Structuring Employee Wellness Programs: Impact of Final DOL and HHS Regulations Complying with New ACA Mandates and Navigating Other Laws Affecting Program Design and Implementation Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. TUESDAY, NOVEMBER 5, 2013 Presenting a live 90-minute webinar with interactive Q&A Kate Saracene, Counsel, Nixon Peabody, Rochester, N.Y. Allison Ullman, Counsel, Crowell Moring, Washington, D.C.
89
Embed
Structuring Employee Wellness Programs: Impact of Final ...media.straffordpub.com/products/structuring...Nov 05, 2013 · smoking cessation program regardless of whether employee
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Structuring Employee Wellness Programs:
Impact of Final DOL and HHS Regulations Complying with New ACA Mandates and Navigating Other Laws
• Provides that a “reward” under wellness programs includes both providing a reward (such as a discount or rebate of a premium or contribution) and imposing a penalty (such as a surcharge)
21
Wellness Programs under the ACA: Final Regulations
• Participatory Wellness Programs
• None of the conditions for obtaining a reward is based on satisfying a standard relating to a health factor; or
• Wellness program does not provide a reward
• Only requirement is that participation in the program is made available to all similarly situated individuals, regardless of health status
22
Wellness Programs under the ACA: Final Regulations
• Examples of Participatory Wellness Programs – Reimbursement of fitness center membership costs
– Reward for diagnostic test regardless of outcome
– Reimbursement of cost of, or reward for, participating in smoking cessation program regardless of whether employee quits smoking
– Reward for attending a monthly no-cost health education seminar
– Reward for HRA without further action (education or otherwise) required as to health issues identified
– Program that encourages preventive care through waiver of copayment or deductible for costs of, for example, prenatal care or well-baby visits
23
Wellness Programs under the ACA: Final Regulations
• Health-Contingent Wellness Programs
– Requires an individual to satisfy a standard related to a health factor to obtain a reward; or
– Requires an individual to undertake more than a similarly situated individual based on a health factor in order to obtain the same reward
– There are two types of health-contingent wellness programs
• Activity-only wellness program
• Outcome-based wellness program
24
Wellness Programs under the ACA: Final Regulations
• Activity-Only Wellness Programs
– Type of health-contingent wellness program that requires an individual to perform or complete an activity related to a health factor in order to obtain a reward, but
– Does not require the individual to attain or maintain a specific health outcome
– Examples: walking, diet, or exercise programs, which some individuals may be unable to participate in or complete (or have difficulty completing) due to a health factor, such as severe asthma, pregnancy, or a recent surgery
25
Wellness Programs under the ACA: Final Regulations
• Outcome-based wellness programs
– Type of health-contingent wellness program that requires an individual to attain or maintain a specific health outcome in order to obtain a reward
– Examples: Not smoking or attaining certain results on biometric screenings
– If a measurement, test, or screening is used as part of an initial standard, and individuals who meet the standard are granted the reward, the program is an outcome-based program
– This holds even if compliance with an educational program or an activity is offered as an alternative to achieve the same reward for individuals who do not attain or maintain the specific health outcome
26
Wellness Programs under the ACA: Final Regulations
• Health-Contingent Standards – Same over-arching standards apply to both activity-only
and outcome-based programs
– HOWEVER, the final rules impose material differences in how these standards must be administered for activity-only versus outcome-based programs (e.g., how to provide a reasonable alternative standard)
– Thus, there are some VERY important differences in how activity-only and outcome-based programs must be implemented
27
Wellness Programs under the ACA: Final Regulations Health-Contingent Standards
1. Must give individuals an opportunity to qualify for the FULL reward at least once per year
Activity-Only
Outcome-Based
28
Wellness Programs under the ACA: Final Regulations Health-Contingent Standards
2. The reward for all health-contingent programs with respect to a given individual may not exceed 30%
– Based on total cost (including employer and employee premium share) of self-only coverage
• If, however, spouses and dependents may participate in the wellness program, then based on total cost of coverage in which dependents and spouse are enrolled
– BUT…. If smoking cessation program, can go as high as 50%
Activity-Only
Outcome-Based
29
Wellness Programs under the ACA: Final Regulations Health-Contingent Standards
3. The program must be reasonably designed to promote health or prevent disease
– 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 chosen to promote health or prevent disease
Activity-Only
Outcome-Based
30
Wellness Programs under the ACA: Final Regulations Health-Contingent Standards
4. The reward must be available to all similarly situated employees
– This is accomplished by providing a reasonable alternative standard (RAS)
Activity-Only
Outcome-Based
** Note: This is where most of the differences arise between the two types of health-contingent programs
31
Wellness Programs under the ACA: Final Regulations Health-Contingent Standards
5. Must provide adequate notice of availability of reasonable alternative standard
– Must disclose availability of RAS in all plan materials describing wellness program terms
– Must include contact information for obtaining a RAS
– Must include statement that the recommendations of an individual’s physician will be accommodated
– For outcome-based programs, must include RAS notice in any disclosure that individual did not satisfy initial standard
Activity-Only
Outcome-Based
32
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
33
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
