ACA Updates Nondiscrimination Rules for Wellness Programs

School districts and other governmental organizations that implement wellness programs for teachers and other employees know they are an excellent way to decrease Health Insurance costs. When employees are well, they have less insurance claims, which help keep rates down.

Additional benefits of wellness programs are known to increase employee morale and productivity, as well as reduce absenteeism.

If your organization has a wellness program in place now, or if you are planning to implement one in the future, make sure your program is ACA compliant and nondiscriminatory. 

ACA Releases Modified Wellness Rules

The ACA has modified the wellness program rules. The new rules apply to all group Health Insurance plans, whether or not you have grandfathered or nongrandfathered status. Nondiscriminatory rules have been clarified to ensure that all employees, regardless of health status, have the opportunity to participate and be rewarded.

The ACA has classified wellness programs into two categories: Participatory and Health-Contingent.

Participatory Wellness Programs

Participatory wellness programs are based on employee’s participation. Events such as attending a health seminar, a fitness center reimbursement program or completing a health questionnaire would be considered participatory. Nondiscrimination requirements are satisfied as long as the program is available to all employees, regardless of their health status. Also there is no limit on the financial incentives for a participatory wellness program.

Health-Contingent Wellness Programs

A Health-Contingent wellness program can either be activity-based or outcome-based. An activity-based program offers the employee an incentive for participating in an activity such as exercising, dieting or walking. Activity-only wellness programs do not require an employee to attain or maintain a specific health outcome. An outcome-based program requires that an employee meet a specific goal, i.e., to stop smoking or maintain certain health standards (such as achieving a specified cholesterol level or weight).

A Health-Contingent wellness program must meet the following ACA standards by January 1, 2014:

1. Annual Qualification: Participants must be able to qualify for the reward at least once per year.
2. Maximum Reward: When a health-contingent wellness program is offered in connection with a group health plan, the maximum permissible reward will be 30% of the total cost of coverage under the plan including employee and employer contributions, and as much as 50% if a tobacco cessation program is included. Currently, the limit is 20%.
3. Program Focus: The program should be reasonably designed to promote health or prevent disease. It must have a reasonable chance of improving health or preventing disease, not be overly burdensome to employees or discriminate based on a health factor.
4. The reward must be available to all employees:  Those employees who cannot meet the initial standard must be offered reasonable alternative standard. It is also acceptable to waive the initial standard and issue the full reward. Employees completing the alternative standard must receive their award in the same year as those who completed the initial standard.
5. Disclosure of Alternative Standards: The wellness plan must disclose the availability of the reasonable alternative standard or a waiver. This information must be included in all materials describing your health-contingent wellness program. Disclosure should include contact information for employees to obtain the alternative standard. For outcome-based wellness program, a statement about the alternative standard must be included in a notice to employees who did not satisfy the initial outcome-based standard. It should also be stated that an employee’s personal physician’s recommendations will be accommodated. Additionally, if the wellness program materials reference a difference in premiums based on tobacco use or on achieving a standard of a health-contingent wellness program, disclosure must be provided. A Summary of Benefits and Coverage that merely mentions the availability of a wellness program will not be subject to this disclosure requirement. The ACA has provided sample disclosure language:

   Your health plan is committed to helping you achieve your best health. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at [insert contact information] and we will work with you (and, if you wish, with your doctor) to find a wellness program with the same reward that is right for you in light of your health status.

It is important to review your own wellness plan to see if changes need to be made. If your organization doesn’t currently have a wellness plan, now may be the time to consider one to help mitigate the increasing costs of Health Insurance.