wellness programs after the aca callan carter september 17, 2014 trucker huss

Wellness ProgramsAfter the ACA

Callan CarterSeptember 17, 2014

Trucker Huss

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Callan CarterTrucker Huss

[email protected]

Agenda

• Key terms and definitions• Workplace wellness programs in general• Basics of a wellness program under HIPAA post-

ACA• Penalties for non-compliance• ADA considerations• GINA considerations• Experience and tips• Questions

Price Tag on Chronic Conditions

• More than 75% of the annual U.S. medical costs goes toward treating people with chronic conditions

• Related productivity losses – including absenteeism and reduced work output – cost U.S. employers $1,685 per employee per year, or $225.8 billion annually

• Related productivity losses are 4 times higher for individuals with chronic conditions compared with healthy individuals

• Given the price tag, more employers are implementing wellness programs – about 75% of employers with more than 50 employees

Key Terms

• ACA – Affordable Care Act (a collective term for the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010)

• ADA – Americans with Disabilities Act (a collective term for the Americans with Disabilities Act of 1990 and the ADA Amendments Act of 2008)

• GINA – Genetic Information Nondiscrimination Act of 2008

• HIPAA – Health Insurance Portability and Accountability Act of 1996

Definitions

• Chronic condition – condition that lasts one year or more and requires ongoing medical attention or limits activities of daily living or both

• Disability (per ADA) – a physical or mental impairment that substantially limits one or more major life activities; a record of such impairment; or a perception of such impairment

• Medical Care – provision of or payment for the diagnosis, cure, mitigation, treatment or prevention of disease (including transportation costs for such care)

• Group health plan – an employee welfare benefit plan which provides medical care for which 2 or more employees are eligible

Workplace Wellness Programs Defined

• Programs generally characterized by

○ Health promotion – aimed at fostering better overall health through behavior change

○ Disease prevention – aimed at either

preventing the onset of particular diseases or

diagnosing and treating particular diseases at early stages before complications occur

Types of Workplace Wellness Programs

• Lifestyle management (e.g., encouraging exercise, a healthy diet and stress-reduction techniques)

• Disease management (e.g., supporting persons with chronic illnesses to take medication routinely to avoid further complications)

• Health data collection (e.g., health risk assessment (HRA), biometric screening)

• Online or phone health & wellness resources (e.g., a one-stop website or phone line for health information)

• On-site clinics• Employee assistance programs (EAPs)

Features of Workplace Wellness Programs

• Often programs are combined○ HRA/biometric screening followed by personal health

coaching• Often tangible rewards are offered

○ If employee signs up for a health club, employer will help pay for the club dues

• Program may or may not include medical care• More stringent regulations apply if program is

considered a group health plan because program ○ Provides or pays for medical care; OR○ Is “connected to” or “part of” an employer-sponsored

major medical plan

Wellness Programs that are Group Health Plans

EXAMPLES:

• Personal consultations with trained professionals regarding nutrition, lifestyle changes, and related issues involving medical care

• HRAs or biometric screenings with follow-up individualized health coaching

• EAP offering mental health counseling through trained professionals

• On-site clinic providing medical care

• Health education seminar which is paid for with employer-sponsored medical plan assets

Wellness Programs that are NOT Group Health Plans

EXAMPLES:

• Health education seminars offered to all employees

• Program offers rewards if employee walks a certain number of miles

• Providing employees with pedometers

• Payment of health club dues for employees in general

• Online health resources or health-related newsletters

• Referral-only EAP

Regulation of Workplace Wellness Programs

• Several laws and agencies which impact workplace wellness programs: DOL, IRS, EEOC, HHS

• Most comprehensive treatment of wellness programs is found under HIPAA

• EEOC regulations on wellness programs and ADA due summer 2014

Basics of a Wellness Program under HIPAA

• HIPAA generally prohibits group health plans from discriminating against participants in eligibility, benefits or premiums based on a health factor

• However, a group health plan with an associated wellness program that complies with HIPAA is allowed to provide certain rewards to qualifying participants based on a health factor

• ACA and the relevant regulations (“ACA Final Regulations”) enhance incentives (rewards) and further clarify the rules of any wellness program that is considered a group health plan

Intention of the ACA Final Regulations

• From the Preamble to the ACA Final Regulations

“regardless of the type of wellness program, every individual participating in the program should be able to receive the full amount of any reward or incentive, regardless of any health factor.”

