Employers Have Six Months to Comply with Wellness Program Final Rules – Are You Ready?

“The potential payoffs [from a wellness program] include savings in health care costs, decreased absenteeism and increased productivity.” (Holland & Knight)

Late last month, the Departments of Labor, Treasury, and Health and Human Services issued final regulations to help employers avoid health-based discrimination when designing and implementing wellness programs.

Five key takeaways for employers:

1. The rules only lay out the minimum legal requirements for compliance:

“The Departments clarified that the final regulations do not establish requirements for all types of programs or platforms that could be labeled a wellness program. Rather, the final rules establish criteria for an affirmative defense that can be used by a plan in response to a claim that the plan impermissible discriminated against an individual based on health status in violation of HIPAA.” (Proskauer)

2. Two types of programs are allowed:

“The final regulations (like the prior HIPAA regulations) divide wellness programs into participatory and health-contingent categories. Participatory programs either do not offer rewards or do not make rewards contingent on the individual meeting a health-factor-related standard. For example, paying for a gym membership or smoking cessation program or offering a reward for undergoing a diagnostic test or attending an educational seminar is participatory as long as there is no penalty or reward associated with the outcome of the program or test. […] A health-contingent program is one which requires an individual to satisfy a standard related to a health factor to obtain a reward.” (Dickinson Wright)

3. Employers can increase the payoff for participating employees:

“[T]he Final Regulations are designed to implement the Affordable Care Act requirement to increase the permissible reward available to a participant under a discriminatory wellness program to 30 percent of the cost of employee-only coverage. As a result, the Final Regulations increase the maximum reward available under a health-contingent wellness program to 30 percent of the cost of employee-only coverage and up to 50 percent of the cost of employee-only coverage if the wellness program is designed to prevent or reduce tobacco use.” (Duane Morris)

4. The EEOC has yet to weigh in:

“The ACA regulations do not address wellness programs’ compliance with the Americans with Disabilities Act (ADA) or Genetic Information Nondiscrimination Act of 2008 (GINA), which are regulated by the EEOC; but guidance is expected from EEOC in the near future.” (Reed Smith)

5. Employers have six months to comply:

“The final regulations provide the ACA compliance standards for group health plans with plan years beginning January 1, 2014. Employers who offer wellness programs should review the final regulations carefully to ensure compliance by January 1, 2014.” (Holland & Knight)

The updates:

Read more on Wellness Programs at JD Supra Law News>>