Employee Benefits-Government Issues Proposed Rules On Wellness Program To Reflect The Affordable Care Act

December 6, 2012

The Departments of Health and Human Services ("HHS"), Labor and the Treasury have jointly released proposed rules on wellness programs to reflect changes made by the Affordable Care Act. These proposed rules would be effective for plan years starting on or after January 1, 2014. A fact sheet says the following about the proposed rules.

The proposed rules continue to support workplace wellness programs, including "participatory wellness programs" which generally are available without regard to an individual's health status. These programs include, for example, programs maintained by employers which: (1) reimburse employees for the cost of membership in a fitness center, (2) provide a reward to employees for attending a monthly, no-cost health education seminar, or (3) provide a reward to employees who complete a health risk assessment without requiring them to take further action.

The proposed rules also outline amended standards for workplace nondiscriminatory "health-contingent wellness programs," which generally require individuals to meet a specific standard related to their health to obtain a reward. Examples of health-contingent wellness programs are programs maintained by employers which: (a) provide a reward to those employees who do not use, or decrease their use of, tobacco, or (b) provide a reward to those employees who achieve a specified cholesterol level or weight as well as to those employees who fail to meet that biometric target but take certain additional required actions.

Protecting Employees. In order to protect employees from unfair practices, the proposed rules would require health-contingent wellness programs to meet certain requirements, including:

• Programs must be reasonably designed to promote health or prevent disease. To meet this rule, a program would have to offer a different, reasonable means of qualifying for the reward to any employee who does not meet the standard based on the measurement, test or screening that usually applies. Programs must have a reasonable chance of improving health or preventing disease and not be overly burdensome for employees.
• Programs must be reasonably designed to be available to all similarly situated employees. Reasonable alternative means of qualifying for the reward would have to be offered to employees whose medical conditions make it unreasonably difficult, or for whom it is medically inadvisable, to meet the specified health-related standard.
• Employees must be given notice of the opportunity to qualify for the same reward through other means. These proposed rules provide new sample language intended to be simpler for employees to understand and to increase the likelihood that those who qualify for a different means of obtaining a reward will contact the plan or issuer to request it.

Ensuring Flexibility for Employers. The proposed rules also implement changes in the Affordable Care Act that increase the maximum permissible reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of health coverage, and that further increase the maximum reward to as much as 50 percent for programs designed to prevent or reduce tobacco use.

The proposed rules would not specify the types of wellness programs employers can offer, and invite comments on additional standards for wellness programs to protect consumers.