Final Regulations Update HIPAA Health Plan Wellness Program Rules

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Employer, union and sponsors of employment-based group health plans that include health risk assessment (HRA) or other wellness plan features that reward participants for engaging in certain assessments or other activities designed to promote wellness or disease management, and fiduciaries insurers, and administrators  of these health plans should review and update their programs in light of final wellness program rules jointly published by the Department of Health and Human Services (HHS), Department of Labor Employee Benefit Security Administration (EBSA) and the Department of Treasury (collectively the “Agencies”) today (May 29, 2013) here (Wellness Regulations).

While these final Wellness Regulations implementation of changes to the “bona fide wellness program exception” to nondiscrimination rules contained in the Portability Rules of the Health Insurance Portability & Accountability Act (HIPAA) as amended by the Patient Protection and Affordable Care Act (ACA) allow group health plans to provide bigger rewards to members for cooperating in wellness activities required under a “bona wellness program” within the meaning of the Wellness Regulations, the Wellness Regulations and other federal rules still need care to design and administer these health plan features meet all applicable Wellness Regulations for qualification as a “bona fide wellness program while also safeguarding the use of “personal health information” and “genetic health information in accordance with the privacy rules of HIPAA as amended by the Genetic Information Nondiscrimination Act (GINA) managing potential employment disability discrimination exposures under the Equal Employment Opportunity Commission’s (EEOC’s) current interpretation of the employment discrimination rules of Americans With Disabilities Act (ADA) and GINA.

Wellness Rules Implement ACA Changes To HIPAA “Bona Fide Wellness Program Rules

The nondiscrimination prohibitions of the Health Insurance Portability & Accountability Act (HIPAA), as amended by the Genetic Information Nondiscrimination Act (GINA) and the Patient Protection and Affordable Care Act (ACA) generally prohibit health plans from discriminating against an individual based on eligibility or premium based on a health factor.  Wellness or disease management programs that vary premiums or contributions, cost-sharing or other benefit mechanisms, or provide other rewards or inducements can run afoul of this HIPAA nondiscrimination prohibition if not properly designed and administered to fall within the “bona fide wellness program” exception.

The Wellness Regulations as finalized continue to interpret HIPAA’s general prohibition against group health plan provisions that discriminate based on a health factor to prohibit group health plans to vary benefits (including cost-sharing mechanisms) or the premium or contribution for similarly situated individuals when wellness program that satisfies the requirements of the Wellness Regulations for a “bona fide wellness program

The Affordable Care Act generally increased the maximum permissible reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of health coverage for qualifying bona fide wellness programs and to as much as 50 percent of the cost of health coverage for bona fide wellness programs designed to prevent or reduce tobacco use.  In keeping with these ACA amendments to HIPAA, the Wellness Regulations allow group health plans and insurers to offer these greater rewards as long as the wellness program otherwise meets the conditions that the Wellness Regulations set for qualification as a bona fide wellness program.

In order to offer these incentives, however, the Wellness Regulations make clear that group health plans, their insurers and fiduciaries still need to tread carefully to properly design and administer these arrangements to ensure that their wellness program meet the applicable conditions of the Wellness Regulations for qualification as a bona fide wellness program.

In keeping with the approach announced in proposed regulations the Agencies previously published here last Fall, the Wellness Regulations have different requirements for “participatory wellness programs” versus “health contingent wellness programs.”

  • “Participatory wellness programs” generally are programs that reward plan members for participating in wellness activities based on participation in specified activities without regard to an individual’s health status. These include programs that reimburse for the cost of membership in a fitness center; that provide a reward to employees for attending a monthly, no-cost health education seminar; or that reward employees who complete a health risk assessment, without requiring them to take further action
  • “Health-contingent wellness programs” generally are programs where individuals must meet a specific standard related to their health to qualify for the specified reward or avoid a specified penalty. Examples of health-contingent wellness programs include programs that provide a reward to those who do not use, or decrease their use of, tobacco, or programs that reward those who achieve a specified health-related goal, such as a specified cholesterol level, weight, or body mass index, as well as those who fail to meet such goals but take certain other healthy actions.

Group health plan sponsors, fiduciaries, insurers and administrators should use care to properly understand which type of program or programs their group health plans contain and ensure that their programs are properly designed and administered to meet these conditions.  While fulfillment of these requirements can allow the arrangement to avoid violation of HIPAA’s nondiscrimination rules, however, it is important also to ensure that other applicable federal requirements for the use of these arrangements also are fulfilled along with these HIPAA nondiscrimination requirements.

