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Print articleTaking a Look at the Latest on Affordable Care Act
February, 2013 - Eric E. Kinder and Erin Jones Adams
Employers nationally continue to struggle with how to respond and adapt to the ever- changing landscape that is the Patient Protection and Affordable Care Act (often known as ObamaCare or the ACA). We at Spilman Thomas & Battle will continue to work with you through 2013 and beyond as the implementing regulations for the ACA continue to be issued. We are working to identify strategies to help employers navigate the process in the manner that best serves their respective industries.
Before discussing guidance issued recently regarding wellness programs that are part of a health care plan, there is news of a bit of a reprieve. Originally all employers were to provide notice to their employees regarding their state health insurance exchange no later than March 1 of this year. The written notice would inform employees of the existence of the health exchanges in their state, the manner in which an employee may contact the exchanges and information on how an employee may be eligible for a premium tax credit if the employee purchases a health plan through an exchange and other related tax issues. States, however, have been slow to decide if they were going to establish an exchange, and if so, what the rules for that exchange would be. Accordingly, the Department of Labor has stated that employers are not required to comply until it issues regulations regarding employer compliance with these notice requirements. Currently, the Department of Labor expects the timing for distribution of notices to be late summer or fall of this year, and it is considering providing model generic language that employers can use. We will send out information to employers when these regulations are issued.
A question many employers have asked relates to the establishment or continuation of their wellness programs. The federal government recently issued draft regulations on how employers can ensure their wellness programs are nondiscriminatory under the law. These rules would apply to all wellness programs that are part of a health plan, including those already in existence.
An initial matter, the regulations do not apply to wellness programs not connected to a health plan; employers who have wellness programs separate and apart from their plans need not worry. Employers with programs offering health insurance premium reductions need to read on.
The regulations established two categories of wellness programs. The first is participatory wellness programs available to all employees (or all similarly-situated employees) that either do not provide a reward or do not condition the reward based on the individual meeting certain health criteria. Examples of participatory wellness programs include programs that reimburse all or part of the costs of membership in a fitness center or that provide a reward to employees who attend a monthly, no-cost health education seminar. In general, participatory wellness programs are legal without further review.
On the other hand, health-contingent wellness programs are only permitted where they meet five specific standards. A health-contingent wellness program requires an individual to satisfy a standard related to health to obtain a reward. To survive legal scrutiny, a health-contingent wellness program must meet the following five conditions.
Before discussing guidance issued recently regarding wellness programs that are part of a health care plan, there is news of a bit of a reprieve. Originally all employers were to provide notice to their employees regarding their state health insurance exchange no later than March 1 of this year. The written notice would inform employees of the existence of the health exchanges in their state, the manner in which an employee may contact the exchanges and information on how an employee may be eligible for a premium tax credit if the employee purchases a health plan through an exchange and other related tax issues. States, however, have been slow to decide if they were going to establish an exchange, and if so, what the rules for that exchange would be. Accordingly, the Department of Labor has stated that employers are not required to comply until it issues regulations regarding employer compliance with these notice requirements. Currently, the Department of Labor expects the timing for distribution of notices to be late summer or fall of this year, and it is considering providing model generic language that employers can use. We will send out information to employers when these regulations are issued.
A question many employers have asked relates to the establishment or continuation of their wellness programs. The federal government recently issued draft regulations on how employers can ensure their wellness programs are nondiscriminatory under the law. These rules would apply to all wellness programs that are part of a health plan, including those already in existence.
An initial matter, the regulations do not apply to wellness programs not connected to a health plan; employers who have wellness programs separate and apart from their plans need not worry. Employers with programs offering health insurance premium reductions need to read on.
The regulations established two categories of wellness programs. The first is participatory wellness programs available to all employees (or all similarly-situated employees) that either do not provide a reward or do not condition the reward based on the individual meeting certain health criteria. Examples of participatory wellness programs include programs that reimburse all or part of the costs of membership in a fitness center or that provide a reward to employees who attend a monthly, no-cost health education seminar. In general, participatory wellness programs are legal without further review.
On the other hand, health-contingent wellness programs are only permitted where they meet five specific standards. A health-contingent wellness program requires an individual to satisfy a standard related to health to obtain a reward. To survive legal scrutiny, a health-contingent wellness program must meet the following five conditions.
- Frequency of opportunity to qualify – The program must provide the employees the opportunity to qualify for the reward at least once per year.
- Size of reward – In general, a health-contingent wellness program reward may not exceed more than 30% of the cost of employee-only health care coverage. Programs designed to prevent or reduce tobacco use, however, may offer rewards up to 50% of the cost of employee-only health care coverage.
- Uniform availability and reasonable alternative standards - A reward under a health-contingent wellness program must be available to all similarly-situated individuals, which means a “reasonable alternative standard” (including a waiver of an otherwise applicable standard) must be provided for meeting the goal if it is either unreasonably difficult due to a medical condition or where it is medically inadvisable for the employee to attempt to satisfy the standard. In defining what a reasonable alternative standard is, the regulations provide a few rules. First, if the reasonable alternative standard is an educational program, the plan insurer must make the program available (as opposed to telling the employee to find the program) and must pay for it. Where the reasonable alternative standard is a diet program, the employer does not need to pay for the costs of the dietary food, but must pay for any membership or participation fee. And where the reasonable alternative standard is compliance with the recommendations of a medical professional, the plan must provide reasonable alternative standards that can be met within recommendations provided by the individual’s physician.
- Reasonable design – Health-contingent wellness programs must be reasonably designed to promote health or prevent disease, may not be overly burdensome, cannot be a subterfuge for discrimination based on a health factor or disability and may not be highly suspect in the method chosen to promote health or prevent disease. That said, plans and insurers may conduct screenings and measurements in order to target wellness programs effectively, but the program must still be made available to all individuals who do not meet this standard. Again, the program must also provide different, reasonable means for qualifying for the same reward.
- Notice of other means of qualifying for the rewards – Plans and insurers must disclose the availability of other means for qualifying for the reward for the possibility of waiver of the otherwise applicable standard and all plan materials describing the terms of the health-contingent wellness program. If, however, plan materials merely mention that a program is available without describing its terms, this disclosure is not necessary. To be safe, plans should include language such as the following in the description of all health-contingent wellness programs: “Your health plan is committed to helping you achieve your best health status. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard or a reward under this wellness program, you might qualify for an opportunity to earn the same reward by a different means. Contact us at [insert contact information] and we will work with you to find a wellness program with the same reward that is right for you in light of your health status.”
