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Complying with Final ACA Wellness

Non-Discrimination Regulations

FOR EDUCATIONAL PURPOSES ONLY © 2013 Unum Group. All rights reserved. Unum is a registered trademark and marketing brand of Unum Group and its insuring subsidiaries. #7793411

Presented by:

Sarah Marble

and Nimesh Patel

Complying with final ACA Wellness Non-Discrimination

Regs.

The Wellness Legal Landscape: Big Ideas and Important Terms

Participatory Wellness Programs

Health Contingent Wellness Programs

Activity-only Wellness Programs

Outcome-based Wellness Programs

What Has Changed? Five Conditions of a Health Contingent Wellness Plan:

Frequency of Opportunity to Qualify

Size of Reward

Reasonable Design

Uniform Availability and Reasonable Alternative Standard

Notice of Availability of Reasonable Alternative Standard

Application to Grandfathered Plans and Effective Date of Changes

No Effect on Other Laws

AGENDA

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Wellness Legal Landscape

Big Ideas and Important Terms

Big Ideas, Important Terms

63% of all employers offering health benefits, offer a wellness program

63% of large firms that offered an health risk assessment provided employees

with a financial incentive to complete it

30% of employers (70% of large employers) offer smoking cessation resources

Typically less than 20% of eligible employees participate in wellness

interventions like smoking cessation programs

Smoking rates decreased by 30% in the first year of smoking cessation

programs

There is a statistically significant and clinically meaningful improvement in

exercise frequency, smoking behavior, and weight control for wellness program

participants

Treas. Reg. §54.9802-1, Preamble Part III (D)(2013)

“Overall, evidence on the effectiveness of wellness programs is

promising, but it is not yet conclusive.”

WELLNESS LEGAL LANDSCAPE


ERISA – Employee Retirement Income Security Act of 1974

ADA /ADAAA – Americans with Disability Act of 2008/ the

Americans with Disabilities Act Amendments Act

GINA - Genetic Information Nondiscrimination Act of 2008

HIPPA Privacy Rule

FMLA - Family Medical Leave Act of 1993

Tax – Internal Revenue Code

Title VII of the Civil Rights Act of 1964

ADEA – Age Discrimination in Employment Act of 1967

Treas. Reg. §54.9802-1, Preamble Part II (H)(2013)



Wellness Program: a program of health promotion or disease prevention

Reward: includes (1) a discount or rebate of premium or contributions, an

additional benefit or any financial or other incentive, and (2) avoiding a penalty

Health Factors: the eight health factors are 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

Similarly Situated Individuals: a bona fide employment-based classifications

consistent with the employer’s usual business practice, or a classification of

beneficiaries based on relationship to the plan participant (i.e., spouses)

Discrimination: When participation in the wellness program is not made

available to all similarly situated individuals due to health status

Benign Discrimination: When participation in the wellness program is more

available to individuals with an adverse health status than to similarly situated

individuals

Treas. Reg. §54.9802-1, Preamble Part I (B)(A)(fn.

1,2) (2013)

Treas. Reg. §54.9802-1(f)(1)(i) (2013)

29 CFR §2590.702(f)(1)(i) (2013)


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No Reward, No Health Based Conditions

No Reward, No Health Based Conditions


May or may not offer a reward

Rewards are not conditioned on meeting a health factor based standard

Participation in the program is available to all similarly situated individuals

Examples, if employees are:

Reimbursed for all or part of the cost of fitness center membership

Rewarded for undergoing diagnostic test , without regard to outcome

Reimbursed for cost of for participating in smoking cessation program, without regard

for smoking status

Rewarded for attending a monthly, no-cost health education seminar (without regard

for learning?)

Rewarded for completing a health risk assessment, without further action

Not charged a co-pay or deductible for preventative care (i.e., well baby visits, flu

shots)

Treas. Reg. §54.9802-1(f)(1)(ii) (2013) 29 CFR §2590.702(f)(1)(ii) (2013)

PARTICIPATORY WELLNESS PROGRAMS

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Health Contingent Wellness

Programs Activity-Only and Outcome-Based

Activity-Only and Outcome-Based

Health contingent wellness programs discriminate based on a health factor

Rewards are conditioned on meeting a standard related to a health factor

Also if similarly situated individuals have to do more for a reward because of a health factor

Benign discrimination is okay

Two types of health contingent wellness programs

Activity-only wellness programs

Requires the performance or completion of an activity related to a health factor

Does not require attaining or maintaining a specific health outcome

Examples, diet or exercise programs, which may be difficult for some to complete due to a health factor

Outcome-based wellness programs

Programs that use a measurement , test or screening is used as part of initial standard for granting an award are outcome-based, even if alternative is participatory only.

