Health Benefits Advisor for Employers

Determining Compliance with the HIPAA Provisions in Part 7 of ERISA

Compliance with HIPAA Nondiscrimination Provisions - Premiums or Contributions

Does the plan comply with HIPAA's nondiscrimination rules regarding individual premium or contribution rates?

• Yes
• No

Under ERISA section 702(b) and 29 CFR 2590.702(c), plans may not require an individual to pay a premium or contribution that is greater than a premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health factor. For example, it would be impermissible for a plan to require certain full-time employees to pay a higher premium than other full-time employees based on their prior claims experience.

Nonetheless, the nondiscrimination rules do not prohibit a plan from providing a reward based on adherence to a wellness program. See ERISA section 702(b)(2) (B); 29 CFR 2590.702(b)(2)(ii) and (c)(3). Final rules for wellness programs were published on December 13, 2006, at 71 FR 75014. These rules permit rewards that are not contingent on an individual meeting a standard related to a health factor. In addition, these rules permit rewards that are contingent on an individual meeting a standard related to a health factor if:

• 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 20 percent of the cost of employee-only coverage under the plan. If dependents (such as spouses and/or dependent children) may participate in the wellness program, the reward must not exceed 20 percent of the cost of the coverage in which an employee and any dependents are enrolled.
• The program must be reasonably designed to promote health and prevent disease.
• The program must give individuals eligible to participate the opportunity to qualify for the reward at least once per year.
• The reward must be available to all similarly situated individuals. The program must allow a reasonable alternative standard (or waiver of initial standard) for obtaining the reward to any individual for whom it is unreasonably difficult due to a medical condition, or medically inadvisable, to satisfy the initial standard.
• The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of a waiver of the initial standard). A model notice is provided by EBSA.