DOL Wellness Program Guidance under PPACA
Consistent with what we’ve known about PPACA, when 2014 arrives, nondiscriminatory wellness programs will have the ability to increase the maximum permissible rewards from 20% to 30% of the cost of coverage. Further, today’s proposed regulations from HHS/IRS/DOL allow for an increase to 50% for wellness programs designed to “prevent or reduce tobacco use.”
As outlined in HIPAA’s 2006 regulations, the following consumer-protection conditions for health-contingent wellness programs remain intact:
- The total reward for such wellness programs offered by a plan sponsor does not exceed 20% of the total cost of coverage under the plan.
- The program is reasonably designed to promote health or prevent disease. For this purpose, it must have a reasonable chance of improving health or preventing disease, not be overly burdensome, not be a subterfuge for discriminating based on a health factor and not be highly suspect in method.
- The program gives eligible individuals an opportunity to qualify for the reward at least once per year.
- The reward is available to all similarly situated individuals. For this purpose, a reasonable alternative standard (or waiver of the otherwise applicable standard) must be made available to any individual for whom it is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard during that period (or for whom it is medically inadvisable to attempt to satisfy the otherwise applicable standard).
- In all plan materials describing the terms of the program, the availability of a reasonable alternative standard (or the possibility of waiver of the otherwise applicable standard) is disclosed.
Section 120 of The Affordable Care Act (PPACA) amended these nondiscrimination and wellness program provisions (and even extended them to the individual market). Today’s proposed regulations apply to insured and self-insured groups and to both grandfathered and non-grandfathered plans.
Effective for plan years beginning on or after 1/1/2014, the maximum reward can be as high as 30% and as high as 50% for tobacco users (although they are asking for comments on that, especially considering that the 30% differential is based purely upon tiers and plan, whereas the proposed regulations state that a tobacco differential must be prorated by member. We will all eagerly await the final specifics on the 50% tobacco-user-rules).
The Department of Labor’s Employee Benefits Security Administration updated its website with the following – DOL Wellness Programs Links:
- Proposed regulations
- Market Study
- Fact Sheet – Wellness Programs
- Press Release
- HHS Proposed Regulation – Health Insurance Market Rules
Essential Health Benefits:
- Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation for all non-grandfathered health insurance coverage in the individual plans and small group markets.