Wellness Programs

Wellness programs are health promotion and disease prevention programs and activities offered to employees as part of an employer-sponsored group health plan or separately as a benefit of employment.

Wellness programs generally come in two different forms:

• Participatory Wellness Programs: Generally available without regard to an individual’s health status. Either no reward is offered, or none of the conditions for obtaining a reward are based on an individual satisfying a standard related to a health factor.
• Health-Contingent Wellness Programs: Requires participants to satisfy a standard related to a health factor in order to obtain a reward. There are two types of health-contingent wellness programs:
  • Activity-only programs require an individual to perform or complete an activity related to a health factor in order to obtain a reward. Examples include a walking, diet or exercise program.
  • Outcome-based programs require an individual to attain or maintain a specific health outcome (such as not smoking or attaining certain results on biometric screenings) in order to obtain a reward.

Wellness programs are generally subject to certain requirements under the Health Insurance Portability and Accountability Act (HIPAA), the Americans with Disabilities Act (ADA), and the Genetic Information Nondiscrimination Act (GINA).

HIPAA and ACA Requirements

Wellness programs offered as part of a group health plan must generally comply with the following nondiscrimination, notice, and privacy protection requirements under HIPAA, as amended by the Affordable Care Act (ACA).

Nondiscrimination Requirements

If a wellness program is part of a group health plan, it must comply with rules created by HIPAA that prevent the employee from being impermissibly discriminated against based on a health factor. “Health factors” include:

• Health status;
• Medical condition, including both physical and mental illnesses;
• Claims experience;
• Receipt of health care;
• Medical history;
• Genetic information;
• Evidence of insurability; or
• Disability.

Participatory wellness programs are deemed nondiscriminatory under HIPAA as long as they are made available to all “similarly situated individuals.”
HIPAA states that plans may distinguish among employees only on “bona fide employment-based classifications” consistent with the employer’s usual business practice. For example, the following employees can be treated as different groups of similarly situated individuals:

• Part time and full time employees;
• Employees working in different geographic locations; and
• Employees with different dates of hire or lengths of service.

In addition, a plan may draw a distinction between employees and their dependents, and can also make distinctions between beneficiaries themselves if the distinction is not based on a health factor (e.g., a plan can distinguish between spouses and dependent children, or between dependent children age 26 and older based on their age or student status).

Health-contingent wellness programs are generally deemed nondiscriminatory under HIPAA if they meet the following requirements:

1. Individuals must be able to qualify for a reward at least once each
   year.
2. The total reward for all the plan’s wellness programs that require satisfaction of a standard related to a health factor is limited – generally, it must not exceed 30%(or 50% for programs designed to prevent or reduce tobacco use) of an employee’s cost of coverage for the employee and any covered dependents. If dependents (such as spouses and/or dependent children) may participate in the wellness program, the reward must not exceed 30 percent (or 50 percent) of the cost of the coverage in which an employee and any dependents are enrolled.
3. The program must be reasonably designed to promote health and prevent disease.*
4. The full reward must be made available to all “similarly situated individuals.” This means the program must allow a reasonable alternative standard to gain a reward (or waiver of the otherwise applicable standard) to individuals for whom gaining a reward is medically unreasonable.*
5. Any materials describing the program must notify individuals about an alternative standard to gaining a reward (or the possibility of a waiver of the otherwise applicable standard)*

Notice Requirement

Group health plan participants & beneficiaries eligible to participate in a health-contingent wellness program must receive a Wellness Program Disclosure in all plan materials that describe the terms of the health contingent wellness program (both activity-only and outcome-based). For outcome-based wellness programs, this notice must also be included in any disclosure of an individual’s failure to satisfy an initial outcome-based standard (e.g., a notice that an individual did not meet the BMI target range to qualify for the reward).

If the plan materials merely mention that a program is available, without describing its terms, this disclosure is not required.

