Compliance Issues Around Effective Wellness Programs

Transcription

1 Compliance Issues Around Effective Wellness Programs September 16, 2015

2 Disclaimer Our presentations and publications are for educational purposes only and are not intended, and should not be relied upon, as accounting, tax or legal advice; any advice is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code (IRC) or applicable state or local tax law provisions. 2

3 Today s Speakers Joe DiBella Managing Director, Executive Vice President Conner Strong & Buckelew Lisa Frappolli Wellness & Productivity Coordinator Conner Strong & Buckelew Saniyyah Saka Compliance Consultant, Employee Benefits Conner Strong & Buckelew 3

4 Impact of Wellness & Population Health Control Benefit Costs Productive Workforce Employee Engagement & Participation 4

5 Why Wellness? Increased health risk awareness Ever increasing health care costs Win-win for both employers and employees Healthier employees lead to better attendance and increased productivity. Lower company healthcare costs lead to healthier bottom-line. Study by U.S. Corporate Wellness says average results of employee wellness plan include: Drop in workers compensation and disability claims by 30% Decrease in short-term sick leave by 32% Savings of between $3 and $6 for every $1 invested in wellness 5

6 Why Wellness is Critical to Control Healthcare Costs CDC reports chronic illnesses, (closely linked to lifestyle behaviors) drive approximately 75% of healthcare costs Three lifestyle behaviors (smoking, physical inactivity and poor diet) drive four key diseases (cancer, diabetes, lung disease, heart disease) that result in 50% of deaths worldwide If the major risk factors for chronic disease were eliminated, at least 80% of premature heart disease, stroke and type 2 diabetes would be prevented; as well as 40% of cancer Source: Bradshaw, et al, MRC Policy Brief no 1, March

7 So What To Do About It? Wellness is considered an important component of employer benefit packages. Offer workers and their families access to programs to increase health which ultimately contributes to development of less costly benefit packages A comprehensive wellness program can include, among other features: - health-related communications, - health risk assessments - rewards intended to raise employees health awareness and promote healthy lifestyles Wellness programs can cover - employees only - employees spouses/domestic partners and dependents Common goals of most workplace wellness programs is to: - help control health plan costs - encourage a healthy workforce 7

8 Wellness Strategy Management support Business Case Wellness Committee Mission Statement Long-term strategic plan Workplace assessment Current program evaluation Employee survey Health Risk Assessment Health screenings Data Analytics Employee Education and Activities: physical, spiritual, intellectual, social, emotional and occupational Communications Incentives Program Evaluation: Participation, satisfaction, health care costs, risk changes, productivity, absenteeism and presenteesim, morale, ROI Communicate Results 8

9 Keys to Engaging Employees in Health & Wellness Programs Top-down Support Reward Personalize Successful Wellness Programs Make it fun Socialize Make it easy 9

10 Incentives Less Intrusive Undefined/lower ROI The Continuum Most Aggressive Measurable/high ROI Reward for Activity Reward Based On Risk Reward for Achievement Reward for Adherence $ for completing a PHA $ for enrolling in a chronic disease management program $ for completing an online or telephonic wellness program $ for participation in biometric screening 100% preventive care Reduced copays for use of premium providers Waived co-pays on diabetes medication Waive co-pays on high blood-pressure medication Cover NRT for tobacco users $ for colonoscopies $ to maintain low cholesterol $ to reduce cholesterol 10 points $ to stop smoking $ to maintain BMI below 25 $ to hit biometric screening results Lower premium for non-smokers $ to reduce % of body weight or maintain in a healthy range $ to maintain a target BMI for 12 months $ to maintain low blood pressure for 12 months 10

11 Compliance Matters

12 Wellness Plan Defined Wellness program = any program in place to promote health and/or prevent disease. Do not have to include word wellness but may still be wellness program Examples include: - disease management program - discounts programs to promote health or fitness - a smoker cessation program - case management program to manage a health condition NOT all wellness programs are subject to rules that apply to group health plans 12

13 Wellness Plan Defined Wellness programs are often group health plans Programs that are, or relate to, a group health plan, must comply with certain laws that apply to group health plans Wellness programs may be offered on a stand-alone bases Stand-alone wellness programs that do not relate to, provide or pay for health/medical benefits are generally not group health plans Incentives offered are completely unconnected to the group health plan. Standalone wellness programs that provide or pay for medical benefits are generally group health plans. 13

