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Wellness Programs Final Regulations

Jonathan Edelheit, JD

The final regulations from the Affordable Care Act, AKA Obamacare, have been released. Here is what you need to know.

Final Regulations

On Wednesday May 29, the Departments of Labor, Treasury and Health and Human Services issued a final rule concerning wellness programs in the Patient Protection and Affordable Care Act (PPACA). There has already been a proposed regulation issued in November of 2012. The regulations list two forms of wellness programs; these are “participatory wellness programs” and “health-contingent wellness programs.”

A participatory wellness program rewards participants solely for involvement in the wellness program.  These programs are the HIPAA nondiscrimination compliant programs, which are available to all “similarly situated individuals, regardless of health status” (Incentives for Nondiscriminatory Wellness Programs in Group Health Plans, Final Rule). The rules remain more or less unchanged from the proposed regulations.

Health-contingent wellness programs received several changes. One of which is dividing these programs into two forms, activity-only programs and outcomes based programs. The regulation was restructured to “to help clarify” these programs. An activity-only program provides a reward if the individual completes an activity related to a health factor, but without requirement of any specific health outcomes. An example of this is completion of a health risk assessment without requiring any further action on the part of the individual. An outcomes based program requires individual to reach certain health outcomes, such as a specific results in a biometric screenings.

Health-contingent programs must meet five requirements, some of which have been changes or clarified, these are:

  1. Individuals must be given an opportunity to qualify for the reward at least one a year
  2. Rewards may not exceed 30 percent of the total cost of employee-only coverage. An exception to this is for programs reducing tobacco use, where the maximum reward is 50 percent.
  3. The program “must be reasonably designed to promote health or prevent disease.”
  4. The reward must be available to all similarly situated individuals. This ruling has changed from the proposed regulation, and is dependent upon which program type is used. For activity-based wellness programs, the reward must be available to all “similarly situated individuals” by offering a reasonable alternative standard for obtaining a reward if it is “unreasonably difficult” due to a medical condition. Verification from a physician can be obtained if needed. For outcome-based wellness programs, the full reward must be available to those who do not meet the standard based on the initial measurement. The alternative standard cannot be a requirement to meet a different level of the same standard without additional time to comply with it. In the case the individual’s physician becomes involved in appealing for a reasonable alternative, the physician can set and adjust the alternative.
  5. The plan must disclose, in all plan materials, the terms of the program and other means of qualifying for the reward or possibility of a waiver for the standard.

These final rules apply to non-grandfathered and grandfathered plans, and are effective for plan years beginning on or after January 1, 2014.

About The Author

Jonathan Edelheit is the president of Free Health LLC, a leading US and International insurance and healthcare media company that specializes in “niche” industry health insurance, employee benefits and healthcare magazines. Under Free Health LLC, Mr. Edelheit is Editor-in-Chief of Benefits Live Magazine. The magazine includes four industry-specific publications, including: Corporate Wellness Magazine, the only US and International magazine dedicated to health and wellness in the workplace, the Voluntary Benefits Magazine, the Self Funding Employer Healthcare and Workers Compensation Magazine, and the National Healthcare Reform Magazine, the only magazine dedicated to the newly implemented US Healthcare Reform Law.

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