HIPAA Wellness Rules
Does Your Program Fall Under the new HIPAA Wellness Rules?
It does if the answer to both questions below is “yes”:
1) Is your program part of a group health plan?
The new HIPAA wellness rules pertain to wellness programs that are part of a group health plan (GHP). A program will be considered part of a GHP if it is:
• Offered as part of the employer’s health plan.
• Offered to any population, whether on the employer’s health plan or not, and includes services that are considered to be “medical care” because they are individualized in nature and are provided by trained professionals. Examples include programs with individualized coaching – disease management, lifestyle coaching, EAP – or “medical” services like biometric screening or flu shots.
2) Do you offer a health-contingent incentive?
Incentives are classified into two types: participatory and health-contingent. Only those incentives that are health-contingent are subject to the new rules. An incentive is considered health-contingent if it:
• Is offered in response to completion of an activity that is related to a health factor. No specific health outcome is required to flow from completing the activity.
However, since a health contingent incentive program is based on a health condition, some individuals may have difficulty participating in the program. An example of this type of program would be a reward for participation in a walking program. Some people – such as those with a condition like asthma – may not be able to participate because of their health status and thus the activity and related reward are considered health-contingent. Incentives for participation in programs directed at a subset of people based on their health status, such as completion of lifestyle coaching for those identified as high risk or completion of disease management phone calls for those with chronic conditions, may also be considered health-contingent if non-participation results in a penalty, such as a premium surcharge.
• Is outcomes-based – meaning a person must satisfy a certain health level, such as a body mass index (BMI) below 30 or must attain non-smoking status, in order for the incentive to be received.
What are the new requirements for programs that fall under HIPAA?
If your program is subject to the new HIPAA wellness rules, for plan years starting on or after January 1, 2014, it must comply with the following five requirements:
1) Annual Qualification. There must be an annual opportunity for individuals to qualify for the incentive. This requirement remains unchanged from previous years.
2) Limits on incentive Size. The new HIPAA wellness rules have expanded the size of incentives that can be offered to encourage health improvement. Incentives for tobacco cessation cannot exceed 50% of the cost of coverage. All other health-based rewards must not exceed 30% of the cost of coverage. If incentives for tobacco and other health-based activities or outcomes are both offered, the health-based reward must not exceed 30% and the tobacco cessation incentive must not exceed an additional 20%. In other words, the total incentive offered cannot exceed 50% of the cost of coverage. If only the employee is eligible for the incentive, the percentage should be calculated on the employee only cost of coverage regardless of the type of coverage in which the employee enrolls. If spouses /domestic partners are also eligible for the incentive, the cost of coverage for employee + spouse applies for calculation purposes. Note that any incentives offered for participatory programs / activities – such as completion of an HRQ – do not count toward these totals offered as part of the employer’s health plan.
3) Reasonable Design. As in prior years, the incentive must be reasonably designed to promote good health and not act as a subterfuge for discrimination based on health. This means the program cannot be overly burdensome and must have a reasonable chance to improve health.
4) Uniform Availability and Reasonable Alternative Standards. As in prior years, the employer must: (a) make the incentive available to all similarly situated individuals and (b) offer individuals an alternative if participation is unreasonably difficult due to a medical condition or is medically inadvisable to satisfy the standard for the incentive.
New rules regarding the alternative now apply depending on whether the incentive is activity-based or outcomes-based.
• Activity-Based: If the incentive is activity-based, the employer can require physician verification to prove that the incentive standard is unreasonable for the individual. When provided with a doctor’s note, the employer must offer an alternative way of achieving the incentive.
• Outcomes-Based: If the incentive is outcomes-based, the employer must provide an alternative standard to anyone who comes forward to indicate they cannot meet the requirements for the incentive. The employer cannot require verification from the physician that the incentive is unreasonable for the individual.
It is important to note that the employer does not have to furnish an alternative standard up front. Instead, an alternative can be created upon request by the individual.
Whether the alternative is offered pursuant to an activity or outcomes-based program, the simplest alternative in either case is one that is participatory in nature, such as completion of a health education program. This program must be provided by and paid for by the employer – the employee cannot be required to find the program unassisted or pay for it themselves. If the alternative offered is health-contingent, all of the HIPAA wellness rules, including the availability of an alternative standard, continue to apply. This means the employer may need to offer a series of alternative standards to accommodate various employee situations.
5) Notice of Availability of Alternative Standards. The employer must ensure that a notice regarding the availability of an alternative standard is included in ALL materials that describe the program.
Disclaimer: The information contained herein is not intended to be legal advice, and while every effort has been made to ensure that the content of this legislative summary is accurate, we make no representations or warranties in relation to the information provided, and assumes no liability or responsibility for any acts or omissions based on this information. As always, we encourage you to consult with your own legal counsel prior to making any decisions regarding plan design or administration.