The Department of Health and Human Services, Department of Labor and the IRS jointly released proposed amendments to regulations, consistent with PPACA, regarding nondiscriminatory wellness programs in group health coverage. Generally, group health plans and group health insurance issuers are prohibited from discriminating against individual participants and beneficiaries in eligibility, benefits or premiums based on a health factor. An exception to the general rule allows premium discounts or rebates or modification to otherwise applicable cost sharing (including copayments, deductibles or coinsurance) in return for adherence to certain programs of health promotion and disease prevention, subject to compliance with a number of conditions and limitations.

These regulations generally propose standards for group health plans and health insurance issuers offering group health insurance coverage with respect to wellness programs. Consistent with the wellness program provisions of prior regulations issued in 2006, these proposed regulations generally would maintain the five requirements for health-contingent wellness programs with one significant modification relating to the size of the reward. In addition, the proposed regulations provide several clarifications of the prior 2006 regulations and changes intending to be consistent with the amendments made by PPACA. Specifically, these proposed regulations would increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan (and any related health insurance coverage) from 20% to 30% of the cost of coverage. The proposed regulations would further increase the maximum permissible reward to 50% for wellness programs designed to prevent or reduce tobacco use. These regulations also include other proposed clarifications regarding the reasonable design of health-contingent wellness programs and the reasonable alternatives they must offer in order to avoid prohibited discrimination.

These proposed regulations would replace the wellness program provisions of prior regulations issued in 2006 and would apply to both grandfathered and non-grandfathered group health plans and group health insurance coverage for plan years beginning on or after January 1, 2014.