Key Terms

• Reward – getting a positive (e.g., premium discount, cash payment) and/or avoiding a negative (e.g., surcharge)

• Health factors – health status, medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability

• Similarly situated individuals – a distinct group of individuals who may or may not be eligible for a wellness program. For example, employees, enrollees in a particular benefit option (e.g., HMO or PPO), spouses, and children each constitute a distinct group

Wellness Program Defined under

ACA & HIPAA

• Wellness program – a program designed to promote health or prevent disease

• Two types of group wellness plans subject to ACA Final Regulations:○ Participatory program○ Health-contingent program

Participatory Wellness Program

• Participatory program – ○ does not require an individual to meet a health factor

in order to get a reward or does not provide a reward○ must be offered to all similarly situated individuals

• It is automatically deemed as satisfying HIPAA’s nondiscrimination requirements

• Examples include:○ Reimbursement of health club memberships○ Reimbursements for smoking-cessation programs

(regardless of outcome)

Participatory Wellness Program

• Examples – cont’d○ A program that rewards employees for attending a

monthly, no-cost health education seminar○ A program of monthly, no-cost health education

seminars (no reward other than attendance)○ A program encouraging preventive care through

waiver of the copayment or deductible requirement under a group health plan (e.g., for prenatal care or well-baby visits)

○ A program that rewards employees for completing a health risk assessment – no further action required

Health-Contingent Wellness Programs

• Health-contingent program – a wellness program which requires an individual to satisfy a standard related to a health factor in order to receive a reward

• Formerly known as “standards-based wellness program” pre-ACA

• Health contingent wellness programs are now subdivided into two groups: ○ activity-only; and

○ outcome-based

• These sub-classifications were introduced by the ACA Final Regulations


Activity-Only • Just requires an individual to complete an activity

related to a health factor in order to obtain a reward

• Examples include walking, diet, or exercise programs

• May be challenging for program administrator to verify that individual is completing the activity


Outcome-Based • Requires an individual to reach or maintain a specific

health outcome in order to obtain the reward • Examples include programs which provide a reward

only if the individual attains a healthy weight, refrains from smoking or attains a certain biometric test result

• Relatively easy to verify that individual conforms to the standard

• Must comply with requirements or violates HIPAA

Health-Contingent Wellness Program Requirements

1. Size of Reward

The total reward must not exceed 30% of the cost of coverage under the related group health plan (up from 20% pre-ACA)

If the wellness program is designed to prevent or reduce tobacco use, then the total reward must not exceed 50% of the cost of coverage


2. Reasonable Design

The wellness program must be reasonably designed to promote health or prevent disease. A program meets this standard if it:○ has a reasonable chance of improving health or

preventing disease;○ is not overly burdensome;○ is not a subterfuge for discriminating based on a

health factor; and○ is not highly suspect in the method chosen to

promote or prevent disease


3. Uniform Availability and Reasonable Alternative Standards Rewards must be offered to all similarly situated individualsAn activity-only program must allow a reasonable alternative standard (or waiver of the standard) to obtain the reward for individuals for whom:○ it is unreasonably difficult to meet the standard

because of a medical condition; or○ it is medically inadvisable to attempt to satisfy the

standard


3. Uniform Availability & Reasonable Alternative Standards – cont’d○ Example: Initial standard for an activity-only

program is to run a certain number of miles per week

○ Alternative standard may be to walk those miles (or another activity-only program)

○ Individual may have to be offered a third standard if walking is also unreasonably difficult to meet because of a medical condition


3. Uniform Availability & Reasonable Alternative Standards – cont’d ○ What to do if plan thinks an individual can meet the

activity-only program standard but is faking it?○ If reasonable under the circumstances, a plan may

seek verification from an individual’s personal physician regarding the level of difficulty the individual would experience in satisfying or attempting to satisfy the standard of that activity-only program


3. Uniform Availability & Reasonable Alternative Standards – cont’d○ An outcome-based program must allow a

reasonable alternative standard (or waiver of the standard) to obtain the reward for any individual who does not meet the initial standard based on a measurement, test or screening that is related to a health factor No requirement of unreasonably difficult or medically

inadvisable Failure to meet the initial standard automatically warrants a

reasonable alternative standard.


3. Uniform Availability & Reasonable Alternative Standards – cont’d○ Example: Initial standard for an outcome-based

program is to attain a certain body mass index (BMI)○ If individual fails to meet that standard, an alternative

standard must be offered, for example, attaining a certain cholesterol level

○ Individual must be offered a third standard if the specified cholesterol level not attained


3. Uniform Availability & Reasonable Alternative Standards – cont’d○ If plan thinks an individual is not putting forth enough

effort to meet the standard of an outcome-based program, may the plan seek verification of individual’s medical condition from the personal physician?