14 When Is a Wellness Plan a Group Health Plan? Wellness Programs Are Group Health Plans When: Connected/related to the group health plan Reduced deductibles, co-payments or contributions based on presence or absence of a health factor. Examples: Reduced premium for non-smokers Discount for completing an annual physical Completion of biometric screening Reduced premium for meeting fitness goals Discounts for completing activity regimen Wellness Programs are Typically Not Group Health Plans* No connection/relation to group health plan and program is offered as employer policy Examples: Discount gym/fitness class memberships Prize for employees who do certain activities such as walking PTO for attending a general health class Onsite stress management course *Caution: Other laws may still apply 14

15 Audience Question We are considering partnering with a local fitness facility to offer discounts to our employees. The facility is convenient to only a few of our locations - many of our employees will not be able to take advantage of the discounted membership. Must we attempt to locate other fitness facilities to partner with to offer discounted services so we capture a greater percentage of employees? 15

16 Many Laws May Apply Today, we will cover group health plan wellness programs and compliance considerations under the following laws: Health Information Portability and Accountability Act (HIPAA) nondiscrimination rules Health care reform (the Patient Protection and Affordable Care Act (PPACA)) The Employee Retirement Income Security Act of 1974 (ERISA) Americans with Disabilities Act (ADA), including proposed EEOC rules The Genetic Information Nondiscrimination Act (GINA) Section 125 (Cafeteria) plan rules Taxability Issues 16

17 HIPAA and Wellness Programs Wellness plans that are group health plans must comply with HIPAA nondiscrimination rules Wellness programs have been subject to two sets of final regulations regulations; effective July provided guidance for determining if wellness programs were compliant with HIPAA nondiscrimination rules > Categorized wellness programs into two groups, standard-based or participation-only > PPACA enacted changes to 2006 rules without significant changes effective January 2014 > IRS, DOL and HHS issued proposed regulations to address changes imposed by HCR in November June 2013 proposed regulations were replaced with final regulations effective the first plan year after January

18 HIPAA Nondiscrimination Rules HIPAA nondiscrimination rules generally prohibit group health plans from discriminating with regard to eligibility (including benefits) premiums or contributions based on any health status related factor. - Can not impose different co-insurance, deductibles, co-payment, or employee contributions based on the presence or absence of a health factor. > Health factors include medical conditions, disability, health status, genetic information, claims experience, health care received, etc. - Benign discrimination permitted Compliant wellness programs are an exception to general rule - allows premium discounts or rebates in return for adherence to certain programs designed to promote health or prevent disease. 18

19 HIPAA Nondiscrimination Rules Wellness programs that are group health plans must satisfy certain requirements to avoid violating HIPAA nondiscrimination rules. Compliance with HIPAA nondiscrimination rules does not always mean compliance with other laws such as ERISA, ADA, or other state or federal law. 19

20 Wellness Program Types Group health plan wellness programs are either: Participation-only - No reward or rewards participant regardless of whether individual satisfies a standard related to a health factor - Must be available to all similarly situated employees - ADA may impose additional requirements Health-contingent - Rewards participant if participant is able to meet a health standard - Must satisfy 5 requirements to comply with HIPAA nondiscrimination rules. - Rules categorize programs as either activity-based or outcomebased 20

21 Wellness Program Types Health-contingent Wellness Programs Activity-only - requires the performance or completion of an activity related to a health factor to get a reward no maintenance of a specific outcome Outcome-based - requires attainment or maintenance of a specific health outcome Multiple Hybrid Programs Offers components of participatory and health contingent program. Each component must satisfy requirements imposed for program type. 21

22 Well Program Type Examples Participation Completing annual physical Biometric test (regardless of test outcome) Attending health related course Health-contingent Activity-based - Completing running/walking program - Completing weight management program Outcome-based - Reward for non tobacco use - Reward for meeting certain measurements, i.e., cholesterol, BMI Multiple Hybrid Completing an annual physical and biometric screening (regardless of the outcome), AND a reward for non-tobacco use. 22

