New Wellness Program Guidance

May 19, 2008

The Department of Labor recently issued Field Assistance Bulletin 2008-02 providing group health plan sponsors guidance for compliance with the wellness program exception to the Health Insurance Portability and Accountability Act (“HIPAA”) nondiscrimination regulations.  HIPAA generally prohibits discrimination based on “health status-related factors” including physical and mental illnesses, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability.  Under the HIPAA wellness program exception, however, group health plans may offer premium discounts, rebates, reduced co-payments and/or lower deductibles to participants and beneficiaries who take part in “programs of health promotion and disease prevention.”

Under the HIPAA regulations, wellness programs that provide a reward merely for participation in the program (e.g., a heart disease educational program for participants with high blood pressure) are not subject to the HIPAA nondiscrimination rules.  The only requirement for these participatory wellness programs is that they be made available to all similarly situated individuals.  Programs requiring participants to meet a health-related standard to obtain a reward, such as a target cholesterol level, are subject to additional scrutiny.  These standards-based wellness programs must ensure:

• The total reward does not exceed 20% of the cost of coverage;

• The program is reasonably designed to promote health and prevent disease;

• Eligible persons have the opportunity to qualify at least once a year;

• The reward is available to all similarly situated persons and a reasonable alternative standard (or waiver of initial standard) is available if attainment is unreasonably difficult due to a medical condition (plans can require hardship verification); and

• Plan materials describing the wellness program must disclose the availability of a reasonable alternative standard, the possibility of a waiver of the initial standard, or state that the plan will work with individuals to develop an alternative standard at their request.

Field Assistance Bulletin 2008-02 provides a checklist for plan sponsors to determine whether a wellness program is subject to the HIPAA nondiscrimination rules and assess the compliance of their programs.  The FAB is available at:  http://www.dol.gov/ebsa/regs/fab2008-2.html.  Wellness programs also may be subject to certain requirements under the Internal Revenue Code, American with Disabilities Act, Age Discrimination in Employment Act, and in some cases consideration will need to be given to Title VII of the Civil Rights Act, and similar state laws, including state privacy laws. 

For an assessment of whether your wellness program is in compliance, or for assistance in designing a compliant program, contact one of our Employee Benefits or Employment Law  attorneys.