Workplace wellness programs often incorporate rewards to promote healthy lifestyle choices and discourage behaviors that are detrimental to employees’ good health. A wellness program that relates to a group health plan must comply with nondiscrimination rules under the Health Insurance Portability and Accountability Act (HIPAA). These rules allow employers to provide rewards as part of a wellness program, provided the program follows certain guidelines.
For plan years beginning on or after Jan. 1, 2014, the Affordable Care Act (ACA) adopted the existing HIPAA nondiscrimination requirements for wellness programs with some modifications.
Categories of wellness programs
Under HIPAA, workplace wellness programs are divided into two general categories: participatory wellness programs and health-contingent wellness programs. This distinction is important because participatory wellness programs are not required to meet the same nondiscrimination standards that apply to health-contingent wellness programs.
Participatory Wellness Programs
Participatory wellness programs either do not require an individual to meet a health-related standard to obtain a reward or do not offer a reward at all. Examples of these programs include a fitness center reimbursement program, a diagnostic testing program (reward not based on outcomes), a program that reimburses employees for the cost of smoking cessation programs (not based on whether the employee quits smoking), or a program that provides rewards for attending a free health education seminar.
Participatory wellness programs comply with the nondiscrimination requirements without having to satisfy any additional standards, as long as participation in the program is made available to all similarly-situated individuals, regardless of health status. There is no limit on financial incentives for participatory wellness programs.
Health-contingent Wellness Programs
Health-contingent wellness programs require individuals to satisfy a standard related to a health factor in order to obtain a reward. There are two types of health-contingent wellness programs:
|Activity-only wellness programs||This type of wellness program requires an individual to perform or complete an activity related to a health factor in order to obtain a reward (for example, walking, diet or exercise programs). Activity-only wellness programs do not require an individual to attain or maintain a specific health outcome.|
|Outcome-based wellness programs||This type of wellness program requires an individual to attain or maintain a certain health outcome in order to obtain a reward (for example, not smoking, attaining certain results on biometric screenings or meeting exercise targets). Generally, these programs have two tiers: (1) a measurement, test or screening as part of an initial standard; and (2) a larger program that then targets individuals who do not meet the initial standard with wellness activities.
Outcome-based programs allow plans and issuers to target specific individuals (for example, those with high cholesterol for participation in cholesterol reduction programs, or those who use tobacco for participation in tobacco cessation programs), rather than the entire population of participants and beneficiaries, with the reward based on health outcomes or participation in reasonable alternatives.
To protect consumers from unfair practices, health-contingent wellness programs are required to follow certain standards related to nondiscrimination, including a standard that limits the maximum reward that can be offered.