WHITE PAPER. Wellness & Affordable Care Act 2015 PREVENTURE. ALL RIGHTS RESERVED.

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1 WHITE PAPER Wellness & Affordable Care Act 2015 PREVENTURE. ALL RIGHTS RESERVED.

2 Wellness Program Rules Under ACA On January 1, 2014, new regulations relating to employer wellness programs went into effect. These new rules are governed by the Protection and Afforda-ble Care Act (also known as the PPACA, the ACA, Health Care Reform, or simply Obamacare). The new rules support workplace wellness and prevention as a means to reduce the burden of chronic illness, improve health and minimize health care costs, while ensuring that individuals are protected from unfair practices that could otherwise discriminate based on health status. These regulations, however, place new requirements on the manner in which these programs may be imple-mented. THE FINAL RULES DIVIDE WELLNESS PROGRAMS INTO TWO CATEGORIES: PARTICIPATORY AND HEALTH- CONTINGENT. Participatory Programs Participatory Programs do not require participants to meet a health standard to receive an award. They simply need to participate in a program (i.e. complete an online tobacco cessation workshop). Health-Contingent Programs Health Contingent Programs require participants to actually perform an activity or achieve a specific outcome to receive a reward (i.e. participate in a walking challenge). Because Health-Contingent programs reward participants for meeting goals that might not be realistic or safe for everyone, they must be more flexible in order to avoid discrimination. There are two types of Health- Contingent wellness programs: Activity-Based Programs reward participants for doing an activity (i.e. walk for 30 minutes three days per week). These programs do not require participants to achieve a health goal, such as a particular body mass index (BMI). Outcome-Based Programs reward participants for achieving or maintaining a particular health goal (i.e. a BMI of 28 or less.) HISTORY OF WELLNESS INCENTIVE REGULATIONS Wellness incentive legislation, like most federal legislation, has progressed over the past 17 years. 1996: HIPAA legislation began the discussion of nondiscrimination and the possibility of rewards. 2001: Interim bona fide wellness rules were introduced and four requirements were suggested to offer rewards to individuals based meeting health standards. 2007: Final Wellness Rules were issued and outcome based rewards were defined and permitted, along with five standards. 2010: ACA clarified and adopted wellness incentives as part of the strategy to help control health care costs. 2013: Final ACA Wellness Regulations released; effective January PREVENTURE 2

3 All Health-Contingent programs must meet these requirements to avoid violating the discrimination rules: Participants must have the ability to qualify at least once per year. The reward may not exceed 30% of the total cost of employee-only health plan coverage nor exceed 50% if tobacco is included. Wellness programs that allow participation by a spouse or by dependents may offer a reward based on the cost of family coverage. Programs must be reasonably designed. Programs must be uniformly available and provide reasonable alternatives. Employers must provide notice to all participants of reasonable alternatives. Reasonable Alternatives Reasonable Alternatives are a means of providing equal opportunity for participants to achieve a wellness reward who may be unable to engage in a wellness activity or achieve a goal. Activity-Based Programs Activity-Based Programs must allow participants to achieve a reasonable alternative standard or waive the standard entirely in order to earn the reward. This applies to participants for whom it is unreasonably difficult or medically inadvisable due to a medical condition to achieve the standard. Alternatives may include but are not limited to: Waiver Alternative program (i.e. online wellness workshop or health coaching) Outcome-Based Programs Outcome-Based Programs must make an alternative available to participants who do not meet the initial standard, regardless of whether it is unreasonably difficult or medically inadvisable to satisfy the standard. Physician verification is not allowed. Alternatives may include but not limited to: Waiver Alternative program (i.e. online wellness workshop or health coaching) Another Outcome-Based standard (i.e. achieve a BMI of 32 rather than 28). Additional rules apply: 1) The participant must receive additional time to meet the alternate standard 2) A second alternative must be offered to comply with the recommendations of the participant s physician. Preventure Does Not Provide Legal Advice Contents of this document are for educational purposes only. Companies should be vigilant in reviewing their wellness plan with their legal counsel. All risk associated with such plans is completely that of the company. PREVENTURE 3