34
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
35
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• For Activity-Only:
– The plan must provide a RAS if:
1. It is medically inadvisable for the individual to attempt to satisfy the plan standard; OR
2. It is unreasonably difficult due to a medical condition for the individual to obtain the reward
– The plan is not required to determine a RAS in advance of request, but a RAS must be furnished upon request
– “If reasonable under the circumstances,” the plan may require physician verification that RAS is needed
36
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• For Activity-Only:
– Facts and circumstances test on reasonableness of RAS, including:
• Whether required time commitment is reasonable
• If the RAS is an education program, must make such program available or assist individual in finding program – and may not require individual to bear the cost of the program
• If the RAS is a diet program, must pay cost of membership or participation fee, but not food
• If individual’s physician states that a plan standard is not medically appropriate, must provide RAS that “accommodates” the recommendations of the physician
** NEW **
37
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• For Activity-Only:
– RAS may be participation-only, activity-only OR outcome-based program
• If RAS1 is participation-only, then participant either participates or does not; no further action is required
• If RAS1 is another activity-only program, then need to provide RAS2 to RAS1, BUT only if the activity-only RAS1 is medically inadvisable or unreasonably difficult
• If RAS1 is an outcome-based program, need to comply with rules for outcome-based programs (by providing, in part, RAS2)
38
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
Plan requires individuals to walk one mile once a week
39
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
Individual says they can’t meet the standard. What next? Depends…
40
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
41
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
Assume the plan chooses the activity-only RAS (i.e., moderate exercise once weekly of any type), but individual still says he or she can’t do it. What next? Depends…
42
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
Of course, the plan can always waive an initial standard or RAS …
43
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
I have the perfect solution….
44
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• For Outcome-Based:
– If eligibility for reward is based on initial screening or test (such as BMI, cholesterol, blood pressure), then:
• MUST provide a RAS REGARDLESS of whether it is unreasonably difficult or medically inadvisable to achieve the outcome
• Thus, CANNOT require physician verification
– The plan is not required to determine a RAS in advance of request, but a RAS must be furnished upon request
** NEW **
45
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• For Outcome-Based:
– Facts and circumstances test on reasonableness of RAS, including:
• Whether required time commitment is reasonable
• If the RAS is an education program, must make such program available or assist individual in finding program – and may not require individual to bear the cost of the program
• If the RAS is a diet program, must pay cost of membership or participation fee, but not food
• If individual’s physician states that a plan standard is not medically appropriate, must provide RAS that “accommodates” the recommendations of the physician
46
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• For Outcome-Based:
– RAS may be participation-only, activity-only OR outcome-based program
• If RAS1 is participation-only, then participant either participates or does not; no further action is required
• If RAS1 is an activity-only program, then need to provide RAS2 to RAS1, BUT only if the activity-only RAS1 is medically inadvisable or unreasonably difficult
47
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• For Outcome-Based: (Cont’d)
– RAS may be participation-only, activity-only OR outcome-based program
• If RAS1 is an outcome-based program, then the outcome-based RAS1 must comply with final rules as if it were the initial standard, i.e., the plan must provide a RAS2 to the RAS1
• Additionally, it must adhere to two “special rules”
1. The RAS cannot be a requirement to meet a different level of the same standard without additional time to comply and that takes into account individual’s circumstances
• E.g., if initial standard is BMI < 30, then cannot be required to achieve BMI <31 on same date; however, could have standard be “small amount or small percentage” of BMI reduction over a realistic period of time, such as within a year
2. An individual must be given the opportunity to comply with the recommendations of the individual’s physician as a second RAS
• Physician must “join[] in the request” for this second RAS
• The individual can make a request to involve his personal physician at any time and the physician can adjust the physician’s recommendations at any time “consistent with medical appropriateness”
48
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
Initial Standard is a BMI < 30
49
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
It’s not medically inadvisable or unreasonably difficult for Bob to reduce his BMI to 30 …
50
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
Doesn’t matter. The new final rules require the plan to make available a RAS …
51
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
Plan could offer a RAS that is participation-only, activity-only or outcome-based
52
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
If choose participation-only RAS…
53
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
If choose activity-only RAS …
54
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
If choose activity-only RAS …
55
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
If choose outcome-based RAS …
56
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
If choose outcome-based RAS …
57
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• Example:
If choose outcome-based RAS …
I have the perfect solution….
