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Wellness in the Corporate Environment and Complying with PPACA. How to Build a Successful Gift Card Incentive Program?


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Wellness programs are an effective method to maintain group health plan costs, motivate employees to take control of their health, while assisting employees lead happier, healthier and more productive lives. Employers seek solutions by offering incentives that are tangible, easily accessible and tailored to the employees work/life balance for voluntary participation.

Prior to the passage of the Affordable Care Act, navigating the legal landscape of wellness programs and incentives could be treacherous. However, the Affordable Care Act seemed to be a clear endorsement of standards-based wellness programs by the government. PPACA generated even more opportunities to get creative with these wellness programs, but it is important to understand the risks.

Published in: Health & Medicine, Business
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Wellness in the Corporate Environment and Complying with PPACA. How to Build a Successful Gift Card Incentive Program?

  1. 1. Wellness in the Corporate Environment and Complying With PPACA Presenters Host Judith Wethall, Shareholder, Littler Mendelson Sarah Michele Hunt, Education & Engagement Coordinator, Corporate Health & Wellness Association Ralph Lardieri, Wellness Manager, Wawa, Inc. Moderator Edward Shulkin, President, GiftCard Partners, Inc.
  2. 2. Today’s Overview 1. 2. 3. 4. 5. Wellness Programs – The Background Final Regulations – DOL Issued 6/3/13 Wellness and Employer Mandate Affordability/Minimum Value Wellness Programs as ERISA Plans Other laws (ADA, ADEA, GINA)
  3. 3. Wellness Program – The Background • Born from the HIPAA nondiscrimination rules – Group health plans cannot discriminate against individuals based on health status: • Exception for discrimination in favor of individual with adverse health status (disease management) • Exception if program meets the “wellness rules” (See DOL Field Assistance Bulletin 2008-02)
  4. 4. Final Wellness Regulations – Effective 1/1/2014 • Increased incentive limits from 20% to 30% of cost of coverage (tobacco cessation to 50%) • Distinguished between TYPES of wellness programs: – Participatory vs. Health-Contingent
  5. 5. Final Wellness Regulations – Effective 1/1/2014 Participatory Health-Contingent Reward not based on a health factor Reward based on a health factor Five wellness criteria not applicable Five wellness criteria applicable Subject to ERISA, ADA, GINA, Tax and Privacy rules NEW! Broken down into two subcategories: • Activity-Only Wellness Programs • Outcomes-Based Wellness Programs
  6. 6. “Participatory” Wellness Programs • Reward is not based on health factor: – Fitness Center – Healthy Choices in Cafeteria – Walk-a-thons – Completion of HRQ (health risk questionnaire) regardless of results – Weight Watchers - goals not linked to rewards
  7. 7. “Participatory” Wellness Programs • Similarly situated individuals must be allowed an opportunity to participate – Allowances for differing locations etc. – Cannot discriminate in favor of highly compensated individuals
  8. 8. “Health-Contingent” Wellness Programs • Reward is based on health factor • Must comply with 5 criteria in “wellness regulations” • Applies to insured, self-funded/self-insured and grandfathered plans
  9. 9. “Health-Contingent” Wellness Programs • Premium surcharge based on tobacco use (or reward based on tobacco-free) • Incentive based upon attainment of one or more health goals (e.g. cholesterol, BMI, blood sugar levels) • Requirement applicable to individuals based upon health status – Pregnancy management program – Coaching
  10. 10. “Health-Contingent” Wellness Programs Activity-Based Outcome-Based Individual required to complete activity related to health factor to obtain reward, but not required to attain a specific outcome Individual required to attain or maintain specific health outcome in order to obtain reward Example: Walking, diet or exercise program where some individuals may be unable to or have difficulty participating or completing due to a health factor ( such as asthma, pregnancy, or recent surgery) Example: Reward for non-tobacco use; reward for results in biometric screening; reward for favorable BMI while those who do not meet criteria must meet with health coach to obtain reward
  11. 11. “Health-Contingent” Wellness Programs • Five Factors: 1. 2. 3. 4. 5. Annual Qualification Amount of Incentive Reasonable Design to Promote Health Participant Disclosures Reasonable Alternatives These Five Factors apply to both activity-based and outcomebased … but there are some differences in administration!
  12. 12. #1 - Annual Qualification • Must give every eligible employee the ability to qualify for the FULL reward at least once a year. – Practice Reminder – include in open enrollment materials or other materials. – Make sure you do not pro rate the amount for late finishers
  13. 13. #2 - Amount of Incentive • Reward for all health-based wellness programs cannot exceed 30% of cost of employee coverage (unless dependents may participate in wellness – then based on employee plus rates) • For tobacco-use programs, reward/penalty cannot exceed 50% • Cost of coverage is Employee + Employer (without 2% COBRA admin)
  14. 14. #2 - Amount of Incentive • EXAMPLE: – Employee premium $150 – Employer premium $550 (Total premiums $700) • Reward limit is $210 for health-based • Reward limit is $350 for tobacco use
  15. 15. #3 - Reasonable Design to Promote Health • Must have “reasonable chance” of improving health or preventing disease • Must not be overly burdensome • Must not be a subterfuge for discriminating based on a health factor • Must not be highly suspect in the method chose to promote health/prevent disease
  16. 16. #4 – Participant Disclosures • Plan must disclose availability of alternative standard in materials describing the wellness program (but not SBC) • Must include contact information • Must include statement that the recommendations of an individual’s doctor will be accommodated • New Safe Harbor language
  17. 17. #5 - Reasonable Alternative Standard (RAS) • The incentive must be available to ALL similarly situated individuals – This is accomplished by providing a reasonable alternative standard (RAS) • [NOTE: This is where the difference between activitybased and outcome-based programs comes into play]
  18. 18. Reasonable Alternative Standards Wellness Programs Health-Contingent Activity-Only: Must provide RAS where medically inadvisable or unreasonably difficult Outcome-Based: Must provide RAS to ALL!! Participatory
  19. 19. Reasonable Alternative Standard • Activity-Only – Plan must provide RAS if: • Medically inadvisable for the individual to attempt to satisfy the wellness standard; OR • It is unreasonably difficult due to a medical condition for the individual to obtain the reward – The plan is not required to determine RAS in advance of request, but a RAS must be furnished upon request – Must be reasonable
  20. 20. Reasonable Alternative Standard • What is reasonable? – Facts and circumstances test... • Is time commitment reasonable? • Has employer made program available and free? • If doctor indicates the RAS is not reasonable, must provide RAS that accommodates doctor’s suggestions • RAS may be activity-based or outcome-based
  21. 21. Wellness and the Employer Mandate • Tobacco Usage Incentives – considered for calculation of “minimum value” and “affordability” • All Other Wellness Incentives – NOT considered for calculation of “minimum value” and “affordability” (assume premiums if no incentive/reward)
  22. 22. Wellness Programs as ERISA Plans • Both Participatory and Health-based programs can be ERISA plan if they provide “medical care” (e.g. biometrics, flu shots) – SPDs, plan document, Form 5500, COBRA, – Offered to those in medical plan or entire employee population?
  23. 23. Other Laws to Watch • Americans with Disabilities Act (ADA) • Age Discrimination in Employment Act (ADEA) • Genetic Nondiscrimination Information Act (GINA) • HIPAA Privacy • Tax – Gift card programs • State Laws – CA pending legislation
  24. 24. Questions For additional questions or comments send email to
  25. 25. Save the Date for the 6th Annual Corporate Wellness Conference For more information visit