4 SUMMARY As you can see, the rules for avoiding discrimination in wellness programs are fairly complex. We expect that additional guidance will be issued to implement these regulations later this year. Preventure is educated in these standards but does not ensure the compliance of your wellness design. If you have a wellness program or are considering implementing one, the best strategy is to consult with an experienced benefits attorney to confirm that your plan will meet all of the applicable requirements. Source: Federal Register, Vol 78. No. 106, Monday June 3, 2013, Part II Department of the Treasury, Internal Revenue Service 26 CFR Part 54, Department of Labor, Employee Benefits Security Administration 29 CFR Part 2590, Department of Health and Human Services, 45 CFR Parts 146 and 147, Incentives for Nondiscriminatory Wellness Programs in Group Health Plans; Final Rule WELLNESS INCENTIVE DESIGN IN PRACTICE Preventure generally implements wellness incentive designs that will engage a significant number of participants and have a likelihood of improving their health. These designs often include: Multiple Paths to earning full incentive value. For example, a participant can select a personal blend of Health Screenings, Online Workshops, Health Coaching, Competitive Challenges, and/or Healthy Outcomes like Normal BMI to qualify. Easy Tracking to assure understanding of personal status. This includes leveraging wellness portal integration for points accrual, tracking, and reward status. We discourage multidependent factors that might require external logic to be applied. Equality with Requirements. Regardless of risk level, seniority at the company, or other factors, participants have the same, opportunity to earn their reward. We do, however, design Outcome-Based Programs where low-risk participants can qualify based on their healthy outcomes. Appeal Process For All. Preventure supports this as a good safety net. It allows participants to submit a Doctor s signed affidavit, proving that they meet incentive program requirements while either under a Physician s care, medically unadvised or otherwise excused. ABOUT PREVENTURE Preventure is a global provider of corporate wellness and health improvement programs, specializing in comprehensive fitness and wellness benefits. We re passionate about improving employee health and creating increased value for our corporate clients as we do it! TO LEARN MORE, VISIT PREVENTURE.COM OR CALL US AT PREVENTURE 4

5 APPENDIX: SAMPLE WELLNESS INCENTIVE DESIGNS SAMPLE PARTICIPATORY PROGRAM (GENERATION 1) Reward: 10% reduction in employee s health care premium contribution the following plan year. Required Points: 100 Points Required Steps: Complete Personal Health Assessment (50 points) Complete Biometric Screening (50 points) HEALTH-CONTINGENT PROGRAMS (ACTIVITY-BASED OR OUTCOME-BASED) All Health-Contingent Programs should include Preventure s Alternative Standard Appeal Process. Clients should ensure access to the Appeal Form and communicate to employees. SAMPLE ACTIVITY-BASED PROGRAM (GENERATION 2) Reward: 20% reduction in employee s health care premium contribution the following plan year. Required Points: 200 Points Complete Personal Health Assessment (75 Points) Complete Online Workshop (25 Points) Complete Competitive Challenge (25 Points) Complete Health Coaching or Disease Management (50 Points) SAMPLE OUTCOME-BASED PROGRAM (GENERATION 3) Reward: 30% reduction in employee s health care premium contribution the following plan year. Required Points: 500 Points Complete Personal Health Assessment (250 Points) Complete Online Workshop (50 Points) Complete Competitive Challenge (50 Points) Complete Health Coaching or Disease Management (100 Points) Achieve Low-Risk Biometrics in Blood Pressure, Glucose, Total Cholesterol, or Body Mass Index (50 Points each) Achieve Moderate-Risk Biometrics in Blood Pressure, Glucose, Total Cholesterol, or Body Mass Index (25 Points each) SAMPLE OUTCOME & IMPROVEMENT BASED PROGRAM (GENERATION 4) Reward: 30% reduction in employee s health care premium contribution the following plan year. Required Points: 500 Points Complete Personal Health Assessment (250 Points) Complete Online Workshop (50 Points) Complete Competitive Challenge (50 Points) Complete Health Coaching or Disease Management (100 Points) Achieve Low-Risk Biometrics in Blood Pressure, Glucose, Total Cholesterol, or Body Mass Index (50 Points each) Achieve Moderate-Risk Biometrics in Blood Pressure, Glucose, Total Cholesterol, or Body Mass Index (25 Points each) Demonstrate Risk Improvement from High to Moderate-Risk Biometrics for Blood Pressure, Glucose, Total Cholesterol, or Body Mass Index (25 Points each) WHAT TO DO NEXT? Preventure Wellness Experts assist clients with multi-year strategic planning and incentive design. For a comprehensive review of your program, please contact your dedicated Engagement Manager. Addi-tionally, we are happy to connect you with our attorney, should you have specific legal questions. You may also visit or call PREVENTURE 5