Wellness Program Changes for 2014

by Constangy, Brooks, Smith & Prophete, LLP
Contact

Apple.jpgThere has been a deluge of new federal regulations related to health care reform since the presidential election, and wellness programs have been no exception. The IRS, U.S. Department of Labor, and the U.S. Department of Health and Human Services jointly issued new proposed regulations on the operation of wellness programs on November 26. Federal Register, Vol. 77, No. 227 (November 26, 2012). The new regulations apply to both insured and self-insured group health plans that have a wellness component, and they apply to non-grandfathered as well as grandfathered plans under the Affordable Care Act.

Although the new regulations do not contain sweeping changes, there are two important aspects of wellness programs which are affected.

Reward Percentages Increased

Current regulations set the maximum permissible reward for a program that requires meeting a certain health-related goal (e.g., lowering cholesterol, controlling diabetes) at 20% of the cost individual or family coverage under the group health plan. For plan years beginning on or after January 1, 2014, however, the maximum permissible reward can be as much as 30%. Also, the reward for programs designed to prevent tobacco use can be as much as 50%, which will be a significant incentive for employees and dependents to stop using tobacco products. Keep in mind that these percentages apply to the total of all rewards offered under a wellness program and not to each individual part aimed at a specific health issue.

“Reasonable Alternative Standard” Clarified

The new regulations also provide additional information about the “reasonable alternative standard” required for all wellness programs which require meeting a certain health-related goal. A “reasonable alternative standard” is another way for an employee or dependent to receive the wellness program reward(s) if the employee or dependent cannot meet the health-related goal for medical reasons. The new regulations provide:

  • Simpler and more clear model language describing the reasonable alternative standard in health plan and wellness program materials distributed to employees and dependents.
  • An option for the health plan to waive the standard altogether for individuals unable to meet the health-related goal for medical reasons.
  • An option for the health plan to determine a reasonable alternative standard on a case-by-case basis, depending on the specific situation of the individual.
  • If the completion of an educational program is required, the employer must provide or locate the program and pay for it.
  • If the alternative standard requires participation in a diet or weight-loss program, the employer must pay any program or membership fees. However, the employee is not required to pay for the cost of food.
  • If the alternative standard requires compliance with the recommendations of a medical professional hired or employed by the employer, then the employer must provide another alternative if the individual’s own physician disagrees with the recommendations.
  • The employer can still request a statement from the individual’s physician that he or she cannot meet the alternative standard for medical reasons, but only if such a request is “reasonable under the circumstances.”
  • If an individual is denied a program reward for failure to meet an alternative standard, then such denial is eligible for external review under the health plan’s claims and appeals procedures

Employer Action

Although these new [health care] regulations are not effective until 2014, we encourage you to start planning now to determine what changes you may want to make to the reward percentages available to wellness program participants.

Although these new regulations are not effective until 2014, we encourage you to start planning now to determine what changes you may want to make to the reward percentages available to wellness program participants. Also, most of the changes to the reasonable alternative standard aspect of the program are mandatory and not optional, so revisions to your health plan documents and wellness program materials will be necessary. Finally, now that the U.S. Supreme Court has upheld the Affordable Care Act and President Obama has been reelected, you can expect more and more regulations changing your health care plan in the coming months.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Constangy, Brooks, Smith & Prophete, LLP | Attorney Advertising

Written by:

Constangy, Brooks, Smith & Prophete, LLP
Contact
more
less

Constangy, Brooks, Smith & Prophete, LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!