New proposed employer wellness program regulations have been released under the U.S. Patient Protection and Affordable Care Act.
On November 20, 2012, the U.S. Departments of the Treasury, Labor (DOL) and Health and Human Services (HHS) (collectively, the Regulators) released proposed regulations addressing the employer wellness program provisions of the Patient Protection and Affordable Care Act (PPACA). The proposed regulations apply to both grandfathered and non-grandfathered plans in both the insured and self-insured markets, and are effective for plan years beginning on or after January 1, 2014.
The proposed regulations did not deviate extensively from the previous wellness program guidance published in 2006. The 2006 wellness program guidance describes two types of wellness programs: one where the reward is not conditioned on the individual satisfying a standard relating to a health factor (non-contingent reward), and one where the reward is conditioned on the individual satisfying a standard relating to a health factor (health contingent reward). The non-contingent wellness programs remain the same, however the wellness programs that contain health contingent rewards have changed under the new guidance.
If a wellness program conditions the reward on a participant’s outcome, for example, all employees who lower their cholesterol to 200 or below will receive a reduction in the cost of their health plan premiums, it is considered a health contingent reward program, and must comply with five requirements. Though the number of requirements has not changed, details of the requirements have changed in certain circumstances. The chart below compares the 2006 requirements with the new proposed regulation’s five requirements.
Click here to view table.
The 2006 wellness regulations provide that it is permissible for a plan or issuer to seek verification, such as a statement from the individual’s personal physician, that a health factor makes it unreasonably difficult for the individual to satisfy, or medically inadvisable for the individual to attempt to satisfy the otherwise applicable standard. The proposed regulations amend that requirement to provide that physician verification may be required by a plan or issuer “if reasonable under the circumstances.” The proposed regulations further provide that "it would not be reasonable for a plan or issuer to seek verification of a claim that is obviously valid based on the nature of the individual’s medical condition that is known to the plan or issuer. Plans and issuers are permitted under the proposed regulations to seek verification of claims that require the use of medical judgment to evaluate." The Regulators are seeking further comment on this new requirement, which, given the vague nature of the statement, will likely generate a few comments.
Plan sponsors and issuers should review their current wellness programs in light of the above and, once the final regulations are published, make any necessary changes to comply with the new regulations. If you have comments, contact your regular McDermott Will & Emery lawyer or an author for assistance in drafting and submitting them on your behalf. Alternatively, you may submit comments online at the federal eRulemaking portal or mail or hand deliver them to the Office of Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, DC 20210, Attention: Wellness Programs.