23 Health-Contingent Program Requirements Must satisfy five conditions to comply with HIPAA nondiscrimination rules: 1. Frequency of the reward 2. Size of reward 3. Reasonable design 4. Uniform availability and reasonable alternative standard 5. Notice of availability 23

24 Health Contingent Wellness Program Requirements 1. Frequency of reward - Must provide opportunity to qualify at least once per year. - Applies to activity and outcome-based programs 2. Size of reward - Generally cannot exceed 30% of total cost of coverage. Can be up to 50% if in connection with tobacco cessation. - Applies to activity and outcome-based programs - Recent guidance from the EEOC may impact future incentive amounts for certain wellness programs, participatory and outcome based programs 24

25 Health-Contingent Wellness Programs Size of the Reward Calculation Employee only - calculate reward based on total cost of employee only coverage. Employee plus dependent/spouse - calculate reward based on total cost of employee s enrollment tier. (Complaint with HIPAA, ADA proposed rule considerations) Limit of 30% for non-tobacco related rewards apply to all health based programs offered. Careful when calculating rewards for multiple programs If program based on both tobacco use and other health-contingent factors incentives not related to tobacco are still capped at 30%; incentive related to tobacco use may go up to 50%. 25

26 Health-Contingent Wellness Program Requirements 3. Reasonable Design - Program must be designed to promote health or prevent disease. - Cannot be overly burdensome, a subterfuge for discriminating based on a health factor or highly suspect in the method chosen to promote health or prevent disease. 4. Uniform Availability and Reasonable Alternative Standards ("RAS") - UA means full reward must be available to all "similarly situated" individuals. - Requirements differ between activity-based and outcome-based - May mean retroactive rewards are due 26

27 Health-Contingent Wellness Program Requirements RAS for Activity-based Programs Must offer RAS (or waiver of standard) for any individual for whom it is: - unreasonably difficult due to a medical condition to satisfy standard; and - medically inadvisable to satisfy the standard If RAS is an activity, another RAS (or waiver) must be offer if RAS is unreasonably difficult or medically inadvisable Plan can seek physician verification if medically unreasonable or inadvisable 27

28 Health-Contingent Wellness Program Requirements RAS for Outcome-Based Programs RAS is required for anyone who does not meet initial standard. - Must offer RAS (or waiver of standard) regardless of whether it is unreasonably difficult due to a medical condition or medically inadvisable to satisfy the standard. Plan must offer another RAS to accommodate personal physician s recommendation if physician joins request at any time. RAS cannot be a requirement to meet a different level of the same standard without more time to comply The plan can NOT seek physician verification if medically unreasonable or inadvisable 28

29 Health-Contingent Wellness Programs Reasonable Alternative Standard (RAS) Facts and circumstances should be considered in determining if an alternative standard is reasonable: a) If RAS is an educational program, plan must make program available or assist with finding program b) Reasonable time commitment c) If RAS is a diet program, plan must pay for membership or participation but not food d) If individual s physician determines program is not medically appropriate for individual, plan must provide RAS in line with physicians recommendation. Plan may still determine the RAS in this case 29

30 Health-Contingent Wellness Programs Reasonable Alternative Standards (RAS) More about RAS Can be offered in advance or upon request RAS is participation based, no additional RAS are required If participant declines RAS or does not complete a RAS (not based on being medically unreasonable or inadvisable) plan is not required to offer another RAS - DOL Q&A, FAQ Part XVIII 30

31 Health Contingent Wellness Program Requirements 5. Notice of Availability Must disclose to all participants availability of a RAS to get reward. Statement must include plan s contact information and also state that recommendations of a participant s personal physician will be accommodated. > If plan materials just mention that wellness program is available, without describing terms, no need to include such disclosure. >Sample language provided in final wellness regulations 31

32 Audience Question We will be moving to a results-based wellness program and I'd like to learn more about acceptable documentation for employees that need a reasonable alternative. 32

33 Wellness Programs and Health Reform Generally, applicable large employers (ALEs) subject to the employer mandate can t include healthcare premium contribution discounts offered to employees who participate in wellness programs to determine if coverage passes HCR affordability and minimum value test. Proposed employer mandate rules permitted nondiscriminatory wellness programs to calculate MV and affordability assuming that every eligible individual qualifies for any reward related to the prevention or reduction of tobacco use Final employer mandate rules do not expressively adopt guidance issued under proposed rules related to wellness and affordability and MV determinations The most conservative approach would be for ALEs to make MV and affordability calculations without regard to wellness incentives 33

