:: Paul Rauseo :: | New Health Care Bill

WELLNESS PROGRAM CHECKLIST

Use the following questions to help determine whether the plan offers a program of health promotion or disease prevention that is required to comply with the Department’s final wellness program regulations and, if so, whether the program is in compliance with the regulations.

A. Insert the first day of the current plan year: _______________________________.

Is the date after July 1, 2007? …………………………………………………………… Yes No

The wellness program final rules are applicable for plan years beginning on or after July 1, 2007.

B. Does the plan have a wellness program? …………………………………………… Yes No

A wide range of wellness programs exist to promote health and prevent disease. However, these programs are not always labeled “wellness programs.” Examples include: a program that reduces individual’s cost-sharing for complying with a preventive care plan; a diagnostic testing program for health problems; and rewards for attending educational classes, following healthy lifestyle recommendations, or meeting certain biometric targets (such as weight, cholesterol, nicotine use, or blood pressure targets).

TIP: Ignore the labels – wellness programs can be called many things. Other common names include: disease management programs, smoking cessation programs, and case management programs.

C. Is the wellness program part of a group health plan?………………………… Yes No

The wellness program is only subject to Part 7 of ERISA if it is part of a group health plan. If the employer operates the wellness program as an employment policy separate from the group health plan, the program may be covered by other laws, but it is not subject to the group health plan rules discussed here.

Example: An employer institutes a policy that any employee who smokes will be fired. Here, the plan is not acting, so the wellness program rules do not apply. (But see 29 CFR 2590.702, which clarifies that compliance with the HIPAA nondiscrimination rules, including the wellness program rules, is not determinative of compliance with any other provision of ERISA or any other State or Federal law, such as the Americans with Disabilities Act.)

D. Does the program discriminate based on a health factor?………………….. Yes No

A plan discriminates based on a health factor if it requires an individual to meet a standard related to a health factor in order to obtain a reward. A reward can be in the form of a discount or rebate of a premium or contribution, a waiver of all or part of a cost-sharing mechanism (such as deductibles, copayments, or coinsurance), the absence of a surcharge, or the value of a benefit that would otherwise not be provided under the plan.

Example 1: Plan participants who have a cholesterol level under 200 will receive a premium reduction of 20%. In this Example 1, the plan requires individuals to meet a standard related to a health factor in order to obtain a reward.

Example 2: A plan requires all eligible employees to complete a health risk assessment to enroll in the plan. Employee answers are fed into a computer that identifies risk factors and sends educational information to the employee’s home address. In this Example 2, the requirement to complete the assessment does not, itself, discriminate based on a health factor. However, if the plan used individuals’ specific health information to discriminate in individual eligibility, benefits, or premiums, there would be discrimination based on a health factor.

If you answered “No” to ANY of the above questions, STOP. The plan does not maintain a program subject to the group health plan wellness program rules.

E. If the program discriminates based on a health factor, is the program saved by the benign discrimination provisions?…………………………………………………….. Yes No

The Department’s regulations at 29 CFR 2590.702(g) permit discrimination in favor of an individual based on a health factor.

Example: Plan grants participants who have diabetes a waiver of the plan’s annual deductible if they enroll in a disease management program that consists of attending educational classes and following their doctor’s recommendations regarding exercise and medication. This is benign discrimination because the program is offering a reward to individuals based on an adverse health factor.

TIP: The benign discrimination exception is NOT available if the plan asks diabetics to meet a standard related to a health factor (such as maintaining a certain BMI) in order to get a reward. In this case, an intervening discrimination is introduced and the plan cannot rely solely on the benign discrimination exception.

If you answered “Yes” to the previous question, STOP. There are no violations of the wellness program rules.

If you answered “No” to the previous question, the wellness program must meet the following 5 criteria.

F. Compliance Criteria

(1) Is the amount of the reward offered under the plan limited to 20% 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% 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% 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% 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% reward for meeting a body mass index target and a 10% reward for meeting a cholesterol target, it must decrease the total reward available from 30% to 20%. However, if instead, the program offered a 10% reward for meeting a body mass index target, a 10% reward for meeting a cholesterol target, and a 10% 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% reward for completing the health risk assessment does not require individuals to meet a standard related to a health factor.

