Healthcare Reform Alert: Wellness Program Proposed Rules and FAQs Issued

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The following Healthcare Reform Alert was provided to us by Cigna. This document is for general informational purposes only. Please be sure to review the official and supplement documents through the appropriate federal agencies for clarification, accuracy, and up-to-date content.

On April 16, the U.S. Equal Employment Opportunity Commission (EEOC) issued proposed rules about wellness programs included in group health plans and the guidelines that must be followed if the program asks employees to answer disability-related questions or take a medical examination. At the same time, the Department of Health and Human Services (HHS) and other federal agencies issued FAQs related to wellness programs.

In its proposed rules, the EEOC intended to reconcile the differences between the current wellness program rules under the Patient Protection and Affordable Care Act (PPACA) and the Americans with Disabilities Act (ADA). The proposed rules may affect health-contingent wellness programs such as health assessments and biometric screenings that gather information about employees’ cholesterol, blood glucose, body weight, and blood pressure levels.

The proposed rules also address how to administer wellness incentives for these types of activities while keeping employee health information confidential and prohibiting discrimination based on health factors or disabilities under the ADA.

The proposed rules are open for comments and address three topics: voluntary participation, financial incentives and the use and protection of employees’ health information.

Wellness programs must be voluntary

Voluntary means that:

  • Employees cannot be required to participate in wellness programs that ask them to answer disability-related questions or take a medical exam.
  • Enrollment in a group health plan or a particular benefits package within a group health plan cannot be denied or limited for employees who do not participate.
  • Employees cannot be fired, disciplined, coerced or retaliated against for failure to participate.
  • Individuals with disabilities must be provided with reasonable accommodations that allow them to participate and earn whatever incentives the employer offers.

Incentives of up to 30% of the cost of employee-only coverage can be offered

The maximum financial incentive is 30% of the cost of premiums for employee-only coverage. Financial incentives can be either rewards or penalties.

  • For example, if the total premium paid by the employer and employee for single coverage is $5,000, rewards or penalties for participating in a wellness program cannot exceed $1,500.

How the proposed ADA rules are different from the current wellness program incentive rules under PPACA

There are several differences between the proposed ADA rules and the current PPACA rules. Importantly, the ADA rules do not change the current PPACA rules. However, a wellness program will need to satisfy the new ADA rules, when final, in order to be considered ADA compliant.

  • The 30% maximum would apply to the total wellness program, regardless of whether it is participatory, health-contingent, or both. Currently, the 30% maximum applies only to health-contingent programs. Rewards for participatory programs would be included in the 30% maximum if the participatory program asks a participant to provide medical information, such as completing a Health Risk Assessment. (Please see the information below regarding the 50% maximum for some tobacco-related programs.)
  • The proposed regulations do not address family member participation in wellness incentives. Currently the 30% maximum can be applied to the family premium when an employee’s family members also participate in the wellness program and are enrolled in the group health plan. This will need to be clarified in the final regulations.
  • The 50% maximum incentive that currently applies to tobacco cessation programs would only apply to programs that ask employees if they use tobacco. A biometric screening that tests for the presence of nicotine or tobacco would be considered a medical examination and the 30% maximum would apply.

Employees must receive a notice about how their medical information will be used and protected

If a wellness program collects disability-related information or requires a wellness exam, employers must provide employees with a notice that describes what medical information will be collected, who will have access to it, how it will be used, and how it will be kept confidential.

Medical information obtained by wellness programs can be disclosed to employers only in aggregate form, except as needed to administer the health plan.

What’s next?

The proposed rules are open for comment for 60 days. The EEOC will evaluate the comments and make revisions in response to those comments. The EEOC will then vote on a final rule and send it to the Office of Management and Budget where it will be coordinated with other federal agencies before it becomes final.

FAQs from other agencies

The Departments of Health and Human Services (HHS), Labor (DOL) and Treasury also issued related FAQs. The FAQs restate existing PPACA regulations that say wellness programs must be “reasonably designed” to promote health or prevent disease. Programs designed to discourage enrollment in the plan by individuals who are sick or potentially have high claims do not meet this requirement. Examples include programs that collect a substantial amount of sensitive health information about participants or that require unreasonable time commitments or travel.

The FAQs also note that compliance with the current PPACA wellness program regulations does not necessarily mean the program is in compliance with other state or federal laws such as the ADA.

The Centers for Medicare and Medicaid (CMS) also issued FAQs covering these questions:

  • Can the offer of a wellness program be limited to certain employer groups?
  • Do rating rules prohibit the offer of premium discounts, rebates or incentives?
  • When establishing rates, may penalties/rewards under a wellness program be considered?

Read the proposed rule.

Read a press release about the proposed rule.

Read FAQs from DOL, HHS and the Treasury.

Read FAQs from the HHS Office for Civil Rights.

Read FAQs from CMS.

The following Healthcare Reform Alert was provided to us by Cigna. This document is for general informational purposes only. Please be sure to review the official and supplement documents through the appropriate federal agencies for clarification, accuracy, and up-to-date content.

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