With Thanksgiving only two days away, the Departments of Health and Human Services, Labor and the Treasury (collectively, the "Departments") jointly released proposed rules on wellness programs to reflect the changes to existing wellness provisions made by the Affordable Care Act (ACA). The proposed rules would be effective for plan years starting on or after January 1, 2014.
The proposed rules would retain many of the existing rules pertaining to "participatory wellness programs" (generally, programs providing rewards without regard to an individual’s health status) and "health-contingent wellness programs" (generally, programs that require individuals to meet a specific standard related to their health to obtain a reward). However, the Departments propose a number of changes, some of which are summarized below. They also seek comments from employers and others on a range of issues concerning wellness programs which must be submitted approximately 60 days from the date of this post.
What are some of the key changes:
- In addition to implementing the statutory change in the ACA that increases the maximum permissible reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of health coverage, the Departments would further increase the maximum reward to 50 percent for programs designed to prevent or reduce tobacco use.
- If a reasonable alternative standard is an educational program, the plan cannot require individuals to find such a program on their own, nor may the plan require individuals to pay for the program. Similarly, in the case of diet programs, while the plan does not have to cover the cost of food, it must pay the cost of admission to the program.
- The Departments would continue to permit employers to obtain physician verification that an individual’s 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, provided doing so is reasonable as required under the ACA. The regulations propose that it would not be reasonable for a plan to seek verification of a claim that is obviously valid based on the nature of the individual’s known medical condition.
- In order to be reasonably designed to promote health or prevent disease, where the initial standard for the reward is based on a measurement, test or screening, programs would be required to offer a different, reasonable means of qualifying for the reward to any individual who does not meet the standard based on the measurement, test or screening.
- The proposed regulations also confirm that adverse benefit determinations dealing with whether a participant or beneficiary is entitled to a reasonable alternative standard for a reward are situations eligible for Federal external review under the ACA claims and appeals procedures.
- The Departments would also provide new language to communicate to program participants the opportunity for a reasonable alternative to achieving the reward under the program:
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.
Over the past few years, many employers have implemented wellness programs hoping to provide employees opportunities to enhance their health, manage unhealthy behaviors and control plan costs. The Departments are hopeful that once final the regulations will provide clarity to some of the biggest challenges facing wellness programs, although some critical issues remain for employers, including the effects of other laws, such as the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act, federal and state privacy laws, and off-duty activity laws. For this reason, employers may want to take advantage of the opportunity to submit comments concerning these programs in the hope of shaping the law to suit their needs.