○ Answer: N0. Verification may only be reasonable in the context of an activity-only program


3. Uniform Availability & Reasonable Alternative Standards – cont’d○ Alternative standard need not be the same type of

program as the initial standard

○ Example: Initial standard may be to run miles (activity-only). Alternative standard may be to attain a certain cholesterol level (outcome-based) or to attend a health education seminar (participatory)

○ Specific program rules apply to each standard, whether initial or alternative (e.g., if alternative standard is outcome-based, then all of the outcome-based rules apply to the alternative standard)


3. Uniform Availability & Reasonable Alternative Standards – cont’d

If the reasonable alternative standard to an outcome-based program is, itself, another outcome-based program, the following two special rules also apply:

(i) More time to meet alternative standard

The alternative outcome-based program cannot be a requirement to meet a different level of the same standard without extra time to comply, considering the individual’s circumstances.


3. Uniform Availability & Reasonable Alternative Standards – cont’d(ii) Opportunity for physician involvement

The plan must give an individual the opportunity to comply with the recommendations of the individual’s personal physician, as a second reasonable alternative standard in lieu of the plan’s default reasonable alternative standard.


3. Uniform Availability & Reasonable Alternative Standards – cont’d○ Payment of the Reward and Timing

Full reward must be available under a health-contingent wellness program to individuals who qualify by satisfying an alternative standard as is provided to individuals who qualify by satisfying the program’s initial standard

This may result in a retroactive payment of the reward


4. Notice of Availability of Alternative Standards○ A notice of availability of alternative standards must

be in all plan materials describing the terms of a health-contingent wellness program

○ If plan materials merely mention that a program is available, without describing its terms, this notice is not required

○ For outcome-based wellness programs, the notice must also be included in any communication to an individual that he/she did not satisfy an initial outcome-based standard


4. Notice of Availability of Alternative Standards – cont’d○ Model Disclosure Language: Your health plan is

committed to helping you achieve your best health. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at […] and we will work with you (and, if you wish, with your doctor) to find a wellness program with the same reward that is right for you in light of your health status.


5. Frequency of Opportunity to Qualify

○ All individuals who are eligible for a health-contingent wellness program must be provided an opportunity to qualify for the program’s reward at least once per year

• IRS Excise Taxes of $100 per day of noncompliance for each individual to whom the HIPAA nondiscrimination failure relates. For unintentional failures, the maximum excise tax is the lesser of: ○ 10% of the amount paid during the preceding tax year by

the employer for group health plans; or

○ $500,000

• DOL Enforcement Action○ Under ERISA, the DOL may bring a civil action to enforce

the applicable HIPAA nondiscrimination requirements found in ERISA

Potential Penalties for Group Health Plans

ADA Considerations

Two key rules under ADA relevant to wellness programs:

1. ADA prohibits an employer from requiring medical examinations or answers to disability-related medical inquiries unless

○ to determine an employee’s ability to perform job; or

○ part of a voluntary wellness program

2. ADA generally prohibits employment discrimination against individuals with disabilities – including in the area of employee compensation and benefits

○ Safe harbor for bona fide benefit plans

Voluntary Wellness Program

• ADA permits collection of health data through medical examinations and disability-related inquiries which are part of an employee health program (e.g., a wellness program) if:1. participation in program is voluntary

2. the collected information is maintained according to ADA’s confidentiality requirements

3. the collected information is not used to discriminate against the employee

Uncertainty re “Voluntary”

• Neither the ADA nor existing EEOC guidance provides a detailed analysis on how to determine whether participation in a wellness program is considered “voluntary” under ADA

• Per the EEOC’s existing guidance, a wellness program is voluntary as long as participation is not required and there are no penalties for not participating

• Informal EEOC discussion letters have stated that requiring completion of a HRA or submission to biometric screening in order to obtain health coverage is not “voluntary” and thus would violate ADA

• Formal EEOC guidance expected this summer

No Discrimination Against the Disabled

• Participants with disabilities should have equal access to wellness program benefits, for example:○ Onsite clinics or employer-sponsored health clubs should

be accessible to participants with disabilities○ Employer-sponsored online or phone health and wellness

resources should accommodate the needs of sight-disabled or hearing-disabled participants

• More requirements should not be imposed upon participants with disabilities to get equal benefits, for example:○ Participants with disabilities should not be required to get

personal physician approval before getting advice from employer sponsored dietician if such approval not required for non-disabled participants

Uncertainty re ADA Safe Harbor & Wellness Programs

• No existing EEOC guidance on how to determine whether a wellness program satisfies the ADA

• Case law:– Seff v. Broward County, the federal district court held that

a wellness program’s data collection methods satisfied the ADA safe harbor requirements

– In a new complaint filed by EEOC (EEOC v. Orion Energy Systems, Inc.), the EEOC alleges that a health risk assessment, medical history, blood draw and range of motion machine violate the ADA if the non-participation consequences are payment of 100% of premium and employment termination.

