Bona Fide Employee Wellness Programs
HIPAA generally prohibits a plan from discriminating among similarly- situated individuals based on their health status. This means, in general, a plan cannot charge different premiums or impose different costs (through higher deductibles or copayments) because of a health condition.
However, these non-discrimination provisions were not intended to prevent a group health plan from establishing premium discounts, deductible or copayment incentives for employees adhering to a employee wellness programs or disease prevention plans. Health promotion and disease management plans, commonly referred to as employee wellness programs, can be an exception to HIPAA’s non-discrimination requirements under certain circumstances.
Incentives to participate in employee wellness programs are not subject to HIPAA’s non-discrimination rules. However, a lot of corporations want to associate the incentive to satisfying a standard related to a state of health. If the program wants to give a reward based on a health status factor, that initiative must meet the rules of a “bona fide wellness program” in order to prevent any HIPAA non-discrimination issues.
In order to be considered bona fide employee wellness programs, the following conditions must be met:
- The incentive must be limited to 10%, 15% or 20% of the unsubsidized price of single coverage (even if the employee elects family coverage).
- The employee wellness programs must be reasonably designed to encourage wellness or to prevent disease and the wellness program must give respondents to re-qualify at least once a year.
- The employee wellness programs must be made available to every similarly situated respondents and reasonable alternative standards must be provided to people who cannot within reason to reach the health standards as a result of a medical condition or for whom achievement of the standard is medically inadvisable. This may mean the wellness program may need to provide individually tailored programs to some workers. Plans could make available an alternative requirement that is not based on a state of health, such as taking part in a self-care class. Some plans have created letters that individuals can take to their physicians to have the doctor attest that the health standard is not possible as a result of a health condition.
- The wellness program must give an explanation that accommodations are available in every wellness program descriptive materials.
In order for employee wellness programs to provide an incentive tied to health factors instead of participation, the above requirements for a bona fide wellness program must be met.
Many employers are currently thinking about including tobacco user surcharges. If employee wellness programs adopt a smoker surcharge, the employee wellness programs would charge tobacco users more to participate in the medical plan. On the surface, this seems to be a direct violation of the HIPAA non-discrimination rules.
However, if the employee wellness programs meet the guidelines of bona-fide employee wellness programs, the tobacco user surcharge is allowed. To meet the rules of a bona fide wellness plan, for example, the employer would make available to tobacco users a tobacco cessation program.
The additional charge could not be greater than 20% of the unsubsidized employee’s health plan cost. Lastly, the employee wellness programs must offer a reasonable alternative for tobacco users who cannot quit because of a health reason, such as a nicotine addiction. In this example, the reasonable alternative may be nicotine patches.
If your employee ties rewards to results, your employee wellness programs must conform not only with HIPAA non-discrimination regulations, but also with any state laws inhibiting discrimination based on lifestyle choices. If you are unsure whether or not your program qualifies as a bona fide employee wellness program then you should consider consulting with your corporate attorney.