The U.S. Departments of Health and Human Services, Labor and the Treasury released on Wednesday final rules describing the standards for employment-based wellness programs and rewards associated with them as part of the Affordable Care Act.
The final rules support workplace health promotion and prevention as a way to reduce the burden of chronic illness, improve health, and limit growth of healthcare costs, according to an HHS news release.
At the same time, the regulations strive to make sure that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on their health status, which the Affordable Care Act prohibits.
The final rules, which will be officially published in the June 3 Federal Register, will take effect for plan years beginning on or after Jan. 1, 2014.
Specifically, the final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20 percent to 30 percent of the cost of coverage and 50 percent for tobacco prevention or reduction.
Although little changed from the proposed rules, the final rules provide some clarifications around the design of health-contingent wellness programs and alternatives they must offer in order to avoid prohibited discrimination, the regulation said.
“Participatory wellness programs” generally are available without regard to an individual’s health status, the news release said. These include programs that reimburse for the cost of a gym or fitness center membership; provide a reward to employees for attending a monthly, no-cost health education seminar; or reward employees who complete a health risk assessment, without requiring them to take further action.
The agencies also outline standards for nondiscriminatory “health-contingent wellness programs,” which generally reward individuals who meet a specific standard related to their health.
These include programs that provide a reward to those who do not use, or decrease their use of, tobacco, or programs that reward those who achieve a specified health-related goal, such as a specified cholesterol level, weight, or body mass index, as well as those who fail to meet such goals but take certain other healthy actions.
The rules increase the maximum reward that employers may offer under appropriately designed wellness programs, including outcome-based programs. Consumers are protected by requiring that health-contingent wellness programs be reasonably designed, be uniformly available to all similarly situated individuals, and accommodate recommendations made at any time by an individual’s physician based on medical appropriateness.
The value of incentives can vary widely. Survey estimates of the average value of incentives per year range between $152 and $557, or between 3 percent and 11 percent of the $5,049 average cost of individual coverage in 2010, among employees who receive them, the rule noted.
“If the rewards are effective, healthcare costs will be reduced as an individual’s health improves. Some of these lower healthcare costs could translate into lower premiums paid by employers and employees, which could offset some of the transfers,” the rule said.
According to a 2012 Kaiser/HRET survey, which HHS cited, only 7 percent of employers with fewer than 200 employees had a wellness program that offered cash or cash equivalent incentives.
The agencies said in the rule that increasing the rewards threshold will affect few health plans because only a small percentage have health-contingent wellness programs, and they do not come close to reaching the 20 percent limit.
The final rule contains regulatory flexibility for employer plans to design wellness programs that fit their needs. “With this flexibility in mind, the departments expect that plans will only choose to offer a wellness program if the benefits outweigh the costs,” the regulation said.
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