Requires the attainment or maintenance of a specific health outcome, or the completion of an alternative

Examples, tests Body Mass Index, or biometric screenings for high cholesterol, blood pressure or glucose

HEALTH CONTINGENT WELLNESS PROGRAMS

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Some Things Change,

Some Stay the Same

Five Conditions for a Non-Discriminatory

Health Contingent Program

Some Things Change, Some Stay the Same

A health contingent program must meet all five standards to comply with

the non-discrimination rules:

Frequency of Opportunity to Qualify for Reward

Size of Reward

Reasonable Design

Uniform Availability and Reasonable Alternative Standards

Notice of Availability of Reasonable Alternative Standards

“These rules set forth the criteria for an affirmative defense

that can be used by plans and issuers in response to a

claim that the plan or issuer discriminated under the

HIPAA nondiscrimination provision”

Treas. Reg. §54.9802-1, Preamble Part II (A)(2013)

FIVE CONDITIONS FOR A NON-DISCRIMINATORY HEALTH CONTINGENT PROGRAM

1. Frequency of Opportunity to Qualify for Reward

Outcome-based Programs and Activity-only Programs

Eligible individuals must have an opportunity to qualify for

the reward at least once per year

Unchanged from prior and proposed regulations


2. Size of Reward

Outcome-based Programs and Activity-only Programs Size of reward is limited to a percentage of the cost of the group health plan

Cost of group health plan includes employer and employee contributions

Cost of employee plan only, unless family members can also participate in program

Flexibility to apportion the reward among family members, if method is reasonable

Final regulations adopt the proposed regulations limits:

Up to 30% of the cost for general health contingent wellness programs

Up to an additional 20% for health contingent wellness programs designed to reduce or prevent tobacco use

The limits apply to the aggregate rewards from all health contingent programs but exclude participatory programs’ rewards

Example:

25% of cost is rewarded if employee lowers BMI to normal levels = okay

Additional 10% for completing health risk assessment = okay

Additional 25% for quitting smoking = ?


3. Reasonable Design

Outcome-based Programs and Activity-only Programs

Design must promote health or prevent disease

Cannot be “overly burdensome” or a “subterfuge for underwriting or

reducing benefits” based on a health factor

Must not be “highly suspect in the method chosen to promote health or

prevent disease”

Outcome-based programs: a reasonable alternative must be provided

for any individual who does not meet the initial standards based on a

measurement, test or health screening

A “facts and circumstances” determination, which leaves the program

design open to legal attack


4. Uniform Availability and Reasonable Alternative

Standards

Activity-only Programs Full reward must be available to all similarly situated individuals

Must allow a reasonable alternative of a waiver for any individual for whom, during that period, the activity is medically inadvisable

If “reasonable under the circumstance,” the program may verify medical inadvisability

Whether an alternative is reasonable is a “facts and circumstances” determination but the program must Provide and assist with locating the alternative

Pay fees and membership fees for alternative

Not food costs

Have a reasonable time commitment

Accommodate the recommendation of the individual’s physician (always reasonable)

Can apply standard co-pay or cost sharing for recommended medical services and equipment

Activity-only or an outcome-based alternatives must also provide a reasonable alternative



Standards

Activity-only Program Example:

A group health plan rewards individuals who participate in a

reasonable walking program (not overly burdensome” a

“subterfuge” or “highly suspect”), that is unreasonably

difficult or medically inadvisable for Jo. Jo’s doctor

recommends a monthly healthy eating education program

and a weekly weight-loss diet program, which are

reasonable time commitments.

Who finds the finds the two programs?

The plan

Who pays the education and diet program fees?

The plan – but not the food costs



Standards

Outcome-based Programs Full reward must be available to all similarly situated individuals

If health standard is not met at initial measurement, test or screening program must allow: A reasonable alternative (not the same standard at a different level without additional

time)

The individual’s physician’s recommendation (which can change), or

A waiver

May not seek verification of medical difficulty in meeting standard

Whether an alternative is reasonable is a “facts and circumstances” determination but the program must Provide and assist with locating the alternative

Pay fees and membership fees for alternative

Have a reasonable time commitment

Accommodate the recommendation of the individual’s physician (always reasonable)

Activity-only or an outcome-based alternatives must also provide a reasonable alternative



Standards

Outcome-based Program Example:

A group health plan rewards individuals who achieve a cholesterol test

of less than 200.

Can the plan request medical verification that meeting the standard is

medically inadvisable?

No – verification is not reasonable for outcome based programs

Can the alternative be an activity-only program, like a reasonable

walking program?