(2) 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.

(3) 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

(4) 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:

o It is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard; OR

o 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.

(5) 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, 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).

Additional compliance information regarding the other provisions in Part 7 of ERISA, including the HIPAA portability provisions and the rest of the HIPAA nondiscrimination provisions, is available on the Department’s website at: http://www.dol.gov/ebsa/pdf/CAGAppA.pdf.

Questions concerning the information contained in this Bulletin may be directed to the Office of Health Plan Standards and Compliance Assistance at 202-693-8335.

This Profit Engineer warns small business owners to fully understand the impact of this healthcare bill to their pricing model.

The healthcare bill, Patient Protection and Affordable Care Act (H.R. 3590), as well as the Health Care & Education Affordability Reconciliation Act of 2010 (H.R. 4872) has immediate ramifications for small businesses with more than 50 full-time equivalents (FTE’s).
Therefore, the most essential compliance step is for you to identify how many full time employees (about 40 hours) or FTE’s you have working for you. Employers near the magic number of 50 FTE’s will have to make sure you accurately count your employees. Keep records for each non-exempt worker, and certain identifying information about the employee and data about the hours worked and the wages earned.
Once you understand your employee count, you can determine your options or penalty calculations. You may want to analyze your employee count on a quarterly or monthly schedule based on how close you are to the federal goal post of 50 FTE’s.
Employer coverage mandate (”pay or play”)
Large employers will have to make available to all employees a minimum level of coverage or pay a per-employee penalty (fee). Employers will not be required to provide coverage for part-time employees, but these employees may be counted as partial employees for purposes of determining whether an employer has 50 employees. The bill is still unclear as to how employees will be counted and what formula will be used, but it looks like the real “number” to be counted will be a baseline of total hours worked by all employees. For that reason, keep accurate time records as described above. If the employer offers coverage but employees are forced to purchase insurance through the state-based exchanges because the employer’s coverage is not affordable, the employer must pay separate fees. This “Pay or Play” provision goes live in 2014 upon the creation of the state-based exchanges. Once the exchange is established, it can:
– Assess employers with more than 50 FTE’s that do not offer coverage and have at least one full-time employee who receives a premium tax credit a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment. For example, an employer with 50 employees will pay a penalty of $40,000 (20 times $2,000) for not offering coverage.
– Employers with more than 50 FTE’s that offer coverage but have at least one full-time employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium credit or $750 for each full-time employee. (Effective January 1, 2014)
– Require employers that offer coverage to their employees to provide a free choice voucher to employees with incomes less than 400 percent federal poverty level whose share of the premium exceeds 8 percent but is less than 9.8 percent of their income and who choose to enroll in a plan in the Exchange. The voucher amount is equal to what the employer would have paid to provide coverage to the employee under the employer’s plan, and will be used to offset the premium costs for the plan in which the employee is enrolled. Employers providing free choice vouchers will not be subject to penalties for employees that receive premium credits in the Exchange. (Effective January 1, 2014)
Creation of state healthcare exchanges
Small businesses and individuals would have the choice of buying health insurance through state-based exchanges. The exchanges are expected to offer easy-to-understand competitive benefits at affordable prices. Some small businesses and individuals may be eligible to receive credits toward the purchase of insurance through the exchanges. The exchanges will begin in 2014.
Limitation on employee contributions to healthcare flexible spending account
Employees would be limited to an annual contribution of $2,500 to health care flexible spending accounts. One downside is that employers would no longer be permitted to reimburse employees for over-the-counter medication under flexible spending arrangements. For example, over-the-counter cough and allergy medicine that can now be paid under flexible spending arrangements will now be paid out of pocket by employees with post-tax dollars. This provision is effective at the beginning of 2011 in the Senate bill, but the House bill would delay the effective date to 2013.
Elimination of preexisting condition exclusions and lifetime limits
Group health plans and insurers will no longer be permitted to exclude coverage for preexisting conditions or place lifetime limits on coverage. Lifetime limits are prohibited effective six months after enactment of the legislation. Preexisting conditions exclusions must be eliminated for dependent children within six months of enactment and must be completely eliminated by 2014. Thanks to Christa Rapoport for great info on this National Healthcare Plan.