New Rules Revise Requirements for Employee Wellness Programs and Health Benefits for Certain InjuriesJanuary 02, 2007
Employee Wellness Programs
Just in time for employee New Year resolutions, the federal government has issued final rules relating to employee wellness programs so that employers can help employees achieve their health-related goals. Fed. Reg., Vol. 71, No. 239, at 75014 (Dec. 13, 2006). The new rules amend provisions of the Internal Revenue Code, the Employee Retirement Income Security Act (ERISA) and the Public Health Service Act by clarifying what employee wellness programs will be exempt from the nondiscrimination provisions of the Health Insurance Portability and Accountability Act (HIPAA).
The HIPAA nondiscrimination provisions generally prohibit a health plan from charging similarly situated individuals different premiums or contributions based on a health factor. However, plans may discriminate against an employee's health by offering a reward, such as a premium discount or waiver of a cost-sharing requirement, if the reward is based on participation in a program of health promotion or disease prevention (i.e., wellness program).
The new rules list the following five examples of employee wellness programs that would not be considered discriminatory:
- A program that reimburses all or part of the cost for memberships in a fitness center;
- A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes;
- A program that encourages preventive care through the waiver of the copayment or deductible requirement under a group health plan for the costs of specific types of care, such as prenatal care or well-baby visits;
- A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking; or
- A program that provides a reward to employees for attending a monthly health education seminar.
The federal government does not consider the five examples above as providing rewards based on health factors. An employee wellness program can base rewards on health factors and still be considered nondiscriminatory, but the program must meet five additional requirements:
- The total reward given to an individual may not exceed 20% of the cost of coverage;
- The program must be reasonably designed to promote health or prevent disease;
- The program must give eligible individuals the opportunity to qualify for the reward under the program at least once per year;
- The reward must be available to all similarly situated individuals, which includes offering a reasonable alternative standard for obtaining the reward for any individual for whom it is unreasonably difficult or medically inadvisable to satisfy the otherwise applicable standard; and
- The plan must disclose in all plan materials describing the terms of the program the availability of a reasonable alternative standard. However, certain exceptions may apply.
These new federal rules will apply for plan years beginning on or after July 1, 2007. Employers who offer or are thinking of offering employee wellness programs should review their wellness plans to ensure compliance with the new requirements, as well as any other federal and state laws, such as the Americans with Disabilities Act. Clarification to Source-of-Injury Exclusions in Group Health Plans
The new rules also clarify provisions of the Internal Revenue Code, the Employee Retirement Income Security Act and the Public Health Service Act. The rules state that if a group health plan generally provides benefits for a type of injury, the plan may not deny benefits otherwise provided for the treatment of the injury if the injury results from an act of domestic violence or a medical condition (including both physical and mental health conditions).
The rule applies to injuries resulting from medical conditions even if the condition is not diagnosed before the injury. Example: A plan covers certain typical injuries, such as a broken leg or back, and the injury results from a suicide attempt. If the plan beneficiary attempted the suicide because he or she had an undiagnosed condition of depression, the plan would have to cover the injury, despite the existence of a suicide exclusion in the policy.
As health care providers, purchasers and payers handle claims for injury, they should be aware of these new coverage requirements, which take effect in plan years beginning on or after July 1, 2007. If you have any questions or would like assistance with your health care compliance needs, please contact Barbara Zabawa at firstname.lastname@example.org
or any other member of the Godfrey & Kahn Employee Benefits Practice Group.