Privacy Protection Requirements

Where a wellness program is offered as part of a group health plan, the individually identifiable health information collected from or created about participants in the wellness program is protected health information (PHI) protected by HIPAA. While the HIPAA Privacy Rule does not directly apply to the employer, a group health plan sponsored by the employer is generally a covered entity under HIPAA (an exception exists for self-administered plans with fewer than 50 participants), and HIPAA protects the individually identifiable health information held by the group health plan (or its business associates). HIPAA also protects PHI that is held by the employer as plan sponsor on the plan’s behalf when the plan sponsor is administering aspects of the plan, including wellness program benefits offered through the plan. Where a workplace wellness program is offered by an employer directly and not as part of a group health plan, the health information that is collected from employees by the employer is not protected by HIPAA. However, other federal or state laws may apply and regulate the collection and/or use of the information.

Additional privacy protection rules apply.

ADA Requirements

The Americans with Disabilities Act (ADA) prohibits employers with 15 or more employees from discriminating against individuals on the basis of disability. It also generally restricts employers from obtaining medical information from applicants and employees.

The law provides the following regulations regarding wellness programs:

• An employer cannot deny an employee access to a wellness program on the basis of a disability;
• An employer may make inquiries about employees’ health or conduct medical examinations that are part of a voluntary employee health program, which include many workplace wellness programs (see below);
• An employer must provide reasonable accommodations (adjustments or modifications) that allow employees with disabilities to participate in wellness programs;
• An employer must keep any medical information gathered as part of the wellness program confidential; and
• An employer may offer limited incentives as part of a wellness program that makes disability-related inquiries or requires a medical examination.

“Voluntary”

In order for participation in a wellness program that includes disability-related inquiries or medical examinations to be considered voluntary, an employer:

• May not require participation;
• May not deny access to health insurance or benefits to an employee who does not participate;
• May not retaliate against, interfere with, coerce, intimidate, or threaten any employee who does not participate or fails to achieve certain health outcomes;
• Must provide a notice (” ADA Notice Regarding Wellness Program“) that explains the medical information that will be obtained, how it will be used, who will receive it, and the restrictions on disclosure; and
• Must comply with certain incentive limits.

“Employee Health Program”

An “employee health program,” including any disability-related inquiries or medical examinations that are part of such program, must be reasonably designed to promote health or prevent disease.

A wellness program meets this standard if it:

• Has a reasonable chance ofimproving the health of, or preventing disease in, participating employees; and
• Is not overly burdensome, a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.

A wellness program is not reasonably designed to promote health or prevent disease if the program:

• Exists mainly to shift costs to employees based on their health;
• Is used only to predict an employer’s future health costs;
• Imposes unreasonably intrusive procedures, anoverly burdensome amount of time for participation, or significant costs related to medical exams on employees; or
• Collects health information but does not use it to provide follow-up information or advice to individual participants or to design a program that addresses at least some conditions identified in the responses (e.g., a program to help manage diabetes if aggregate information shows that a significant number of employees in the employer’s workforce have diabetes).

Notice Requirement

The ADA requires employers that offer wellness programs that collect employee health information to provide a notice (” ADA Notice Regarding Wellness Program“) to employees informing them what information will be collected, how it will be used, who will receive it, and what will be done to keep it confidential.

Permitted Incentives

Incentives to an employee who answers disability-related questions or undergoes medical examinations as part of a wellness program in order to earn a reward or avoid a penalty are limited to the following:

• Where the employer requires the employee to be enrolled in a particular group health plan
  in order to participate in the wellness program, the incentive may not exceed 30% of the total cost of self-only coverage under that plan.
• Where the employer offers a single group health plan, and participation in the wellness program does not depend on the employee’s enrollment in any plan, the incentive may not exceed 30% of the total cost of self-only coverage under that plan.
• Where the employer offers more than one group health plan, and participation in the wellness program does not depend on the employee’s enrollment in a particular plan, the incentive may not exceed 30% of the lowest cost major medical self-only plan the employer offers.
• Where the employer does not offer a group health plan, and offers a wellness program, the incentive may not exceed 30% of the total cost to a 40-year-old non-smoker purchasing self-only coverage under the second lowest cost Silver Plan available on the state or federal Exchange in the location
  that the employer identifies as its principal place of business.

