Healthcare Reform Act and Corporate Wellness Program Guidelines

Many employers are attempting to improve employees' health and thus, reduce health care costs; and, with the tax incentives available, it just makes dollars and sense to implement a wellness program today.  The focus is on employee health and wellness programs that promote healthier lifestyles or prevent disease.  This article is meant as a starting resource for employers seeking to incorporate a workplace wellness program.  For purposes of this article, a wellness program may be part of a group health plan or may be offered outside of a group health plan.

Step 1:  Programs must be reasonably designed to promote health and/or decrease disease

• A program must offer an alternative for someone who does not fit the "standard" based on testing, measuring or screening, a means to qualify for the reward.
• Programs must have a reasonable chance of improving health or preventing disease.
• Programs must not be overly burdensome to an individual.
• Programs must be designed to be available to all similarly situated individuals (i.e. non-discriminatory).  Reasonable alternatives must be made available where unable or medical inadvisable to an individual.
• Programs must give notice of a means of qualifying for a reward through other means.

Step 2:  Employers must comply with governmental laws and agencies enforced by the EEOC, including ADA

• Employers are restricted in the information they may obtain from employees
• Employers cannot discriminate against individuals with disabilities
• Employers cannot discriminate based on race, color, sex (including pregnancy), nationality, religion, compensation, age or genetic information
• Employers must comply with HIPAA standards

Step 3:  Determine Which Type of Wellness Program to Offer

Participatory Wellness Programs

Participatory wellness programs are not based on achieving a certain health outcome, but are based solely on participation in a program or activity.  These programs are permissible under the HIPAA standards, as long as these programs are provided to all employees.  Examples may include:

• Total or partial reimbursement for a gym membership
• Participation in a smoking cessation program (without regard to whether the employee quits smoking or not)
• Participation in a weight loss program (without regard to whether the employee loses weight or not)
• Participation in a HRA (Health Risk Assessment), without any further action required

Health-Contingent Wellness Programs

Health-contingent wellness programs may be either activity or outcome based.  They require an individual to satisfy a certain health factor in order to obtain a reward, or, require an individual to undertake MORE than a similarly situated individual would in order to obtain the same reward.  

Activity-based programs require an individual to perform or complete an activity related to a health factor in order to obtain a reward.  However, it may not require an individual to attain or maintain a specific heath outcome. 

• Stop smoking or lose weight or actively participate in attempting, whether or not successful 

Outcome-based programs require an individual to attain or maintain a specific health outcome.

• Stop smoking
• Decrease blood pressure or BMI

In order for a health-contingent wellness program to be considered for tax incentives (i.e. deduction or credit), it must meet five criteria:

1. Individuals eligible for the health-contingent program must be given the opportunity to qualify for the reward at least once per year. 
2. The total reward under the health-contingent program cannot exceed 30% of the total cost of the employee-only coverage under the plan, including both employee and employer contributions toward the cost of coverage (or 50% to the extent that is attributable to smoking cessation).  NOTE:  This needs further clarification.
3. The health-contingent program must be reasonably designed to improve health or decrease disease.
4. The full reward under a health-contingent program must be available to all similar situated individuals.
5. Plans and issuers must disclose the availability of a reasonable alternative for activity and outcome based programs.

In the next article on Corporate Wellness Programming, we'll discuss numerous ways of implementing successful programming that conform to all the criteria outlined by the governing agencies.  In the meantime, if you have any questions, please email me at kathy@365fitt.com.

Living 365fitt,
Kathy