The Departments of Health and Human Services (HHS), Labor and the Treasury (Departments) have jointly released proposed rules on nondiscriminatory wellness programs in group health coverage pursuant to the Patient Protection and Affordable Care Act (ACA). The proposed regulations replace the wellness program provisions of the HIPAA nondiscrimination regulations issued in 2006 (2006 regulations), but they do not modify any other provisions of those regulations.
The proposed regulations would increase the maximum permissible reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of health coverage and would further increase the maximum reward to as much as 50 percent for programs designed to prevent or reduce tobacco use. The regulations also include other proposed clarifications regarding the reasonable design of health-contingent wellness programs and the reasonable alternatives they must offer in order to avoid prohibited discrimination.
The proposed rules would apply to both grandfathered and non-grandfathered group health plans and group health insurance coverage for plan years beginning on or after January 1, 2014.
Categories of wellness programs. The proposed regulations would continue to divide wellness programs into two categories: ?participatory wellness programs? and ?health-contingent wellness programs.? Participatory wellness programs are programs that are made available to all similarly situated individuals and that either do not provide a reward or do not include any conditions for obtaining a reward that are based on an individual satisfying a standard that is related to a health factor.
Examples of participatory wellness programs include a program that reimburses for all or part of the cost of membership in a fitness center and a program that provides a reward to employees for attending a monthly, no-cost health education seminar. Participatory programs are not required to meet the five requirements applicable to health-contingent wellness programs.
Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward (or require an individual to do more than a similarly situated individual based on a health factor in order to obtain the same reward). Like the 2006 regulations, the proposed regulations would continue to permit rewards to be in the form of a discount or rebate of a premium or contribution, a waiver of all or part of a cost-sharing mechanism (such as deductibles, copayments, or coinsurance), the absence of a surcharge, the value of a benefit that otherwise would not be provided under the plan, or other financial or nonfinancial incentives or disincentives.
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 provide a reward to those who achieve a specified cholesterol level or weight as well as to those who fail to meet that biometric target but take certain additional required actions.
Requirements for health-contingent programs. Health-contingent programs are permissible only if they comply with the following five requirements:
1. frequency of opportunity to qualify,
2. size of reward,
3. uniform availability and reasonable alternative standards,
4. reasonable design, and
5. notice of other means of qualifying for the reward.
The proposed regulations maintain these requirements from the 2006 regulations with one significant modification relating to the size of the reward. The 2006 regulations specify 20 percent as the maximum permissible reward for participation in a health-contingent wellness program. Public Health Service Act (PHSA) Sec. 2705(j)(3)(A), effective for plan years beginning on or after January 1, 2014, increases the maximum reward to 30 percent and authorizes the Departments to increase the maximum reward to as much as 50 percent if the Departments determine that such an increase is appropriate. In the proposed regulations, the increase in the applicable percentage from 20 percent to 30 percent, which is effective for plan years beginning on or after January 1, 2014, conforms to the new PHSA Sec. 2705(j)(3)(A).
Size of reward for tobacco use reduction. In addition, the Departments have determined that an increase of an additional 20 percentage points (to 50 percent) for health-contingent wellness programs designed to prevent or reduce tobacco use is warranted to conform to the new PHSA Sec. 2701, to avoid inconsistency across group health coverage, whether insured or self-insured, or offered in the small group or large group market, and to provide grandfathered plans the same flexibility to promote health and prevent disease as non-grandfathered plans.
Reasonable alternative standard. The proposed regulations would not require plans and issuers to establish a particular alternative standard in advance of an individual?s specific request for one. However, a reasonable alternative standard would have to be provided by the plan or issuer (or the condition for obtaining the reward would be required to be waived) upon an individual?s request.
Plans and issuers cannot cease to provide a reasonable alternative standard merely because one was not successful before; they must continue to offer a reasonable alternative standard, whether it is the same standard or a new reasonable alternative standard (such as a new weight-loss class or a new nicotine replacement therapy).
All the facts and circumstances would be taken into account in determining whether a plan or issuer has provided a reasonable alternative standard, including but not limited to the following proposed factors:
? If the reasonable alternative standard is completion of an educational program, the plan or issuer must make the educational program available instead of requiring an individual to find such a program unassisted, and may not require an individual to pay for the cost of the program.
? If the reasonable alternative standard is a diet program, the plan or issuer is not required to pay for the cost of food but must pay any membership or participation fee.
? If the reasonable alternative standard is compliance with the recommendations of a medical professional who is an employee or agent of the plan or issuer, and an individual?s personal physician states that the medical professional?s recommendations are not medically appropriate for that individual, the plan or issuer must provide a reasonable alternative standard that accommodates the recommendations of the individual?s physician with regard to medical appropriateness. Plans and issuers may impose standard cost sharing under the plan or coverage for medical items and services furnished in accordance with the physician?s recommendations.
Verification of health factor. The proposed regulations clarify that, if reasonable under the circumstances, a plan may seek verification, such as a statement from an individual?s personal physician, that a health factor makes it unreasonably difficult for the individual to satisfy, or medically inadvisable for the individual to attempt to satisfy, the otherwise applicable standard. It would not be reasonable, for example, for a plan to seek verification of a claim that is obviously valid based on the nature of the individual?s medical condition that is known to the plan. However, plans may seek verification in the case of claims for which it is reasonable to determine that medical judgment is required to evaluate the validity of the claim.
Notice of other means of qualifying for reward. The proposed regulations would require plans and issuers to disclose the availability of other means of qualifying for the reward or the possibility of waiver of the otherwise applicable standard in all plan materials describing the terms of a health-contingent wellness program. If plan materials merely mention that a program is available, without describing its terms, this disclosure is not required.
The proposed regulations provide new sample language to satisfy this requirement as follows: ?Your health plan is committed to helping you achieve your best health status. 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 to find a wellness program with the same reward that is right for you in light of your health status.?
Comments. Comments are due 60 days after publication in the Federal Register (scheduled publication date is November 26, 2012). Comments, identified by ?Wellness Programs?, may be submitted via www.regulations.gov or by mail or hand delivery to: Office of Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210.