New rules are about to go into effect that provide guidance for group health plans in complying with the nondiscrimination provisions of the Health Insurance Portability and Accountability Act (HIPAA) and offer guidance on the implementation of wellness programs.
The rules are effective on the first day of the plan year beginning on or after July 1, 2007. For calendar year plans, the new rules generally apply beginning January 1, 2008.
The HIPAA nondiscrimination provisions generally prohibit group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductible, copayment, or other cost sharing requirements based on a health factor. However, there is an exception that allows plans to offer wellness programs.
The new rules specify that wellness programs that condition a reward on an individual satisfying a standard related to a health factor must meet five requirements to comply with HIPAA's nondiscrimination rules.
Health factors include: health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), and disability.
A wellness program that conditions a reward on an individual satisfying a standard related to a health factor must meet these five requirements:
- The total reward must be limited--generally, it must not exceed 20 percent of the cost of employee-only coverage under the plan.
- The program must be reasonably designed to promote health and prevent disease.
- The program must give individuals eligible to participate the opportunity to qualify for the reward at least once per year.
- The reward must be available to all similarly situated individuals. The program must allow a reasonable alternative standard (or waiver of initial standard) for obtaining the reward to any individual for whom it is unreasonably difficult due to a medical condition, or medically inadvisable, to satisfy the initial standard.
- The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of a waiver of the initial standard).
Under the final rules, examples of wellness programs that comply with HIPAA's nondiscrimination requirements without having to satisfy those 5 additional standards (assuming participation in the program is made available to all similarly situated individuals) include:
- A program that reimburses all or part of the cost for memberships in a fitness center.
- A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes.
- A program that encourages preventive care through the waiver of the copayment or deductible requirement under a group health plan for the costs of, for example, prenatal care or well-baby visits.
- A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking.
- A program that provides a reward to employees for attending a monthly health education seminar.
EBSA has issued updated frequently asked questions on HIPAA's nondiscrimination requirements to assist the employee benefit community in complying with the new rules.
You can read the final rules here Federal Register .