Source: EBIA Weekly, 5/30/13
The IRS, DOL, and HHS have issued final regulations addressing changes related to employee wellness programs under health care reform. The final regulations amend existing wellness regulations issued in 2006.
Who is affected?
- Insured Plans
- Self-Insured Plans
- Grandfathered Plans
- Non-Grandfathered Plans
What is Included in the Final Regulations?
- Increase in the maximum permissible reward under a health-contingent wellness program from 20% to 30% of the cost of individual coverage under the group health plan;
- Up to 50% permissible reward for programs designed to prevent or reduce tobacco usage;
- Clarification about what constitutes a reasonable design for health-contingent wellness program and the reasonable alternatives that must be offered to avoid discrimination;
- Clarification about the different requirements based on whether a health-contingent wellness program is “activity-only” (requiring that an individual perform or complete an activity in order to obtain a reward) or “outcome based” (requiring an individual attain or maintain specific health outcomes such as not smoking or attaining certain biometric screening results in order to obtain a reward).
Reasonable Alternative Standard Clarified. Health-contingent wellness programs must provide a “reasonable alternative standard” for participants unable to meet the usual standard due to medical reasons. Plans may choose simply to waive the standard for those unable to comply for medical reasons, and may establish alternatives on a case-by-case basis rather than in advance. Also, plans or insurers must provide or locate any educational program required to meet the standard, and, if the reasonable alternative involves a weight-loss program, must pay program membership fees but not the cost of food. The final regulations also clarify that for an alternative standard to be reasonable, the time commitment must be reasonable. For example, requiring attendance nightly at a one-hour class would be considered unreasonable.
Medical Verification Not Always Required. Different standards exist based on the type of program offered. An activity-only program must offer a reasonable alternative standard to individuals for whom satisfying the program’s standard is unreasonably difficult due to a medical condition (or is medically inadvisable). An outcome-based program must offer an alternative to any individual who does not meet the initial standard (i.e., without regard to whether the inability to meet the standard relates to a medical condition). In addition, outcome-based programs cannot require medical verification that compliance with a standard is unreasonably difficult for an individual (whereas activity-only programs may require such verification).
Notice of Reasonable Alternative Standard Required. All plan materials describing a health-contingent wellness program must disclose the availability of a reasonable alternative standard. The regulations provide revised sample language. The final regulations clarify that communications that refer to the wellness program but do not provide details (such as the SBC) need not provide this disclosure.
Anticipated Future Guidance. The preamble to the regulations notes that future guidance may be issued, specifically with respect to verification of a participant’s medical limitations by a medical professional, and rescission in connection with false statements about tobacco use.
Why is this Important?
The new regulations provide guidance to employers who wish to strengthen their wellness programs. Workplace health promotion and preventive is a means to reduce the burden of chronic illness, improve health, and slow the rise in health care costs.
Be aware that compliance with these regulations does not determine a wellness program’s compliance with other laws such as HIPAA Privacy/Security or the ADA.
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