H&W: Final Wellness Incentive Rules

Final Wellness Incentive Rules” On June 3, 2013, the United States Departments of Treasury, Labor and Health and Human Services (the Departments) published the final rule on the use of incentives in wellness programs.  The final rule does not mark a radical departure from the 2006 regulations but does provide some much needed clarifications.

Here are some highlights:

• It formalizes the distinction between participatory and health-contingent wellness programs.

• Participatory wellness programs are programs that do not offer a reward, or if they do offer a reward, they do not require participants to meet any health standard in order to receive the reward.  Programs of this nature do not have to meet the requirements of the wellness rule provided that they are made available to all similarly situated employees regardless of health status.

• It divides health-contingent programs into two subcategories: activity-only and outcome-based wellness programs.
  • Activity-only wellness programs require an individual to perform or complete an activity related to a health factor in order to obtain a reward.
  • Outcome-based wellness programs require an individual attain or maintain a specific health outcome (such as not smoking or attaining certain results on biometric screenings) in order to obtain a reward.

• Outcome-based wellness programs must make the full reward available to persons who do not qualify based on the initial testing if they satisfy a reasonable alternative standard and even if it requires time to satisfy that standard.

• The notice of availability of a reasonable alternative standard must include contact information for requesting such a standard and a statement that the recommendations of an individual’s physician will be accommodated.  In addition to providing the notice with any program materials describing the incentive program, it must also be provided with any notice that an individual failed to meet the initial standard for an outcome-based program.

• For plan years beginning on after January 1, 2014, the reward cannot exceed 30% of the cost of coverage; however, an additional 20% can be added to the extent the additional percentage is connected to a program designed to decrease tobacco usage.

For more information, see the HIPAA Nondiscrimination reference material on Compliancedashboard.