Reform Alert - News from the Blues' Office of National Health Reform

Final guidance on wellness programs released

June 11, 2013

On May 29, the Department of Health and Human Services (HHS), Treasury, and the Department of Labor (DOL) released joint guidance on nondiscriminatory group wellness programs under the Affordable Care Act (ACA).

This final rule establishes standards for all grandfathered and nongrandfathered group health plans with plan years beginning on or after January 1, 2014. The final rule largely maintains the guidance issued in the proposed rule, but makes a number of clarifications.

Under the rule, wellness programs are divided into two categories – participatory wellness programs and health-contingent wellness programs.

Participatory wellness programs

  • Participatory wellness programs (non-health contingent wellness programs) are programs that are made available to all individuals and that either do not provide a reward or do not include any conditions for obtaining a reward that are based on an individual satisfying a standard that is related to a health factor.
    • Participatory wellness programs do not include walking programs, weight-loss programs, or exercise programs. Such programs would be considered health-contingent wellness programs.

Health-contingent wellness

  • Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward, or require an individual to do more (based on a health factor) than a similarly situated individual to obtain the same reward.
  • The annual reward available under a health-contingent wellness program may not exceed 30 percent of the cost of coverage. If the health-contingent program is tied to tobacco cessation, an additional 20 percent incentive may be provided. Plans have the flexibility to determine apportionment of the reward among family members, as long as the method is reasonable.
  • This final rule divides health contingent wellness programs into two subcategories: activity only and outcomes based.
    • Activity-only wellness programs require an individual to perform or complete an activity related to a health factor to obtain a reward. Activity-only wellness programs do not require an individual to attain or maintain a specific health outcome:
      • Walking program
      • Diet program
      • Exercise class
    • Outcomes-based programs require an individual to attain or maintain a specific health outcome (such as not smoking or attaining certain results on biometric screenings) to obtain an award.

Where can I find more information?
More information can be found at guidance on nondiscriminatory group wellness programs.

 

The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.