Seff v. Broward County Case

• In October 2009, Broward County implemented a wellness program that included an HRA questionnaire and a biometric screening

• The wellness program was administered and paid for by Broward County’s health insurer

• Participation in the wellness program was not required to participate in the group health plan

• Wellness program was offered only to enrollees in the plan

• No individual information, only de-identified aggregate information, was provided to the County, the employer


• In June 2010, Broward County implemented financial incentives to increase participation in wellness program○ Employees who did not complete an HRA

questionnaire and undergo a biometric screening would incur a surcharge on health plan premiums of $20 per bi-weekly pay period

• In August 2010, Bradley Seff filed a class action lawsuit alleging Broward County violated the ADA by requiring employees to undergo a medical examination and making medical inquiries of its employees


• On April 11, 2011, the United States District Court for the Southern District of Florida granted summary judgment in favor of Broward County

• The District Court found that the wellness program came within the ADA safe harbor for a bona fide benefit plan and that the data collection was based on underwriting risks, classifying risks, or administering such risks

• On August 20, 2012, the United States Court of Appeals for the Eleventh Circuit affirmed the District Court’s decision


• This is a case of first impression, i.e., the first case to decide how the ADA safe harbor for a bona fide benefit plan might apply to a wellness program offered under an employer’s group health plan

• In this case the courts did not address whether the data collection was voluntary

• This decision is only binding in the Eleventh Circuit which includes Alabama, Florida and Georgia

GINA Considerations

• GINA limits the use of genetic information by group health plans (Title I) and by employers (Title II)

• Genetic information means information about the individual’s genetic tests, the genetic tests of the individual’s family members, and the individual’s medical family history

• GINA’s purpose is to ensure that individuals do not avoid genetic testing or counseling because they fear health plan or employment discrimination

• GINA prohibits differences in premiums and deductibles based on genetic information

Meeting GINA’s Requirements (Title I)

• Designing Wellness Programs to comply with GINA○ If Health Risk Assessment (“HRA”) contains

questions regarding genetic information, a reward or incentive cannot be provided to participants in exchange for completion of HRA An employee’s genetic information includes both

the employee’s medical history and the spouse’s medical history because the spouse is considered the employee’s family member

GINA allows for “bifurcated” HRA


• Designing Wellness Program to comply with GINA○ An employee cannot be required to complete HRA

containing questions regarding genetic information prior to his or her enrollment in group health plan

○ If employee completes HRA containing genetic information questions, he or she cannot become eligible for additional benefits under group health plan (e.g., eligibility for Disease Management Program) based on his or her answers to the HRA

○ Employee’s completion of genetic information portion of HRA must be voluntary


• Designing Wellness Program to comply with GINA○ Group health plan cannot generally request or require

an employee to undergo a genetic test○ Exceptions:

Health care professionals in course of providing health care services

Making determination regarding payment Research purposes

Experience of Wellness Programs

• The Preamble to the ACA Final Regulations acknowledges that evidence on the effectiveness of wellness programs is promising but not yet conclusive

• Wellness programs may bring down inpatient costs but equally increase outpatient costs

• Employer savings from these programs may result more from cost shifting to unhealthy workers, rather than from healthier outcomes and reduced health care usage

• According to a 2010 study, medical costs fall by about $3 for every $1 spent on wellness programs

General Tips for Success

• Plan on a long term basis (e.g., 5 to 10 years)• Be ready and willing to make a significant financial

commitment• Get the active support and involvement of top

organizational leaders and middle managers• Conduct a strong, internal marketing campaign• Focus on specific, measurable outcomes• Use biometric screenings (do not rely on health risk

assessments alone)

General Tips for Success

• Maintain an individual focus (including some personal health coaching and opportunities to repeat relevant, targeted programs, such as a weight-loss program)

• Include geographic, cultural, industry and profession considerations in the design and operation, especially re team approaches

• Ensure program is legally sound

• Periodically evaluate and improve the program

Disclaimer

• These materials have been prepared by Trucker Huss, APC for informational purposes only and constitute neither legal nor tax advice

• Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship

• Anyone viewing this presentation should not act upon this information without seeking professional counsel

• In response to new IRS rules of practice, we hereby inform you that any federal tax advice contained in this writing, unless specifically stated otherwise, is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding tax-related penalties or (2) promoting, marketing or recommending to another party any tax-related transaction(s) or matter(s) addressed herein

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Callan CarterTrucker Huss

One Embarcadero Center, 12th FloorSan Francisco, CA 94111-3617

Telephone: 415-277-8037Email: [email protected]

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wellness programs after the aca callan carter september 17, 2014 trucker huss

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