58
Wellness Programs under the ACA: Final Regulations Reasonable Alternative Standards
• So when/how does the plan “turn off the spigot to RAS”?
– If offer participation-only program
– If activity-only initial standard or activity-only RAS and either (i) standard/RAS is not medially inadvisable or unreasonably difficult, or (ii) individual fails to get doctor verification
– If waive initial standard or waive RAS
– If individual joins with personal physician to recommend an alternative and the plan accommodates such recommendations
• Remember: Need reasonable design!
59
Section divider slide
Place image here
Size: 2.19” x 2.19”
Position: horizontal 0”
vertical 1.93”
Compliance with Other Laws
Kate Saracene, Esq.
61
HIPAA – Administrative Simplification (i.e.,
Privacy and Security)
• Privacy Rule and Security Rule
› Group Health Plans are generally subject to the HIPAA
Privacy Rule and the Security Rule.
› This means that GHP wellness plans must have certain
things, including:
– Plan document language creating “firewall” between the employer
and the plan;
– Training for employees with access to Protected Health
Information;
– Notice of Privacy Practices;
– Privacy and security officers;
– Privacy, security and breach policies and procedures;
– Business Associate Agreements with plan vendors.
62
COBRA – Continuation Coverage
• (Non-Church Plan) Group Health Plans, including
wellness plans, are subject to COBRA continuation
coverage requirements:
› Initial/general COBRA notice provided to all participants;
› COBRA election notice provided upon the occurrence of a
“qualifying event” by a “qualified beneficiary”;
› Continuation coverage from 18-36 months, depending upon
the qualifying event;
› Calculation of the “applicable premium”;
› Employers with fewer than 20 employees are exempt.
63
Americans with Disabilities Act (ADA)
• Prohibits covered entities from denying, on the basis of
disability, qualified individuals with disabilities an equal
opportunity to participate in, or receive benefits under,
programs or activities conducted by those entities
64
ADA – Reasonable Accommodation
• A wellness or program that requires disabled individuals to
participate in order to attain benefits equal to those offered
to nondisabled individuals might be found to violate the
ADA in some circumstances.
› Examples:
– participation in a 5k run/walk might be difficult due to many
disabilities;
– consider whether a mobility impaired employee will be able to
access the facility where a class is taking place;
– A reasonable alternative standard may be required when an
employee’s disability prevents them from participating in a
class or screening that is held while the employee is on
disability leave.
65
ADA – Disability-Related
Inquiries and Medical Examinations
• The ADA limits the circumstances under which an
employer may:
› Make disability-related inquiries; or
– (e.g., questions about current health status asked as part of
a Health Risk Assessment)
› Conduct medical examinations
– (e.g., biometric screenings such as blood pressure and
cholesterol screening to determine whether an employee
has achieved certain health outcomes).
66
ADA – Disability-Related
Inquiries and Medical Examinations
• Employers are permitted to conduct disability-related
inquiries and medical screenings only as part of an
employee health program when:
› participation is “voluntary;”
› information is maintained according to the confidentiality
requirements of the ADA; and
› the information is not used to discriminate against an
employee (e.g., employees with disabilities should not be
required to complete additional requirements to receive
benefits that are generally available to non-disabled
individuals).
67
ADA – Disability-Related
Inquiries and Medical Examinations
• The EEOC has issued guidance indicating that a wellness
program is voluntary “as long as an employer neither
requires participation nor penalizes employees who do
not participate.”
› Neither the ADA nor its regulations provide any detail
regarding how to determine whether inquiries and screenings
are “voluntary.”
