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From Health Law Daily, May 29, 2013

HHS releases final rules on employment based wellness programs

By Danielle H. Capilla, JD

A final rule due for publication on June 3, 2013, on nondiscriminatory wellness programs in group health coverage programs has been released by HHS along with the Internal Revenue Service, Department of Treasury, Employee Benefits Security Administration, Department of Labor and CMS. This broad-reaching rule increases the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20 percent to 30 percent of the cost of coverage, and allows for a maximum permissible reward up to 50 percent for wellness programs designed to prevent or reduce tobacco use. The rule also provides clarifications regarding reasonable alternatives that must be provided to avoid discrimination. The rule will become effective 60 days after publication and will apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2014.

According to an HHS news release, the final rule will continue to support participatory wellness programs such as memberships to gyms or fitness centers, rewards for attending a no-cost seminar related to health education or reward employees who complete a health risk assessment. These programs are available regardless of an individual’s health status. Wellness program standards will apply to grandfathered health plans and non-grandfathered plans under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). This will prevent inconsistency across group health coverage and allow grandfathered plans to promote health and prevent disease.

The final rule focuses on health contingent wellness programs, which are designed to reward individuals who meet specific standards relating to health. This can include not using or stopping the use of tobacco or tobacco products, or reaching or working to reach a specified weight, cholesterol or body mass index level. The final rule caps the reward for health contingent wellness programs at 30 percent. For example, the reward must not exceed 30 percent of the total cost of the employee-only coverage under the plan. For the reduction of tobacco use this cap is raised to 50 percent.

The final rule divides the programs into “activity only” and “outcome based” programs. Activity only programs reward an individual for performing or completing an activity related to a health factor. They do not require an individual to attain or maintain a specific outcome. An activity only program might be walking or exercising. Outcome based programs reward individuals for attaining or maintaining a specific health outcome such as not smoking. The rewards must be available to all individuals who are similarly situated, and a reasonable alternative standard (or a waiver) must be made available to an individual who has unreasonable difficulty due to a medical condition to satisfy the applicable standard. The final rule states that the program must be reasonably designed to promote health or prevent disease.

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