Health Plan Related Participatory Programs
Health and wellness incentive and rewards programs have consistently proved useful in engaging behaviors that improving health, moral, and efficiency in the workplace. However, there are legal issues that organizations must consider when planning out a Health Participatory programs. Navigating the rules and regulations of a health and wellness incentive program may seem daunting, but in most cases, a health and wellness incentive provider would tell you that the primary legal requirements can be summed up in five general rules. The five general rules for health and wellness incentive programs included:
- Do not exceed the maximum reward.
- Ensure the program is of reasonable design
- There must be an annual opportunity provided
- A reasonable alternative standard must be provided
- Provide the required disclosures
Rule 1: Maxmimum Reward
When creating a health and wellness incentive program, one of the requirements you will have to meet will be ensuring that your rewards and incentives do not exceed the maximum amount legally allowable for the participant. In other words, your rewards will have to stay below a certain percentage of coverage cost. Both the Americans With Disabilities Act (ADA) and the Health Insurance Portability and Accountability Act (HIPAA) have specific rules that are related to the maximum reward allowed.
Under the Americans with Disabilities Act, the maximum reward for a health and wellness program is limited to 30% of the cost of employee-only coverage. The 30% includes both financial and non-financial rewards. Additionally, there are a few other essential rules involved when you are calculating the maximum reward.
If a wellness program’s participation is dependent upon a participant being enrolled in a specific group health plan, then the program’s reward or incentive must be limited to 30% of the total cost of self-only coverage under that particular plan.
If participation is not dependent upon the participant being enrolled in the company’s group health care plan, and if the employer only offers one group health care plan to employees, then the 30% is to be based on the total cost of self-only coverage for an employee under the company’s group health care plan.
If the wellness program does not require a participant’s enrollment in a specific company group health care plan and the company offers more than one group health care plan, then the 30% must be calculated using the cost for the company’s least expensive health care plan. For instance, if the company offers four group health care plans with premiums for self-only coverage that range from $4,000 to $9,000 and participation in the wellness program does not require enrollment in any particular plan, the 30% must be calculated using the $4,000 health care plan, in which case the maximum reward would be $1200 (30% of $4000).
If the company does not offer a group health plan, but they do provide a wellness program, the 30% maximum reward will be calculated by using the cost of self-only coverage for a 40-year-old non-smoker under the second lowest cost Silver plan available through the state or federal marketplace in the location identified as the company’s principal place of business.
If the wellness incentive program involves smoking cessation, the maximum incentive will be limited to 30% of self-only coverage, provided that the program includes biometric screening or any other medical procedure that tests for the presence of tobacco. As long as the wellness program does not contain any disability-related inquiries or medical exams, the ADA’s 30% limit will not apply, and the company may offer an incentive of up to the 50%, which is the incentive level permitted by HIPAA.
Under the Health Insurance Portability and Accountability Act, participatory health programs that require the completion of an activity-only standard of some sort must not have the total plan-based rewards for the company wellness programs exceed 30% of the cost of employee-only coverage under the company’s health care plan. If the wellness program allows for the participation of dependent children or spouses, the reward maximum is 30% of the cost of coverage for their appropriate level of coverage. If there are outcome-based programs or multiple activity-only programs, the reward, or penalty, for all applicable programs combined must not exceed 30%. If a program is designed for tobacco use reduction, the reward may be as much as 50%. The entire 50% may be used if the only wellness program offered is a tobacco reduction program, however, if there are other wellness programs as well, the combined total of all programs cannot exceed 50%, with the non-tobacco related programs being limited to 30%. For instance, if an employer tried to use 50% for a tobacco reduction program as well as 30% for a non-tobacco related program, this would not be permissible, as the total would then be 80%.
Rule 2: Reasonable Design
It is vital that a company’s health and wellness rewards or incentive program be considered to be of a reasonable design according to all applicable regulations. In general, the program must be proven to be non-discriminator and created with the intent of improving health or preventing disease. The reasonable design is outlined in the Health Insurance Portability and Accountability Act (HIPPA), the Americans with Disabilities Act (ADA), and the Genetic Information Nondiscrimination Act (GINA).
Under HIPPA, it is essential that a program be reasonably designed to either prevent disease or to promote health. To be considered reasonably designed to prevent disease and promote health if the program needs to meet five requirements:
1: The program must provide a reasonable chance of improving a participant’s health or preventing them from contracting diseases.
2: The program must not be overly burdensome to its participants.
3: The program must not be a subterfuge for discrimination against individuals based on their health.
4: The program must not be “highly suspect” in the method that is chosen for preventing disease or promoting health.
It is important to note that any wellness program that includes disability-related medical examinations and or questions for participating employees will be subject to the requirements of the Americans With Disabilities Act, which also requires reasonable design.
The Americans With Disabilities Act regulations included all four of HIPPA’s requirements, along with stating that a program will not be considered of reasonable design if it collects health information, or that use tests that do not provide results to the participants, offer advice to the participants, or give follow up data with the intention of improving an employee’s health.
The Genetic Information Nondiscrimination Act will apply in the case of a program that includes a spouse’s involvement and completion of an HRA (Health Reimbursement Account). GINA includes all the requirements of HIPPA and ADA, as well as requiring that for a program to be considered of reasonable design it must not impose a penalty on a company employee by inhibiting or preventing the employee’s spouse from participating in a program because of a spouse’s disease or disorder.
In other words, taking all three acts into account, a program is considered to be of reasonable design provided that it is nondiscriminatory, offers a fair chance of improving health or preventing disease, is not overly burdensome, the program is not highly suspect in its methods and, in the case of the collection of health information or testing, it provides results and/or offers advice, or follow up information.
