On May 23, 2013, the DOL, Treasury and HHS finalized the HIPAA Nondiscriminatory Wellness Programs Regulations that were proposed in November 2012, clarifying what will work and what will not work for 2014 and beyond. Review how the Affordable Care Act (ACA) impacts wellness incentives.

1. Charlotte - Headquarters Coldwater Sandy
13024 Ballantyne Corporate Place 15 E. Washington Street 9350 S. 150 E.PO Box 889
Suite 400 PO Box 889 Suite 300
Charlotte, NC 28277 Coldwater, MI 49036 Sandy, UT 84070
Toll Free: 800-300-3838 Toll Free: 800-300-3838 Toll Free 800-733-8839
www.infinisource.com Fax: 517-278-0764 Fax 801-281-9545
One Source. Infinite Solutions.
ACA Wellness Incentives
Wellness:
A program of health promotion
or disease prevention.
Although workplace wellness was first introduced in the 1960s, it was two
decades before corporations began to realize the benefits of providing wellness
programs. The trend of adopting healthy lifestyles has continued and today
almost 90% of U.S. employers offer wellness programs.
The Affordable Care Act (ACA) expanded the potential for these programs to
encourage healthy choices and reduce health care costs. Wellness incentive
programs give participants rewards for meeting certain health-related goals, such
as losing weight, receiving flu shots or meeting health requirements.
Proposed rules, effective for plan years starting on or after January 1, 2014,
would increase the maximum permissible health-contingent wellness reward
from 20 percent to 30 percent of the cost of health coverage, and further
increase that reward to as much as 50 percent for programs designed to
prevent or reduce tobacco use.
There are two types of wellness incentives:
Participatory
Not subject to the wellness requirements if participation is available to all
similarly situated individuals
Examples
Fitness center membership reimbursement; diagnostic testing program rewards
participation, not outcomes; copayment/deductible waiver for costs of services
related to a health condition (e.g., prenatal care, well-baby visits); smoking
cessation cost reimbursement; rewards for attending periodic health seminar
Health-contingent
Based on health factors, subject to the wellness requirements
Examples
Tobacco use surcharge for medical premium; reward based on reaching certain
biometric standards (blood pressure, BMI, glucose level)

2. Charlotte - Headquarters Coldwater Sandy
13024 Ballantyne Corporate Place 15 E. Washington Street 9350 S. 150 E.PO Box 889
Suite 400 PO Box 889 Suite 300
Charlotte, NC 28277 Coldwater, MI 49036 Sandy, UT 84070
Toll Free: 800-300-3838 Toll Free: 800-300-3838 Toll Free 800-733-8839
www.infinisource.com Fax: 517-278-0764 Fax 801-281-9545
One Source. Infinite Solutions.
ACA Wellness Incentives
Employer cautions
• Under the ADA, EEOC has said wellness programs must be voluntary
(but has not defined voluntary).
• Wellness penalties may jeopardize grandfathered status of medical plan.
• Wellness programs are ERISA plans if they provide medical care benefits.
Requirements for health factor-based
wellness programs
Frequency
Individuals must have opportunity to qualify for reward at least annually
• Amount: Reward must be no more than 20% of cost of coverage (30% for
plan years starting on or after January 1, 2014, and up to 50% for programs
designed to prevent or reduce tobacco use)
• Availability: Reward must be uniformly available to similarly situated
individuals and offer a reasonable alternative standard if unreasonably difficult
to satisfy standard because of a medical condition
»» Alternative standard does not need to be pre-designed
»» If alternative standard is completion of education program, it must be
employer paid
»» If alternative standard is diet program, employer does not have to pay for
food
»» If alternative standard is not reasonable, follow doctor’s recommendations
»» Plan can request doctor’s note
• Reasonableness: Program must be reasonably designed to promote health or
prevent disease
• Notice: Program must disclose in all plan materials that alternative standards
(or waivers) are available
»» Regulations include several types of model language

3. Charlotte - Headquarters Coldwater Sandy
13024 Ballantyne Corporate Place 15 E. Washington Street 9350 S. 150 E.PO Box 889
Suite 400 PO Box 889 Suite 300
Charlotte, NC 28277 Coldwater, MI 49036 Sandy, UT 84070
Toll Free: 800-300-3838 Toll Free: 800-300-3838 Toll Free 800-733-8839
www.infinisource.com Fax: 517-278-0764 Fax 801-281-9545
One Source. Infinite Solutions.
ACA Wellness Incentives
Examples
• Total annual group health plan premium cost is $5,000. Employer provides
$250 reward for completing health risk assessment, $1,500 for meeting health-
contingent standard.
Good incentive. Even though $1,750 is more than 30% of premium cost, you
don’t count the $250 reward because it is participation based.
• Employer offers reward for under 200 on cholesterol test. If not achieved,
employer provides a different, reasonable means of qualifying for reward.
Materials contain the appropriate alternative reasonable standard notice.
Employee’s count is above 200. Employer’s nurse recommends diet and
exercise routine that is not unreasonably difficult. After program, employee’s
count is still above 200. Program requires him to visit a doctor and follow
any additional doctor recommendations. Doctor prescribes medication and
requires periodic evaluations. Employee qualifies for reward but only if he
actually follows doctor’s advice. Good incentive.
Gray areas
• How to apportion financial rewards among family members where health
goals may not be applicable to all of them (e.g., a spouse who smokes)
• How to define tobacco use
• How percentage limits apply to a financial reward whose amount may not be
known initially (e.g., waiver of copayments)
• Whether reasonable design requirement means you must use evidence- or
practice-based standards
Born in the baby-boomer era, workplace wellness has matured into a nationally
accepted workforce offering. Participants become better educated and healthier
consumers while both employers and participants save on costs.
Wellness incentives have become a way of life to the benefit of us all.