Final Wellness Rules Expand Protections and Incentives

Final Wellness Rules Expand Protections and Incentives

For a background on the subject of HIPAA Wellness programs and how PPACA modified their offerings, please see our November 20, 2012 article called “DOL Wellness Program Guidance under PPACA

Recently, HHS, DOL and the IRS (Departments of Health and Human Services, Labor and the Treasury) issued final rules on employment-based wellness programs. The final rules support workplace health promotion and prevention as a means to reduce the burden of chronic illness, improve health and limit growth of health care costs, while ensuring that individuals are protected from “unfair underwriting practices” that could otherwise reduce benefits based on health status.

The final rules continue to support participatory wellness programs, which generally are available without regard to an individual’s health status. These include programs that reimburse for the cost of membership in a fitness center; that provide a reward to employees for attending a monthly, no-cost health education seminar; or that reward employees who complete a health risk assessment, without requiring them to take further action.

HIPAA Wellness

The rules also outline standards for nondiscriminatory health-contingent wellness programs, which generally reward individuals who meet a specific standard related to their health. Examples of health-contingent wellness programs include programs that provide a reward to those who do not use, or decrease their use of, tobacco, or programs that reward those who achieve a specified health-related goal, such as a specified cholesterol level, weight, or body mass index, as well as those who fail to meet such goals but take certain other healthy actions.  (For additional criteria and background see our prior news article).

Today’s final rules ensure flexibility for employers by increasing the maximum reward that may be offered under appropriately designed wellness programs, including outcome-based programs. The final rules also protect consumers by requiring that health-contingent wellness programs be reasonably designed, are uniformly available to all similarly situated individuals and accommodate recommendations made at any time by an individual’s physician, based on medical appropriateness.

The final rules will be effective for plan years beginning on or after Jan. 1, 2014 and will permit,  nondiscriminatory health-contingent wellness programs to provide up to a 30% cost differential (savings or penalty) for participation. 

A note about Affordability testing under PPACA:

a. Today, when you test affordability for 2014, you do it for the non-wellness rate.  That must pass at 9.5% of family income (for the single-tier/EE-only tier).

b.  For 2015, a wellness rate that is for non-smokers, can be tested for 9.5% affordability.

c.  For 2015, a wellness rate that is for not completing an HRA, not doing biometrics, etc. cannot be tested for 9.5% affordability.  For those people you need to pass the affordability test using the non-wellness rate.

For more details on Affordability & Wellness programs, see our May 2, 2013 article.