Final HIPAA Wellness Program Regulations Issued
The U.S. Departments of the Treasury, Labor (DOL) and Health & Human Services (HHS) have issued final HIPAA nondiscrimination regulations to clarify the 2001 interim rules and finalize the proposed rules on wellness programs. These final HIPAA Wellness Regulations will go into effect the first day of first plan year beginning on or after July 1, 2007. Below is a summary of the state of wellness programs under the new rules:
The final regulations no longer use the term “bona fide” in connection with wellness programs. They now distinguish the two kinds of wellness programs as “participation-only” programs, which reward participation regardless of results, and “standard-based” programs (formerly classified under the bona fide tag), which reward attainment of particular results.
Participation-only programs:
If none of the conditions for obtaining a reward under a wellness program are based on an individual satisfying a standard that is related to a health factor, the wellness program only has to make participation available to all similarly-situated individuals. Examples of participation-only programs include:
- A diagnostic screening program that does not base any part of the reward on outcome
- A program that reimburses the cost of smoking-cessation programs, regardless of whether the individual quits smoking
- A program that encourages preventive care by waiving co-pays or deductibles for services such as prenatal care or well-baby visits
Standard-based programs:
If any of the conditions for obtaining a reward under a wellness program are based on an individual satisfying a standard that is related to a health factor, the wellness program must meet five conditions:
#1 Limited value of reward
The combined reward for wellness programs offered by the plan cannot exceed 20% of the total cost of employee-only coverage. If, in addition to the employee, a class of dependents (i.e. spouses) may participate in the program, the maximum is 20% of the cost of the coverage in which the employee and dependents are enrolled.
#2 Promote health or prevent disease
The program must be reasonably designed to promote health or prevent disease and not be overly burdensome.
#3 Annual qualification
Individuals who are eligible for the program must be given an opportunity to qualify for the reward at least once per year.
#4 Reward available to all similarly-situated individuals
If it is unreasonably difficult for an individual to satisfy the standard due to a medical condition, or if it is medically inadvisable for an individual to attempt to satisfy the standard, a reasonable alternative standard (or waiver of the standard) must be made available. A plan may seek verification that a health factor makes it unreasonably difficult or medically inadvisable for the individual to satisfy or to attempt to satisfy the standard. For example, a plan may require a physician’s statement.
#5 Full disclosures of alternative standards and waiver opportunity
All plan materials that describe the terms of the program must disclose the availability of a reasonable alternative standard or the possibility of waiver of the standard.
Examples of standard-based programs include:
- A testing program that reduces the employee contribution if the employee’s cholesterol count is under 200 or shows at lease a 10% improvement from the last cholesterol test
- A program that imposes a surcharge on employees who use tobacco products
- A program that waives the deductible for employees who run or walk at least ten miles per week
It is important to note that the Equal Employment Opportunity Commission (EEOC), which enforces the Americans with Disabilities Act (ADA), has taken an informal position that compliance with the HIPAA wellness regulations is no guarantee of compliance with the ADA. Therefore, plans should consult knowledgeable counsel before adopting any specific limits or exclusions in their wellness plans.
Should you have additional questions regarding these final regulations, please contact our office at 919-403-1986.
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February 20, 2007
Hill, Chesson & Woody Employee Benefit Services
194 Finley Golf Course Rd, Suite 200,
Chapel Hill, NC 27517
Phone: 919.403.1986
Fax: 919.913.0237
www.hcwbenefits.com