Yes - but the activity-only program must also offer a reasonable

alternative

Can the alternative be achieving a test of under 205 in the same time

period?

No - the alternative must also offer more time- a small percentage

improvement in the test results over a realistic time period would

be appropriate

Can the participant obtain and propose the recommendation of her

physician as an alternative?

Yes - the program must accommodate the recommendation of the

participant’s physician


Sample: Your health plan is committed to helping you achieve your best health. Rewards for

participating in a wellness program are available to all employees. If you think you might be

unable to meet a standard for a reward under this wellness program, you might qualify for an

opportunity to earn the same reward by different means. Contact us [contact information] and

we will work with you (and if you wish, with your doctor) to find a wellness program with the

same reward that is right for you in light of your health status.

5. Notice of Availability of Reasonable Alternative

Standards

Outcome-based Programs and Activity-only Programs Any description of a health contingent wellness program must disclose the availability of a

reasonable alternative standard, with

contact information for obtaining the alternative, and

a statement that recommendations of an individual’s personal physician will be accommodated.

Announcement of the availability of the program only, does not require disclosure The notice requirement would not be triggered by a summary of benefits and coverage that states

that the cost sharing may vary based on participation in a diabetes wellness program, without describing the standards of the program

The requirement is triggered if the document states that premium differential is based on tobacco use (standard) or the results of a biometric exam (outcome-based)

For outcome based-wellness programs, notice of a reasonable alternative is provided to any individual who did not satisfy an initial outcome-based standard


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Application to Grandfathered Plans

and

Effective Date of Changes

Then and Now

Then and Now

Final regulations are applicable to group health plans and health insurance issuers in the group and individual markets for plan years (in the individual market policy years) beginning on or after January 1, 2014

To promote consistency between grandfathered and non-grandfathered plans, and to allow flexibility for grandfathered plans, the final wellness regulations will apply to both

Proposed Rule addresses how to calculate minimum value for wellness incentives – 78 Fed. Reg. 25909 (May 3, 2013) If wellness incentive is premium credit, may be able to count toward affordability test

If wellness incentive affects deductible, copayment, cost sharing, may be able to count toward minimum value test

Tobacco use incentives can be used by employer for all employees, whether or not the incentive was earned

Example: if premium is $1,000 and employer offers $200 premium credit for not smoking, then for the affordability calculation the employer can count the $200 premium credit and consider employee premium to be $800 ($1,000 - $200 tobacco credit)

Transition rule for 2014 only, counts other (non-tobacco) program incentives if the reward, the terms of program and the eligibility was all in place as of May 3, 2013

APPLICATION TO GRANDFATHERED PLANS AND EFFECTIVE DATE OF CHANGES

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Compliance Here and There

Compliance Here and There

“Compliance with the ACA non-discrimination requirements is not determinative of compliance with any other applicable requirements.”

ERISA – Employee Retirement Income Security Act of 1974

ADA /ADAAA – Americans with Disability Act of 2008/ the Americans with Disabilities Act Amendments Act

GINA - Genetic Information Nondiscrimination Act of 2008

HIPPA Privacy Rule

FMLA - Family Medical Leave Act of 1993

Tax – Internal Revenue Code

Title VII of the Civil Rights Act of 1964

ADEA – Age Discrimination in Employment Act of 1967

NO AFFECT ON OTHER LAWS

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Conclusions

Summary of Call, Important Take-Aways

and the Coming Attractions

Summary

The Wellness Legal Landscape: Big Ideas and Important Terms


Health Contingent Wellness Programs

Activity-only Wellness Programs

Outcome-based Wellness Programs

What Has Changed? Five Conditions of a Health Contingent Wellness Plan:

Frequency of Opportunity to Qualify

Size of Reward

Reasonable Design

Uniform Availability and Reasonable Alternative Standard

Notice of Availability of Reasonable Alternative Standard

Application to Grandfathered Plans and Effective Date of Changes


CONCLUSIONS

Important Take-Aways

The five-part non-discrimination test does not apply to participatory wellness programs

There are two types of health contingent wellness programs

Outcome-based

Activity-only

A health contingent wellness plan must meet all five requirements of ACA’s non-discrimination regulations:

Frequency of Opportunity to Qualify for Reward

Size of Reward

Reasonable Design

Uniform Availability and Reasonable Alternative Standards

Notice of Availability of Reasonable Alternative Standards

Benign discrimination is acceptable

New rules are effective for plan years on or after January 1, 2014

CONCLUSION

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Thank You

Questions?

Documents

Complying with Final ACA Wellness Non-Discrimination ... › webfiles › public › links › Updated-LAW-7793… · Complying with final ACA Wellness Non-Discrimination Regs. The