This is the fourth in a series of articles about health care reform.
Q.1 I have heard that there are provisions in the Act to encourage the development of wellness programs in health plans. Is that true?
A.1 Yes. One provision in the Act requires the Secretary of Health and Human Services to develop requirements for group health plans and other health insurance issuers to report on plan provisions to improve health outcomes through activities such as case management, the use of medical homes, etc. Group health plans would also have to report on their wellness and health promotion activities, including efforts around smoking cessation, weight management, stress management, physical fitness, nutrition, heart disease prevention, healthy lifestyle support and diabetes prevention. These reports will be available to the public generally and to enrollees during open enrollment periods. Grandfathered health plans will not need to file these reports. See our previous article regarding grandfathered plans here.
The reporting requirement is generally in effect for plan years after September 23, 2010, or January 1, 2011, for calendar year plans. However, since compliance depends to a certain extent on the issuance of regulations, it is unclear when the first reports will be required.
Q.2 I have also heard that the Act makes it easier for employers to apply penalties to employees who choose not to participate in wellness programs. Is that true?
A.2 Yes, that is generally true. The Act codifies the general regulatory provisions on wellness programs that became effective for plan years beginning on or after July 1, 2007. Those regulations provide no limit on the amount of a wellness incentive or penalty if the incentive or penalty is not based on the results of satisfying a health standard, e.g., if an award is available to participants who learn their cholesterol level without regard to whether the level is high or low. If a program provides a reward based on satisfying a health standard, then under the Act the same general requirements of the prior regulations must be met, specifically, the program must be designed to improve the health or prevent disease of participating individuals; it must not be overly burdensome; it must not be a subterfuge for discrimination based on a health factor; and it cannot be highly suspect in the method chosen to prevent disease or promote health. The program must give individuals the opportunity to qualify for the reward at least once a year. The program must provide a reasonable alternative standard or waiver for any individual for whom it is unreasonably difficult to meet the standard. Program materials must describe the standard and the availability of the alternative.
The regulations allow for a reward or penalty of up to 20% of the cost of the health care coverage, considering both the employer's and the employee's share of the premium. Under the Act, effective for plan years beginning on or after January 1, 2014, the reward can be up to 30% of the cost of the employer and employee premiums under the plan. If in addition to covering the employee as a participant in the wellness program, any class of dependents can also participate, the reward cannot exceed 20% (30% effective in 2014) of the cost of coverage for the employee and the dependents. In addition, the Secretaries of Labor, Health and Human Services, and the Treasury may increase the reward/penalty available to up to 50% of the employer and employee premiums if they determine that such an increase is appropriate. These provisions will give employers greater latitude in designing their wellness programs.
Q.3 Are there other ways in which wellness programs are encouraged under the Act?
A.3 Yes. The Secretary of Health and Human Services is required to develop demonstration projects by 2014 to test the effectiveness of wellness programs. In addition, wellness services (together with preventive and chronic disease management services) are part of "minimum essential services" that health plans must provide if they want to participate in the insurance exchanges that will be established in each state. The Secretary of Health and Human Services must determine which services are essential, but wellness services of some type will be part of that mix. There are also provisions in the act to reward wellness strategies in the Medicare program. It should be noted, however, that although workplace wellness programs are to be encouraged, they cannot be mandated under the statute.
Q.4 Are there any new limits on wellness programs?
A.4 Yes. Under the Act, a wellness and health promotion activity that is reportable under Question 1 is not allowed to require the disclosure or collection of any information relating to the presence or storage of lawfully possessed firearms or ammunition in the residence or on the property of an individual or the lawful use, possession or storage of firearms or ammunition by an individual. The activity cannot collect the information and the information cannot be a factor in setting premium rates or eligibility for health insurance. Among other things, this may mean that health risk assessments will not be able to ask about the presence of guns in the household.
Q.5 I heard that the new law contains a provision for small businesses to get grants to provide wellness programs. Is this true?
A.5 Yes. The Act requires the Secretary of Health and Human Services to award grants to employers for comprehensive workplace wellness programs. The grant program will be in effect for five years and will be available to employers, including nonprofit employers, who employ fewer than 100 employees working 25 hours or more per week and who were not providing a workplace wellness program on March 23, 2010, the date of enactment. The Secretary must develop the criteria for a comprehensive workplace wellness program, but such a program must include components such as health awareness initiatives (including health education, preventive screenings and health risk assessments), efforts to maximize employee engagement, initiatives to change unhealthy behaviors and lifestyle choices, and a supportive environment, including workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity and improved mental health. Employers will have to apply for the grants under application procedures yet to be developed. For fiscal years 2011 through 2015, $200,000,000 is appropriated. The program will end if amounts are expended before then.
Q.6 Does the Act answer all the legal questions that have been raised about wellness programs?
A.6 No. While portions of the Act encourage wellness programs, the law does not amend or repeal other laws that have made designing a legally compliant wellness program a challenge. For example, the Americans with Disabilities Act (ADA) prohibits medical inquiries that are not voluntary. The EEOC has said that penalties for failing to complete a health risk assessment may make completion of the health risk assessment involuntary. The Act does not resolve this conflict or other conflicts between encouraging wellness incentives and meeting other legal requirements.
Go to our Health Care Reform page to read other articles about the new health care reform law.
The article was reprinted with permission from Employee Benefit Plan Review.