ACA amended and expanded the HIPAA nondiscrimination and wellness provisions. For the most part, the ACA statute itself adopted the existing HIPAA wellness regulations, and increased the maximum permitted financial incentives. The new regulations interpreting the statutory provisions, however, make many more changes. These final rules apply to all group health plans, regardless of whether they are grandfathered or non- grandfathered, insured or self- insured, for plan years beginning on or after January 1, 2. In many ways, the final rules are similar to the proposed rules issued in November 2. While the proposed rules also distinguished between “participatory wellness programs” and “health- contingent wellness programs,” the final rules further divide health- contingent wellness programs into “activity- only” and “outcome- based” wellness programs, and impose differing compliance burdens on each. A summary of the final rules follows.
Types of wellness programs under the final rule. Participatory wellness programs. Participatory (or “participation- only”) wellness programs are programs that either do not provide a reward, or do not include any conditions for obtaining a reward that are based on satisfying a standard related to a health factor.
Examples of participatory wellness programs include gym membership reimbursements, diagnostic testing that rewards participation but does not base any part of the reward on the outcome, and rewards for attending no- cost health education seminars. There is very little regulation of participatory wellness programs under the ACA, and participatory programs do not need to comply with the onerous requirements for health- contingent wellness programs that are described below. The primary requirement for participatory wellness programs is that they must be available “to all similarly situated individuals regardless of health status.” If factors other than health status limit a participant’s ability to take part in a program, a participatory wellness program does not discriminate based on a health factor. For example, if a plan made a premium discount available for attendees of an educational seminar, but only healthy individuals could attend (e.
However, if all similarly situated participants could attend, but someone could not attend because the seminar was held on a weekend when the individual was unavailable, then the program would not discriminate based on health factor. The final rule has very little else to say about participatory wellness programs, so long as they do not adjust benefits or premiums based on a health factor. As noted in the regulations, however, compliance with the HIPAA/ACA wellness regulations does not ensure compliance with other federal or state laws such as the Americans with Disabilities Act (“ADA”) or the Fair Labor Standards Act (“FLSA”), which may impose additional requirements on wellness programs.
Thus, employers should consult with counsel to ensure that a participatory wellness program design complies with all applicable laws. Health contingent wellness programs. In contrast to participatory wellness programs, “health- contingent” wellness programs require an individual to satisfy a standard related to a health factor in order to obtain a reward (or in some cases, they require the participant to do more than a similarly situated individual to obtain the same reward because of a health factor). A health- contingent wellness program may involve performing or completing an activity related to a health factor or attaining or maintaining a specific health outcome. Health contingent wellness programs are further divided into two types: “activity- only” and “outcome- based” wellness programs. Under an activity- only wellness program, an individual must perform or complete an activity related to a health factor to obtain a reward. An activity- only wellness program does not require the participant to attain or maintain a specific health outcome.
Examples include walking, diet, or exercise programs. In an outcome- based wellness program, an individual must attain or maintain a specific health outcome, like not smoking, or receiving certain results on a biometric screening, in order to obtain a reward. The programs often, but not always, have two parts: (1) a measurement, test, or screening as part of the initial standard; and (2) a program that targets individuals who do not meet the initial standard with wellness activities.
Examples of outcome- based wellness programs include tests for specific medical conditions or risk factors (e. BMI, tobacco use, or high glucose), and provide a reward to employees who are within a normal or healthy range, but require individuals who are outside the normal or healthy range to take additional steps to obtain the reward. Such additional steps can include, but are not limited to, meeting with a health coach, taking a health or fitness course, participating in a tobacco- cessation program, adhering to a health improvement action plan, or complying with a health care provider’s care plan. Although individuals who do not meet or maintain the specific health outcome may be offered an educational program or an activity as an alternative to achieve the same reward, and the alternative itself would be considered a “participatory” or “activity- only” wellness program, the overall program is still an “outcome- based wellness program.” In other words, if a measurement, test, or screening is part of the initial standard for getting the reward, the program is an outcome- based wellness program. While many of the requirements in the final rules are the same for both activity- only and outcome- based wellness programs, there are some key differences, discussed below. Maximum reward increased for health- contingent wellness programs.
Under the previous HIPAA wellness regulations, the maximum financial incentive plans could offer for participation in health- contingent wellness programs could not exceed 2. However, as permitted by the ACA, the new regulations increase the maximum reward to 5. For all health- contingent wellness programs, “rewards” include both “carrot- like” incentives (such as discounts or rebates on premiums, waivers of cost- sharing, providing additional benefits, and any financial or other incentive), as well as “stick- like” penalties (such as surcharges or other financial or nonfinancial disincentives). Common requirements for both activity- only and outcome- based wellness programs. The intention of the regulations is that, regardless of whether the health- contingent wellness program is activity- based or outcome- based, every individual should have a fair opportunity to receive the full amount of any reward, irrespective of the individual’s health status. Thus, all health- contingent wellness programs must comply with the following five standards: Frequency of opportunity to qualify—Individuals must be given the opportunity to qualify for the reward at least once each year.
Size of reward—The total reward offered under all health- contingent wellness programs cannot exceed the applicable percentage (i. If dependents cannot participate in the wellness programs, then the reward cannot exceed the applicable percentage of the cost of single coverage. If dependents can participate in the wellness programs, then the reward cannot exceed the applicable percentage of the cost of coverage in which the employee and dependents are enrolled (such as employee + 1 or family coverage), and any premium variation should be apportioned among the family members eligible for the incentive. For example, where either the employee or the dependents fail to satisfy the tobacco standard, the 5. While health insurers in the small group market must apply rating variation to family coverage based on the portion of the premium attributable each covered family member, other plans have flexibility to determine apportionment of the reward among family members, as long as the method they choose is reasonable.
Reasonable design—All health- contingent wellness programs must be reasonably designed to promote health or prevent disease. A wellness program is reasonably designed if it. The determination of whether a wellness program is reasonably designed is based on the facts and circumstances.