Employment Based Wellness Programs Final PPACA Regulations

The Department of Health and Human Services (HHS) issued final Patient Protection and Affordable Care Act (PPACA) Health Care Reform rules on May 29th, 2013 regarding employment based wellness programs.  The final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20% to 30% of the cost of coverage, and to 50% when the wellness program is designed to prevent or reduce tobacco usage.  The final rules will be effective for plan years beginning on or after January 1, 2014.

The final rules support workplace health promotion and prevention without regard to an employee’s current health status.  These Health Care Reform rules expand non-discrimination protections for employer-sponsored wellness programs.  The final rules also provide more clearly defined guidelines to design and implement workplace wellness programs than were in HHS’s initial proposal.

The final rules include standards for both participatory wellness programs (those available without regard to an individual’s health status such as rewards to employees for taking a health risk assessment, or participating in a biometric screening, etc), and wellness programs that have “health contingent wellness programs” (those which reward individuals for meeting a specific health standard such as no tobacco usage, having a specified cholesterol level, etc).

References in the final regulations include rewards such as:

  • Discount or rebate of a premium or contribution;
  • Waiver of all or part of a cost-sharing mechanism (such as a deductible, copayment, or coinsurance);
  • Additional benefit, or any financial or other incentive;
  • Avoiding a penalty, such as the absence of a surcharge or other financial or nonfinancial.

The final rules state:

  • Individuals eligible for the program must be given an opportunity to qualify for the reward at least once per year;
  • The size of the award reward offered to an individual under all health-contingent wellness programs with respect to a plan cannot exceed the applicable percentage of employee-only coverage under the plan, taking into account both employer and employee contributions towards the cost of coverage for the benefit package under which the employee is receiving coverage.  If, in addition to employees, any class of dependents (such as spouses or dependent children) participate in the health-contingent wellness program, the reward cannot exceed the applicable percentage of the total cost of the coverage in which the employee and any dependents are enrolled or employee-plus-one coverage;
  • The reward for a health-contingent wellness program, together with the reward for other health-contingent wellness programs with respect to the plan, must not exceed 30% of the total cost of employee-only coverage under the plan, or 50% to the extent the program is designed to prevent or reduce tobacco use;
  • Consumers are protected with the following provisions:
    • Wellness programs must be reasonably designed to promote health or prevent disease;
    • The full reward under a health-contingent wellness program must be available to all similarly situated individuals;
    • Recommendations be accommodated which are made at any time by an individual’s physician based on medical appropriateness.

To read the final rules in their entirety, please visithttp://www.ofr.gov/OFRUpload/OFRData/2013-12916_PI.pdf