General questions about wellness programs
The Affordable Care Act (ACA) prohibits group health plans and group health insurers from discriminating against individuals in eligibility, benefits or premiums based on enumerated health factors such as medical condition, claims experience, medical history, and genetic information. The ACA recognizes an exception to this prohibition that permits the use of rewards such as premium discounts or rebates and modifications to cost-sharing in return for adherence to programs of health promotion and disease prevention.
Here we answer your questions about ”participatory wellness” and “health-contingent” plans.
What is a “participatory wellness program”?
“Participatory wellness programs” generally are available without regard to an individual’s health status. These programs must be made available to all similarly situated individuals and include for example, programs that reimburse for the cost of membership in a fitness center; that provides a reward to employees for attending a monthly, no-cost health education seminar; or that provides a reward to employees who complete a health risk assessment regarding current health status, without any further action (education or otherwise) required by the employee regarding any health issues identified as part of the assessment.
What is a “health-contingent wellness program”?
“Health-contingent wellness programs” generally require individuals to meet a specific standard related to their health to obtain a reward. These programs must be made available to all similarly situated individuals and must meet specific standards in order to be considered non-discriminatory. The rules further define health-contingent wellness programs as either activity-only or outcomebased wellness programs.
- An activity-only program requires participants to perform or complete an activity related to a health factor to obtain the reward (e.g. walking, diet or exercise programs), but does not require attainment of a specific health measure.
- Outcome-based programs require participants to attain or maintain a specific health outcome to achieve the reward (e.g. smoking cessation programs). An outcome-based program generally consists of two components: (a) a measurement, test or screening as an initial standard and (b) a program targeting individuals who do not meet the initial standard.
What are the standards for health-contingent wellness programs?
In order to protect consumers from unfair practices, the rules require health-contingent wellness programs to meet the following standards:
- Reasonable Design – The wellness program must have a reasonable chance of improving the health of, or preventing disease in, individuals that participate in the program. In addition the wellness program may not be (a) overly burdensome; (b) a subterfuge for discrimination based on a health factor; or (c) highly suspect in the method chose to promote health or prevent disease.
- Reasonable Alternative Standards – The program must provide a reasonable alternative standard (or waive the applicable standard) for obtaining the reward for individuals for whom it would be unreasonably difficult due to a medical condition to meet the applicable standard. In addition, the alternative standard must be provided (or the applicable standard waived) for individuals for whom it would be medically inadvisable to attempt to satisfy the applicable standard. An outcome-based wellness program is required to provide a reasonable alternative standard to all individuals who do not meet the initial standard related to a health factor.
- Frequency of Reward – Individuals participating in health-contingent wellness programs must be given the opportunity to qualify for the reward at least once per year. Participants must be given the full reward once they qualify based on the established standard. For example, if a health-contingent wellness program provides a premium discount and a participant qualifies for a reasonable alternative standard mid-year, the premium discount must be made available for the entire plan or policy year.
- Participant Notices – The plan or insurer must disclose in all plan materials describing the terms of a health-contingent wellness program the availability of alternative means for qualifying for the reward or the possibility of the waiver of the applicable standard. In the case of outcome-based programs, the disclosure must also be included in the notice to the individual that he or she did not satisfy the initial outcome-based target.
What is the maximum permissible reward under a health-contingent wellness program?
The rules implement changes in the Affordable Care Act that increase the maximum permissible reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of health coverage, and that further increase the maximum reward to as much as 50 percent for programs designed to prevent or reduce tobacco use.