Final Rule on Workplace Wellness Programs Gives Greater Flexibility
On Wednesday, the Obama administration issued a final rule to provide employers with greater flexibility to use workplace wellness programs under the Affordable Care Act, New York Times reports. The rule -- which was developed by HHS in tandem with the Labor and Treasury departments -- applies to group health insurance for plan years that begin on or after Jan. 1, 2014 (Pear, New York Times, 5/29).
Details of Rule
It states that employers must structure the programs so every worker in any "participatory wellness programs" can "receive the full amount of any reward or incentive, regardless of any health factor" (Begley, Reuters, 5/29). The rule classifies wellness programs into two categories -- active-only and outcome-based -- and does not require employers to provide scientific evidence that they are effective (Block, Modern Healthcare, 5/29).
Specifically, the rule allows employers to reward employees with as much as 30% of the cost of their health coverage for participating in wellness programs, up from the current 20% rate. Employees who enroll in smoking cessation programs could earn back as much as 50% of their coverage costs, even if they do not quit smoking at the end of the program.
Meanwhile, employees who do not participate in a wellness program could face a substantial penalty, Reuters reports. For example, an employer could require smokers to pay as much as 50% more for their premiums than their non-smoking coworkers (Reuters, 5/29).
In addition, the final rule requires employers with wellness programs to provide certain groups of workers -- such as those with unique medical conditions -- with "reasonable alternatives" to qualify for rewards if they cannot meet a specific set of benchmarks. Workers also could seek their physicians' help to tailor their wellness programs (Somashekhar, Washington Post, 5/29).
Final Rule Answers Some of Stakeholders' Concerns, HHS Notes
In the final regulation, HHS noted that it "clarified" some "confusion" about the workplace wellness program requirements among business groups and congressional Democrats, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 5/29).
Various experts also have warned that some employers could decide to stop offering health coverage based on the requirement that they provide the full amount of any incentive or reward regardless of any health factor, according to Reuters (Reuters, 5/29).
An HHS statement noted that the final rule will "ensure flexibility for employers by increasing the maximum reward that may be offered under appropriately designed wellness programs, including outcome-based programs."
In addition, the rule will "protect consumers by requiring that health-contingent wellness programs be reasonably designed, be uniformly available to all similarly situated individuals, and accommodate recommendations made at any time by an individual's physician based on medical appropriateness," HHS said ("Healthwatch," The Hill, 5/29).
According to the Times, employers' compliance with the rule does not exempt them from obligations under other federal laws, such as the Americans With Disabilities Act. In addition, the rule states that companies' wellness programs must not be "a subterfuge for discriminating based on a health status factor" (New York Times, 5/29).
Business Groups, Observers Comment on Final Rule
Steve Wojcik -- vice president of public policy at the National Business Group on Health -- expressed concern over the rule's "reasonable alternatives" requirement, saying it could prompt some employees to abuse the system by demanding programs that they like, but are less effective (Modern Healthcare, 5/29). "If the employer has to offer rewards, even without evidence that an employee is trying" to improve health outcomes, "it might decide to end the wellness program," Wojcik said (Reuters, 5/29).
Paul Fronstin -- director of the Employee Benefit Research Institute's health research and education program -- said the final rule "gives the wellness industry a little more certainty, but there's a little uncertainty on what alternatives may be recommended." Fronstin added, "If you make it too complicated for employers to offer wellness programs, they'll stop offering them."However, an administration official said the final rule limits the number of reasonable alternatives an employer is required to provide (Modern Healthcare, 5/29). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.