34 Wellness Programs and ERISA If wellness or disease-management program is an employee welfare benefit plan under ERISA, must satisfy ERISA's applicable compliance requirements (plan document, SPD, 5500, etc.). No bright-line test, but if program provides medical care provides coaching for certain health risk, program is likely subject to ERISA A wellness plan requiring employees meet certain wellness criteria in order to get reduced contributions to the medical plan would be part of the health plan and subject to ERISA. 34

35 Wellness Programs and ADA Employers offering wellness programs should consider the following ADA rules: ADA generally prohibits employment discrimination against disabled individuals. ADA limits when an employer can require physical examinations or answer medical inquires. 35

36 Proposed EEOC Changes to Wellness April 2015, the Equal Employment Opportunity Commission (EEOC) published proposed rules regarding how ADA applies to group health plan wellness programs Generally applies to wellness programs that include health risk assessments (HRAs) or medical examinations Certain requirements apply to wellness plans that are group health plans Certain requirements apply to health programs offered outside of group health plan Incentives limits includes both financial and in-kind incentives. Proposed changes apply to text of the ADA regulation as well as interpretive guidance. Regulations are expected with the final rule 36

37 Proposed EEOC Changes to Wellness To comply with proposed ADA changes, wellness programs that includes HRAs or medical examinations must: Be reasonably designed to promote health/prevent disease - Can not be unduly burdensome and can not violate the ADA - Must meet certain requirements if collects information via an HRA - Consider timing, intrusiveness, and cost 37

38 Proposed EEOC Changes to Wellness Be voluntary - may not require participation, deny health insurance or give a reduced benefit for non-participation - Coercion, intimidation, or threatening are prohibited - Notice must be provided to participants Limit the size of the reward - Limits reward to only 30% of total cost of employee-only coverage - Applies to programs that have disability related inquires (DRI) or medical examinations - Applies to both participatory and health contingent programs with DRI or ME 38

39 Proposed EEOC Changes to Wellness Size of the reward application to smoking cessation programs 30% limit applies to programs with DRI or ME Limit doesn t apply to a smoker cessation program that ask about tobacco use. - If program test for nicotine or tobacco use, 30 % limit applies 39

40 Proposed EEOC Changes to Wellness Medical information obtained from a wellness program must be kept confidential - Covered subject to HIPAA privacy and security rules should meet requirement with HIPAA compliance - Non-covered entities may comply with the ADA by signed a certification. 40

41 Proposed EEOC Changes to Wellness Provide reasonable accommodations to employees with disabilities to participate and earn reward (except in the cases of undue hardship) - Examples includes: > Providing an interpreter for a deaf employee if wellness programs offers incentives for participation in a nutrition class > Providing materials in Braille for a visually impaired employee > Alternative to a blood test if disability would make drawing blood dangerous. Wellness programs are not required to comply with proposed rules now. 41

42 Wellness Programs and GINA GINA prevents discrimination in health insurance based on genetic information. Under GINA, wellness programs (or any group health plan) are prohibited from: using genetic information to discriminate with respect to premium or contribution amounts; requesting or requiring individuals or their family members undergo genetic testing (with limited exceptions); collecting (by requesting, requiring or purchasing) genetic information for underwriting purposes and collecting genetic information with respect to any individual prior to enrollment or coverage under the health plan; and using genetic information to determine eligibility for coverage. EEOC is expected to issue proposed guidance regarding wellness programs and GINA. 42

43 Section 125 considerations Consider if there are section 125 (cafeteria plan) issues Generally, IRS rules permit mid year changes for wellness incentives in the form of premium reductions Changes to other benefits, such as an FSA would not be permissible with this type of change Section 125 rules will not apply in some cases Offer incentives that do not affect section 125 elections 43

44 General Tax Rule Some employer-sponsored wellness incentives have tax consequences. General rule is any compensation provided by an employer to its employees is taxable unless a specific Internal Revenue Code provision excludes it from income. Employer is responsible for withholding all appropriate federal income and other employment-related taxes from the recipient s cash compensation. 44