Confidentiality Requirements

Subject to certain exceptions, under the ADA, an employer:

• May not disclose an employee’s health information;
• May only receive information collected by a wellness program in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals except as necessary to administer the plan; and
• May not require an employee to agree to the sale, exchange, transfer, or other disclosure of medical information or to waive confidentiality protections under the ADA in exchange for an incentive or as a condition for participating in a wellness program, except to the extent permitted by the ADA to carry out specific activities related to the wellness program.

GINA Requirements

The Genetic Information Nondiscrimination Act (GINA) prohibits employers with 15 or more employees from using genetic information–including information about the “manifestation of a disease or disorder in family members of an individual”—in making decisions about employment. It also strictly limits employers from acquiring and disclosing genetic information about applicants or employees. However, GINA does permit employers to acquire genetic information about employees or their family members as part of voluntary health or genetic services, including wellness programs. The provision of genetic information by an individual is voluntary when an employer
neither requires the individual to provide genetic information nor penalizes those who choose not to provide it.

GINA Exception

The exception to GINA’s general prohibition against acquiring genetic information of applicants or employees where employers offer voluntary health or genetic services (including such services offered as part of a voluntary wellness program) applies only where the services are reasonably designed to promote health or prevent disease.

A wellness program meets this standard if it:

• Has a reasonable chance ofimproving the health of, or preventing disease in, participating individuals; and
• Is not overly burdensome, a subterfuge for violating GINA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.

A wellness program is not reasonably designed to promote health or prevent disease if it:

• Imposes a penalty or disadvantage on an individual because a spouse’s manifestation of disease or disorder prevents the spouse from participating or from achieving a certain health outcome (e.g., an employer may not deny an inducement for participation if either the employee or spouse has blood pressure, a cholesterol level, or a blood glucose level that the employer considers too high); or
• Collects health information but does not use it to provide follow-up information or advice to individual participants or to design a program that addresses at least some conditions identified in the responses.

In addition, certain authorization and confidentiality requirements (discussed below) must be met.

Permitted Inducements

Although an employer may not offer an inducement as part of a wellness program (such as a reduction in the portion of a health insurance premium that an employee pays) in exchange for genetic informationabout the employee,an employer can offer a limited inducement to an employee whose spouse receives health or genetic services offered by the employer—including as part of a wellness program —and provides information about manifested diseases or disorders as part of a health risk assessment. Inducements may be financial or in-kind (e.g., time-off rewards, prizes, and other items of value). Please note, however, that employers may not deny access to health insurance or benefits, or retaliate against, any employee whose spouse refuses to provide information about his or her manifested diseases or disorders to an employer wellness program.

Inducements to a spouse who provides information about manifested diseases or disorders are generally the same as the incentives available under the ADA to employees who answer disability-related questions or undergo medical examinations as part of a wellness program (described above). The inducements are as follows:

• Where the employer requires the employee and spouse to be enrolled in a particular group health plan in order to participate in the wellness program, the inducement to the spouse may not exceed 30% of the total cost of the self-only coverage for that plan.
• Where the employer offers only one self-only group health plan, and does not require the employee and spouse to be enrolled in that health plan in order to participate in the wellness program, the inducement may not exceed 30% of the cost of the self-only plan the employer offers.
• Where the employer offers more than one self-only group health plan , and does not require the employee and spouse to be enrolled in a particular health plan in order to participate in the wellness program, the inducement to the spouse may not exceed
  30% of the lowest cost major medical self-only plan the employer offers.
• Where the employer does not offer a group health plan, and offers a wellness program that is open to employees and their spouses, the inducement to the spouse may not exceed 30% of the total cost to a 40-year-old non-smoker purchasing coverage under the second lowest cost Silver Plan available on the Exchange in the location that the employer identifies as its principal place of business.

Authorization Requirement

An employer that offers health or genetic services and requests information about an employee’s spouse’s manifested diseases or disorders must obtain prior, knowing, written, and voluntary authorization from the spouse before the spouse completes a health risk assessment.

Confidentiality Requirements

GINA generally prohibits the disclosure of individually identifiable genetic information about employees or their family members participating in health or genetic services. In addition, employers may not require an employee or spouse to agree to the sale, exchange, transfer, or other distribution of health information in exchange for an inducement or as a condition for participating in a wellness program.