The Affordable Care Act, HIPAA & Wellness Promotion

John J. Sarno, Esq.Employers Association of NJ

www.eanj.org

ACA – Wellness Promotion

• 75 cents of every dollar is spent on chronic diseases• 100 billion dollars of health care is directly attributed

to behaviorThe ACA amends HIPAA, permitting premium discounts to employees who participate in wellness programs.

Employees who participate in HIPAA-approved wellness programs can receive up to 30% off in premium.

HIPAA does not mandate benefits

Plans may limit or exclude benefits in relation to a specific disease or condition (unless state law provides otherwise)

HIPAA was enacted in 1996

Portability of health care insurancePrivacyNondiscrimination

HIPAA and Wellness Programs

It is unlawful for a group health care plan or a health insurance issuer to establish enrollment criteria based on any “health status – related factor.”

“Health status-related factor” means:

• Health status• Medical condition• Claims experience• Receipt of health care• Medical history• Genetic information• Disability

Wellness ProgramsEmployer-sponsored programs that provide educational, mental or physical fitness activities to promote health and well-being of employees and their families

These programs may contain health care costs, enhance productivity and improve employee morale.

Typical Wellness Programs:• Smoking Cessation• Weight Loss• Stress Management • Men’s Health• Women’s Health• Nutrition• Insomnia Program

HIPAA defines a “wellness program” as “any program designed to promote health or prevent disease.”

HIPAA permits a plan or issuer to vary the amount of premium or contribution it requires individuals to pay based on whether an individual has met the standards of a wellness program.

Such a standard must apply to all “similarly situated” individuals.

“Similarly Situated” means a group of individuals who are treated the same

Example: A group health plan gives an annual premium discount of 10% of the cost of insurance coverage to participants who adhere to the Wellness Program. The wellness program consists solely of an annualized cholesterol test. Participants who score 200 receive the discount.

The program fails to satisfy the requirements of being available to all similarly situated employees because some employees may not achieve 200 because of a medical condition. Another way must be found for employees to receive the discount.

HIPAA permits a plan or issuer to vary deductibles, co-payments or co-insurance, based on whether an individual has met the standards of a wellness program.

If the standards of the wellness program concern a “health status-related factor,” 5 requirements must be met.

1) If an award is given, the amount of the reward may not exceed 30% of the cost of employee-only coverage under the plan.

Example: An employer sponsors a group health plan. The annual premium for employee-only coverage is $3,600 (of which the employees pays $900 per year). The plan offers a wellness program with an annual premium rebate of $360.

The wellness program has satisfied HIPAA because the reward for meeting the standard of the wellness program does not exceed 30% of the total cost of the employee-only coverage, $720 ($3,600 x 20% = $720)

2) The wellness program must be reasonably designed to promote health or prevent disease

a) it must have a reasonable chance of improving the health of or preventing diseaseb) not be overly burdensomec) not be an excuse for discrimination based on a health factord) not be “highly suspect” in the methods to promote wellness

3) The program must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.

4) A reasonable alternative standard for obtaining the reward must be available for individuals for whom it is unreasonably difficult due to a medical condition to satisfy the wellness program standard, or it is medically inadvisable to satisfy the standard.

5) The Wellness Plan must describe the terms of the program and the availability of a reasonable alternative standard.

Wellness Programs that Automatically Comply with HIPAA Nondiscrimination Rules

• A program that reimburses all or part of the cost for memberships in a fitness center;

• A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes;

• A program that encourages preventive care through the waiver of the co-payment or deductible requirement under a group health plan for the costs of, for example, prenatal care or well-baby visits;

• A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking; and

• A program that provides a reward to employees for attending a monthly health education seminar.

These programs do not require a reward to be based on meeting a standard related to a health factor.

Wellness Programs and the ADA

Americans with Disabilities Act requires equal treatment in terms, conditions and privileges of employment regardless of disability or medical condition, to the extent feasible.

ADA requires employers to provide reasonable accommodations so that employees may safely participate in benefits programs.

It is uncertain whether “reasonable alternative standard” is the same as “reasonable accommodation.” i.e. morbid obesity, physical disabilities

Medical Examinations

Under the ADA, an employer can conduct a medical exam as a condition of participation of the Wellness Program, when employee participation is “voluntary.”

Is a premium discount a voluntary program?

Wellness Programs and Age Discrimination

Disparate Impact Discrimination

Health-related issues closely correlate with age, such s cholesterol levels

Questions?