45 Financial Incentives Some wellness programs provide financial incentives such as gift certificates, cash, premium reductions, or dollars in a health reimbursement arrangement (HRA), flexible spending account (FSA) or health savings account (HSA). - When incentive is related to a group health plan, then incentive may be excluded from taxation. - When incentive is cash or a cash equivalent will be treated as fully taxable wages. 45

46 De Minimis Rule Special de minimis rules may apply. - Example: wellness program (not a part of s group health plan) awards points for certain activities, such as taking a health risk assessment, walking, or going to a health club. - Employees who earn a prescribed number of points receive tickets for a prize raffle, as well as $25 gift card. All participants receive T- shirts. Must the rewards be reported as income on Form W-2? 46

47 Company Incentive Examples

48 Example Activity Based Wellness Program A group health plan rewards employees who participate in a running program. If unreasonably difficult or medically inadvisable, individuals can participate in a walking program. If walking program is unreasonably difficult or medically inadvisable, walking program is waived and participant can get reward. The plan materials correctly describe availability of an alternative standard. Assuming size of the reward and frequency requirements are met, this is compliant because: The program is designed to promote good health An alternative standard is offered Since alternative standard is also an activity based program, a waiver is offered if someone cannot meet the alternative standard RAS is properly disclosed in plan materials Note: plan may seek medical verification 48

49 Example Outcome Based Program Offers reward to participants who achieve a count under 200 on a total cholesterol test. Participants who don t meet standard may work with their doctor to develop an alternative cholesterol action plan. The physician may modify standards during the year as needed. Plan materials describe that plan will work with the participant s physician to find alternative program to try to lower participant s cholesterol. Assuming the size of the reward and frequency requirements are met, this is compliant because: Program is designed to promote health RAS is available RAS is participatory so another RAS or waiver is not required Plan communicates RAS availability. Note: RAS is available regardless if standard is unreasonably difficult or medically inadvisable. 49

50 Example Combined Wellness Program A group health plan with annual premium of $5000 for employee-only coverage. EE gets $200 annually for physical examination and $150 for completing biometrics tests, regardless of tests results. An additional $500 is provided if employee is a non-smoker. Participants that do not qualify for non-smoker reward may complete a smoker cessation program paid by employer at least once per year to qualify for reward. Information describing the wellness program discloses all required information. This program is complaint. Under HIPAA, biometrics and annual physical examination are participant only programs and do not count against the 30% cost limit. Under ADA proposed rules, programs will count against limit but are compliant, less than 30% of total cost. The reward for the health contingent program is only 10% of total premium cost ($500/$5000), well below the maximum of 50% that may apply to smoker cessation program. Reasonable alternative standard is offered and is participatory, so there is no need for the plan to offer another standard. Individuals can qualify for the reward at least once per year. RAS availability is disclosed to participants. 50

51 Examples of Noncompliant Programs A discount of 32% is provided to participants who have under a 200 level total cholesterol and who achieve a specific BMI or meet an alternative standard. (Reward is too high) A discount of 40% is provided to individuals when they first enroll for not using tobacco products. A person who is a tobacco user when enrolling can not qualify for the reward any other time during the year. (Opportunity to qualify at least once a year is not offered.) A surcharge of 35% of the cost of employee-only coverage applies to individuals who do not provide a certification that they have not used tobacco products in the preceding 12 months. The plan will waive the surcharge for individuals who find, pay for, and complete a smokingcessation program. (Alternative standard is not reasonable because employee has to find and pay for alternative standard) The plan pays a reward for participants with cholesterol below a specified level, and the wellness program's physician designates the required alternative for participants with cholesterol in excess of the specified level. (Program not reasonably designed because it does not provide the participant with an opportunity to comply with a different alternative standard recommended by the participant's personal physician.) 51

52 Resources

53 Agency Resources Department of Labor (DOL) Internal Revenue Service (IRS), Employee Benefits Security Administration (EBSA) and the Health and Human Services Department (HHS) Incentives for Nondiscriminatory Wellness Programs in Group Health Plans Final Rule Equal Employment Opportunity Commission (EEOC) 53

54 Thank You Thank you for your participation! 54