› However, the EEOC has issued three opinion letters that
shed a small amount of light on the matter.
68
ADA – Disability-Related
Inquiries and Medical Examinations
• First, the EEOC has indicated that participation in health
questionnaires and screenings is not voluntary where it is
a prerequisite for participation in an employer’s group
health plan or for receiving reimbursements from a
medical expense account.
› The EEOC indicated these arrangements were problematic
because individuals who did not participate would be “denied
a benefit.”
› Thus, we know that participation in a wellness program
cannot be a prerequisite for health plan coverage or for an
employer Health Reimbursement Account (HRA) contribution.
69
ADA – Disability-Related
Inquiries and Medical Examinations
• Second, the EEOC indicated it was adopting the HIPAA
standards for determining whether monetary incentives affected
voluntariness.
› The EEOC later rescinded that opinion letter, however,
because this issue was not the subject of the inquiry.
› At that time, the agency indicated that it was “continuing to
examine what level, if any, of financial inducement to
participate in a wellness program would be permissible
under the ADA.”
• Third, the EEOC stated earlier this year that it “has not taken a
position on whether and to what extent a reward amounts to a
requirement to participate, or whether withholding the reward
from non-participants constitutes a penalty, thus rendering the
program involuntary.”
70
ADA – Disability-Related
Inquiries and Medical Examinations
• It is not clear at this point whether monetary incentives are
permitted, and there is some risk that offering any type of
monetary incentives to participate in a wellness program
will violate the ADA.
• We think it is more likely, however, that the EEOC will
ultimately adopt the HIPAA/ACA standard, which permits
participation incentives that are tied to health plan
premiums, so long as the incentive is less than 30% of the
applicable premium (50% for tobacco programs).
› However, the EEOC might adopt the same maximum
percentage limits for participation-only programs as the
HIPAA/ACA regulations adopt for health-contingent
programs.
71
Genetic Information
Nondiscrimination Act (GINA)
• Prohibits discrimination in employment,
or under health plan, on the basis of
genetic information.
• GINA compliance standards differ
depending on whether the wellness
program is offered as part of or in
connection with a Group Health Plan
subject to ERISA.
• Before GINA, many employers solicited family medical history
information through a Health Risk Assessment (HRA).
› Some still do.
› Today these HRAs are highly regulated by GINA.
72
GINA – ERISA Wellness Plans
• Post-GINA, Group Health Plans cannot specifically
request or collect any genetic information where:
› A reward is offered for completion of an HRA, or
› The HRA is conducted prior to or in connection with
enrollment (including open enrollment).
• Genetic information is defined very broadly and includes
questions regarding family medical history, whether an
employee has undergone genetic testing, and/or whether
an employee has received genetic services.
73
GINA – ERISA Wellness Plans
• The easiest way for an ERISA wellness
plan to comply with GINA is to simply
not ask questions about genetics and
family history.
› Be careful!
– HRAs commonly ask these questions.
– If there are any open-ended questions
that could invite disclosure of genetic
information in response, the HRA must
include a disclaimer that employees
should not provide any genetic
information in their answer.
74
GINA – ERISA Wellness Plans
› Example: if the HRA included a question like “Have you had
any lab tests this year?” or “Is there any other information
about your health that would help us assess your risks?” then:
– the questions would need to be accompanied by a
statement such as “In answering these questions, you
should not include any genetic information. That is, please
do not include any family medical history or any information
related to genetic testing, genetic services, genetic
counseling, or genetic diseases for which you believe you
may be at risk.”
75
GINA – ERISA Wellness Plans
• This prohibition does not prevent you from requiring a
generic physician certification that a health factor makes it
“unreasonably difficult or medically inadvisable for an
individual to achieve or attempt to achieve a milestone,”
(as discussed above in the HIPAA section).
› However, a statement that genetic information not be
disclosed in the certification should accompany any such
documentation requests.
76
GINA – Non-ERISA Wellness Plans
• GINA provides a limited exception for non-ERISA wellness plans (that are not part of or related to an ERISA wellness plan) to inquire about genetic information, if:
› the employee provides the information voluntarily;
› the individual provides prior knowing, voluntary, and written authorization;
› individually identifiable information is provided only to the individual (or family member receiving the genetic services) and the licensed health care professionals or board-certified genetic counselors providing the services; and
› the individually identifiable information is only available for purposes of the services and is not disclosed to the employer (or other covered entity) except in aggregate terms that do not disclose the identity of specific individuals.
