Health Benefits Advisor for Employers

Determining Compliance with the HIPAA Provisions in Part 7 of ERISA

Compliance with the Wellness Program Provisions - Compliance Criteria

Is the amount of the reward offered under the plan limited to 20 percent of the applicable cost of coverage? (29 CFR 2590.702(f)(2)(i))

Yes
No

Keep in mind these considerations when analyzing the reward amount:

Who is eligible to participate in the wellness program?

If only employees are eligible to participate, the amount of the reward must not exceed 20 percent of the cost of employee-only coverage under the plan. If employees and any class of dependents are eligible to participate, the reward must not exceed 20 percent of the cost of coverage in which an employee and any dependents are enrolled.

Does the plan have more than one wellness program?

The 20 percent limitation on the amount of the reward applies to all of a plan's wellness programs that require individuals to meet a standard related to a health factor.

Example: If the plan has two wellness programs with standards related to a health factor, a 20 percent reward for meeting a BMI target and a 10 percent reward for meeting a cholesterol target, it must decrease the total reward available from 30 percent to 20 percent. However, if instead, the program offered a 10 percent reward for meeting a body mass index target, a 10 percent reward for meeting a cholesterol target, and a 10 percent reward for completing a health risk assessment (regardless of any individual's specific health information), the rewards do not need to be adjusted because the 10 percent reward for completing the health risk assessment does not require individuals to meet a standard related to a health factor.

Is the plan reasonably designed to promote health or prevent disease? (29 CFR 2590.702(f)(2)(ii))

Yes
No

The program must be reasonably designed to promote health or prevent disease. The program should have a reasonable chance of improving the health of or preventing disease in participating individuals, not be overly burdensome, not be a subterfuge for discriminating based on a health factor, and not be highly suspect in the method chosen to promote health or prevent disease.

Are individuals who are eligible to participate given a chance to qualify at least once per year? (29 CFR 2590.702(f)(2)(iii))

Yes
No

Is the reward available to all similarly situated individuals? Does the program offer a reasonable alternative standard? (29 CFR 2590.702(f) (2)(iv))

Yes
No

The wellness program rules require that the reward be available to all similarly situated individuals. A component of meeting this criterion is that the program must have a reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward for any individual for whom, for that period:

• It is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard; or
• It is medically inadvisable to attempt to satisfy the otherwise applicable standard. It is permissible for the plan or issuer to seek verification, such as a statement from the individual's physician, that a health factor makes it unreasonably difficult or medically inadvisable for the individual to satisfy or attempt to satisfy the otherwise applicable standard.

Does the plan disclose the availability of a reasonable alternative in all plan materials describing the program? (29 CFR 2590.702(f)(2)(v))

Yes
No

The plan or issuer must disclose the availability of a reasonable alternative standard in all plan materials describing the program. If plan materials merely mention that the program is available, without describing its terms, this disclosure is not required.

Tip: The disclosure does not have to say what the reasonable alternative standard is in advance. The plan can individually tailor the standard for each individual, on a case-by-case basis.

The following sample language can be used to satisfy this requirement: "If it is unreasonably difficult due to a medical condition for you to achieve the standards for the reward under this program, or if it is medically inadvisable for you to attempt to achieve the standards for the reward under this program, call us at [insert telephone number] and we will work with you to develop another way to qualify for the reward."

If you answered "Yes" to all of the 5 questions on wellness program criteria, there are no violations of the HIPAA wellness program rules.

If you answered "No" to any of the 5 questions on wellness program criteria, the plan has a wellness program compliance issue. Specifically,

Violation of the general benefit discrimination rule (29 CFR 2590.702(b)(2)(i)) - If the wellness program varies benefits, including cost-sharing mechanisms (such as deductible, copayment, or coinsurance) based on whether an individual meets a standard related to a health factor and the program does not satisfy the requirements of 29 CFR 2590.702(f), the plan is impermissibly discriminating in benefits based on a health factor. The wellness program exception at 29 CFR 2590.702(b)(2)(ii) is not satisfied and the plan is in violation of 29 CFR 2590.702(b)(2)(i).

Violation of general premium discrimination rule (29 CFR 2590.702(c)(1)) - If the wellness program varies the amount of premium or contribution it requires similarly situated individuals to pay based on whether an individual meets a standard related to a health factor and the program does not satisfy the requirements of 29 CFR 2590.702(f), the plan is impermissibly discriminating in premiums based on a health factor. The wellness program exception at 29 CFR 2590.702(c)(3) is not satisfied and the plan is in violation of 29 CFR 2590.702(c)(1).

Resume Determining Compliance with the HIPAA Nondiscrimination Provisions