A Taxonomy of Health Wellness Programs - Part 1

A health wellness program is broadly defined as any program of health promotion or disease prevention. In a recent article entitled "Health Wellness Programs - An Introduction and a Resource", I reviewed certain characteristics common to health wellness programs (hereinafter referred to as "Wellness Programs"). In this article, I am going to review the classification of Wellness Programs under the Health Insurance Portability and Accountability Act ("HIPAA").

From a legal perspective, Wellness Programs are initially divided into two classes: (1) programs that are part of (or constitute) a group health plan; and (2) programs that are not part of a group health plan. The U.S. Department of Labor notes that some employers operate a Wellness Program as "an employment policy separate from its group health plan(s)". For example, some employers provide or subsidize healthier food choices in cafeterias, provide pedometers to encourage exercise, pay for gym memberships, or ban smoking at employer facilities.

While these employment policies are not subject to the provisions of HIPAA, these policies (which are not part of a group health plan) may be subject to the provisions of other Federal or State discrimination laws, such as the Americans with Disabilities Act. Thus, the legal compliance analysis does not end upon a determination that a Wellness Program is not part of a group health plan.

In addition, many employers offer multiple health wellness benefits which raises an issue as to whether there is a single Wellness Program or multiple programs (including whether the wellness benefits are a part of a group health plan and subject to HIPAA). If an employer offers multiple health wellness benefits, the employer should review each wellness benefit (with an emphasis on the reward under the program) to determine if the benefit is a part of its group health plan (and thereby subject to HIPAA).

If a Wellness Program is part of (or constitutes) a group health plan, the program must comply with the HIPAA prohibitions against discrimination based on a health factor. Generally, HIPAA prohibits a group health plan from discriminating with respect to eligibility for plan participation, eligibility for benefits, or the amount of premiums and contributions based on any health factor (e.g., health status, medical conditions, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability).

Significantly, the HIPAA regulations provide an exception from the health factor discrimination prohibition for Wellness Programs which meet certain requirements. See 29 CFR Section 2590.702 (the "HIPAA Regulations"). The HIPAA Regulations divide Wellness Programs into two general categories: "participatory wellness programs" and "health-contingent wellness programs".

Under the HIPAA Regulations, a "participatory wellness program" is a Wellness Program under which there are no conditions for obtaining a reward (or the program does not provide a reward) that are based on the participant's satisfaction of a standard that is related to a health factor. The HIPAA Regulations provides that participation in a "participatory wellness program" must be available to all similarly situated individuals, regardless of health status. Generally, it is relatively easy to structure a HIPAA compliant "participatory wellness program" (i.e., no restrictions on participation).

Examples of "participatory wellness programs" include (1) health educational programs (e.g, exercise, diet, stress reduction, substance abuse, etc.); (2) diagnostic testing programs that provide a reward for participation and does not base any part of the reward on the test results; and (3) health risk assessment programs which provide a reward for completing the assessment without a requirement for further employee action with respect to any identified health issues.

In contrast, the HIPAA Regulations define a "health-contingent program" as a "program that 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)". The HIPAA Regulations further divide "health contingent wellness programs" into two classes:(1) "activity-only wellness programs"; and (2) "outcome-based wellness programs".

An "activity-only wellness program" 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". A typical "activity-only wellness program" would be a walking program where participants are given a pedometer and receive rewards for meeting certain goals (such as 10,000 steps per day). Other examples of "activity-only wellness programs" include diet or exercise programs where a participant must attend a certain number of events to obtain the reward.

"Outcome-based wellness programs" require "an individual to attain or maintain a specific health outcome in order to obtain a reward". A common "outcome-based wellness program" is a smoking cessation program with a tobacco use surcharge (i.e., smokers pay a higher health plan premium); but smokers can obtain a waiver of the surcharge (the reward) by attending a smoking cessation program (an alternative standard, noted below). Other examples of "outcome based wellness programs" include diagnostic tests with a requirement that certain results be obtained (e.g., cholesterol levels) or satisfying a body mass index (BMI) standard.

Under HIPAA Regulations, an "activity-only wellness program" and an "outcome-based wellness program" must: (1) give all eligible individuals an opportunity to qualify for the reward at least once per year; (2) limit the size of the rewards to a percentage of the cost of coverage under the group health plan;(3) be reasonably designed to promote health or prevent disease; (4) be uniformly available (including providing an alternative standard for obtaining the reward for individuals that it is unreasonably difficult or medically inadvisable to attempt to satisfy the standard); and (5) provide notice of the availability of a reasonable alternative standard to qualify for the reward. While a review of these five requirements is beyond the scope of this article, many employers address the uniformly available requirement (items (4) and (5) above) by noting the availability of an alternative standard in all program notices and permitting the participants (and their physicians) to propose appropriate alternative standards.

In summary, Wellness Programs can either be part of a group health plan (which is subject to HIPAA) or be an employment policy (which is not part of a group health plan and not subject to HIPAA). HIPAA Wellness Programs are either "participatory wellness programs" or "health contingent programs" (which are either "activity-only wellness programs" or "outcome-based wellness programs").

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