77
GINA – Non-ERISA Wellness Plans
• Under the EEOC's regulations, genetic information
generally is not considered to be provided voluntarily if the
individual is required to provide the information or
penalized for not providing it.
› The regulations explain that this requirement prohibits an
employer from providing a financial inducement to provide
genetic information.
› However…
78
GINA – Non-ERISA Wellness Plans
• An employer can offer a financial inducement to complete
an HRA that includes information about family medical
history or other genetic information, if the form:
› states that the inducement is available whether or not the
individual answers the questions regarding genetic
information;
› is written in a way that the individual is reasonably likely to
understand it;
› describes the information that will be obtained and the
general purposes for which it will be used;
› describes the restrictions that will apply to disclosure of the
genetic information.
79
GINA – Non-ERISA Wellness Plans
• An employer can offer a financial inducement to complete
an HRA that includes information about family medical
history or other genetic information, if the form:
› states that the inducement is available whether or not the
individual answers the questions regarding genetic information;
– Questions must be specifically identified, such as by
segregating them into a separate section;
› is written in a way that the individual is reasonably likely to
understand it;
› describes the information that will be obtained and the general
purposes for which it will be used;
› describes the restrictions that will apply to disclosure of the
genetic information.
80
GINA – Non-ERISA Wellness Plans
• Employers may use the genetic information voluntarily
provided by an individual to guide that individual into an
appropriate disease management program.
› However, if that program offers financial incentives for
participation and/or for achieving certain health outcomes, the
program must also be open to employees with current health
conditions and/or to individuals whose lifestyle choices put
them at increased risk of developing a condition.
81
FLSA
• Establishes rules regarding wage
payment and overtime pay.
• Generally, covered, non-exempt
employees must be paid for all hours
worked and must be paid not less
than time and one-half the
employee's regular rate for time
worked over 40 hours in a workweek.
82
FLSA – Compensable Time
• Although there is not clear authority, time spent
completing wellness activities (e.g., a health risk
assessment) could be regarded as compensable time
under the FLSA.
› Thus, you may want to consider the scheduling of wellness
activities (e.g., health risk assessments) during working
hours.
› It is even less clear whether yoga classes
and the like would be compensable time.
83
FLSA – Overtime Rate
• If you pay a bonus rather than provide a premium
reduction (as would typically happen with a non-GHP
wellness plan), the bonus must be included in calculating
the employee’s “regular rate” for overtime purposes.
› For example, assume an employee gets $100 for participating
in the wellness plan (i.e., essentially a $100 bonus). If the
employee works 2,000 hours during the year, he would be
entitled to an additional $.025 per hour for overtime (i.e.,
[$100/2,000 hours]*.5).
– As a result, many employers choose to offer the wellness
benefit as a premium reduction to those enrolled in the
employer’s health plan, as this will not affect the
employee’s regular rate calculation.
84
Internal Revenue Code (IRC)
• Reductions in Group Health Plan premiums, deductibles
or co-payments for wellness plan participation are
generally tax-free to employees.
• Other types of financial inducements typically associated
with non-GHP wellness plans are generally taxable.
› e.g., cash, gift cards, health club memberships.
• Self-funded GHPs must not discriminate in favor of highly
compensated employees.
• Fully-insured wellness plans must comply with the terms
of the health insurance policies.
85
National Labor Relations Act
• Unionized employers may have
to negotiate with their union
regarding introduction or
amendment of wellness plans.
› Wellness plans are an employee
benefit that would be considered a
term or condition of employment.
› Unilateral action could constitute
an Unfair Labor Practices.
86
State Law Regulation
and ERISA Preemption
• Examples:
› State laws prohibiting discrimination against employees who
use tobacco products.
› State disability discrimination laws that may be more
protective than the ADA.
› State wage & hour laws that require pay for time spent on
wellness activities.
87
State Law Regulation
and ERISA Preemption
• If a wellness plan is subject to ERISA, then state law is
generally preempted if the law “relates to” the terms of the
wellness plan.
› Most, but not all state laws will be preempted:
– e.g., state laws protecting smokers are likely preempted.
– e.g., state laws requiring wage payments are likely not
preempted.
• If the wellness plan is not subject to ERISA, then state law
always applies.
› e.g., non GHPs, Church plans, non-federal governmental