Meeting Other Federal Rules For Wellness Programs Also Important

In addition to fulfilling the Wellness Regulations, health plans, their sponsors, fiduciaries, insurers and administrators also need to ensure that any wellness program included in a group health plan also meets other federal rules about the protection of sensitive personal health information and genetic health information and do not violate the employment discrimination rules of the ADA and GINA

  • Update Privacy Compliance

.Since wellness programs generally inherently involve some collection, use, access or disclosure of “protected health information” within the meaning of the Privacy Rules of HIPAA, it is particularly important to review and tighten plan provisions and other documentation, processes, procedures, and training to reduce the risk of violating HIPAA. A review of the adequacy of these arrangements is made particularly important in light of recent changes to in the implementing regulations of these HIPAA Privacy Rules adopted earlier this year to implement changes enacted by the HITECH Act.  Among other things, these changes may require updates to the health plan’s definition of personal health care information to clarify that it includes family health information and other “genetic information” that wellness programs often collect. Other updates to plan provisions, privacy policies, vendor agreements or other practices also may be needed to comply with modifications to the HIPAA Privacy Rules on business associates, marketing, breach notification, training or other rules.

  • Manage Disability Discrimination Risks

In addition to ensuring compliance with current requirements about privacy, group health plans, their sponsors, fiduciaries, insurers and vendors also should take steps to minimize potential employment discrimination challenges under the ADA and GINA.

Despite ACA’ amendments to HIPAA’s bona fide wellness program rules and the 11th Circuit’s rejection of an EEOC challenge in Broward County v. Seff, EEOC officials continue to take the position that testing and inquiries about medical conditions made in connection with wellness programs presumptively violate the Americans With Disabilities Act physical testing and other disability discrimination rules as raising concerns about wellness and disease management programs..   See, e.g.EBSA Issues Guidance on Health Plan Wellness & Disease Management Programs Subject to HIPAA Nondiscrimination RulesADAAA Amendment Broader “Disability Definition Not Retroactive, Employer Action Needed To Manage Post 1/1/2009 RisksBusinesses Face Rising Disability Discrimination Enforcement Risks; EEOC Finalizes Updates To Disability Regulations In Response to ADA Amendments Act.

The ADA is not the only employment discrimination risk to manage, however.  In addition to the amendments to the group health plan nondiscrimination and Privacy Rules of HIPAA, GINA’s employment discrimination rules generally prohibit employment discrimination based on “genetic health information.” For instance, GINA’s genetic information nondiscrimination rules:

  • Prohibit employers and employment agencies from discriminating based on genetic information in hiring, termination or referral decisions or in other decisions regarding compensation, terms, conditions or privileges of employment;
  • Prohibit employers and employment agencies from limiting, segregating or classifying employees so as to deny employment opportunities to an employee based on genetic information;
  • Bar labor organizations from excluding, expelling or otherwise discriminating against individuals based on genetic information;
  • Prohibit employers, employment agencies and labor organizations from requesting, requiring or purchasing genetic information of an employee or an employee’s family member except as allowed by GINA to satisfy certification requirements of family and medical leave laws, to monitor the biological effects of toxic substances in the workplace or other conditions specifically allowed by GINA;
  • Prohibit employers, labor organizations and joint labor-management committees from discriminating in any decisions related to admission or employment in training or retraining programs, including apprenticeships based on genetic information;
  • Mandate that in the narrow situations where limited cases where genetic information is obtained by a covered entity, it maintain the information on separate forms in separate medical files, treat the information as a confidential medical record, and not disclosure the genetic information except in those situations specifically allowed by GINA;
  • Prohibit any person from retaliating against an individual for opposing an act or practice made unlawful by GINA; and

EEOC officials have stated publicly on certain occasions and reportedly have challenged health risk assessments or other wellness program features that request or collect family medical history or other genetic information as violating GINA’s employment discrimination rules.

Learn More At 6/4 Solutions Law Briefing

Solutions Law Press, Inc. invites employer and other employment-based group health plan sponsors, fiduciaries insurers, administrators, brokers, consultants and others to learn the key details of new Final Wellness Program regulations jointly published May 29, 2013 by the Departments of Health and Human Services, Labor and Treasury (collectively the “Agencies”) by participating in an informative and timely virtual briefing on “Making Wellness Programs Work Under New Final Tri-Agency Regulations” on June 4, 2013 beginning at Noon Central Time.  To register or for additional details, see here.

For Help or More Information

If you need help with preparing these or other ACA compliance or with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 25 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters including extensive experience on HIPAA and other privacy and data security issues.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals.  A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations.   She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications.   You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Resources

If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:


©2013 Cynthia Marcotte Stamer, P.C.  Nonexclusive license to republish granted to Solutions Law Press, Inc.  All other rights reserved

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