Rule 3: Annual Opportunity
When running a company health and wellness program, to remain in compliance with all rules and regulations, it is important to ensure that there is a minimum of one opportunity per year for an eligible individual to qualify for a program’s reward offerings. If a program tends to determine reward eligibility near the beginning of a new medical plan year, the may need to plan for individuals to still be qualifying during the plan year. Part of the annual opportunity rules under the Health Insurance Portability and Accountability Act include a requirement that if an individual does not satisfy a program’s initial standard they must be given a reasonable alternative – which will be discussed further in the next section. Because of the process involved in an individual requesting, establishing, and satisfying an alternative standard, they may end up qualifying for the program’s reward well after the beginning of the new medical plan year.
Rule 4: Reasonable Alternative Standard
When creating a company health and wellness incentive program, it is vital to ensure that there is a reasonable alternative standard for individuals who do not meet the reasonable standard for the program. The alternative measure must fit the needs of the individual requesting the alternative standard, and every effort must be made to ensure compliance.
Several rules must be satisfied for a health and wellness incentive program to be considered to have a reasonable alternative standard according to the Health Insurance Portability and Accountability Act. Any individual who does not satisfy a health and wellness program’s underlying standard must be given a reasonable alternative standard. Additionally, all similarly situated individuals must have access to the health and wellness incentive program’s reward. For an alternative standard to be considered reasonable under HIPAA, it must satisfy four rules (as applicable):
1: If an educational program is presented as an alternative standard for the participant, the program must be made available under the plan, or the individual involved must be found a suitable educational program, for which the company’s plan will cover all costs. The plan can’t require an individual to find the educational program on their own or pay for it out of their own pocket.
2: In the case of diet program alternative standard, the company’s plan must pay for any participation fees and or membership fees. However, the company’s plan does not have to pay for food for the participant.
3: There must be a reasonable time requirement for the alternative standard. According to the regulations, requiring a participant to attend a nightly class for one hour each night would not be considered a reasonable time requirement.
4: If a participant’s physician says that a particular plan standard is not medically appropriate for the participant, a different reasonable alternative must be provided, taking into consideration the recommendations of the participant’s physician.
Along with the above HIPPA guidelines, the Patient Protection and Affordable Care Act of 2010 added more specific requirements regarding there being a reasonable alternative standard. Some of these additional requirements include enhanced internal appeals and claims requirements and external review procedures for non-grandfathered plans. Some examples are included in PPACA to show when a claim would involve a “medical judgment” that would cause it to be subject to the federal external review process for an adverse benefit determination. Some of the examples include a situation where a decision is made as to whether a participant in an employer-sponsored health and wellness incentive program is entitled to a reasonable alternative standard. A non-grandfathered plan must appeal, following all PPACA standards, if they choose to deny a request from an employee for a reasonable alternative standard to the company’s general standard. This includes making an external review by an Independent Review Organization available.
In simple terms, a program is considered to have a reasonable alternative standard if it covers any applicable costs related to the alternative standard’s program, as in the case of a class or diet program, the program must take physician’s recommendations into account, and the time required for the alternative standard must be reasonable.
Rule 5: Required Disclosure
According to the Health Insurance Portability and Accountability Act requirements, all materials describing the terms of a company’s health and wellness incentive program must disclose that a reasonable alternative standard is available to the program’s participants. If applicable, it must also disclose if a waiver is available for the program’s participants. Additionally, any notice used by the program to inform a participant that they have not met the underlying standard must include a disclosure of the existence of the alternative standard.
Sample language was provided by the Department of Labor in June of 2013:
“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.”
The June 2013 regulations also included additional sample language:
“Fitness Is Easy! Start Walking! Your health plan cares about your health. If you are considered overweight because you have a BMI of over 26, our Start Walking program will help you lose weight and feel better. We will help you enroll. (If your doctor says that walking isn’t right for you, that’s okay, too. We will work with you [and, if you wish, your own doctor] to develop a wellness program that is.)”
By using the Department of Labor’s guidelines, it becomes straightforward to ensure that adequate notice and disclosure is given to employees participating in your company’s health and wellness incentive program.
As shown above, there are several requirements to be taken into account when creating your health and wellness program. An easy way to remember the five general rules for health and wellness incentive programs is the acronym MRARD:
M – Maximum Reward
R – Reasonable Design
A – Annual Opportunity
R – Reasonable Alternative Standard
D – Disclosures
When creating your company’s health and wellness incentive program, it is essential to consult with both your company’s legal team and a Health and wellness incentive provider who will be able to help you navigate the legal compliance issues associated with effective health and participatory wellness program.
Contacting All Digital Rewards is the next step to creating a health and wellness incentive program, our health and wellness experts at All Digital Rewards can answer questions you may have about health and wellness rewards programs and what it takes to keep your program compliant. Offering an extensive variety of rewards and incentives – many of which can be custom branded and tailored to fit your company’s needs. We pride ourselves on our ability to provide advanced technology reward management solutions and systems to manage your program reward offerings.
We appreciate working with companies that are committed to their participant’s health and wellness and our experts are standing by to help develop a program that meets all the requirements to provide participants an engaging health and wellness rewards program that is compliant.
Our Healthy Choice Rewards, Living Well™ Debit Reward Card, and our robust Health and Wellness points-based platform technology, Live Well™ all of which can be fully branded and personalized for your company. ADR’s products and services allow you to quickly and effectively reward participants online and off. The experts at ADR can help you create the ideal health and wellness program for your company and guide you to meet all applicable legal compliance requirements. Give our Health and Wellness Reward Program experts a call at 866-415-7703 or click the “Schedule a Demo” button below!
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