Wellness programs sponsored by employers are growing in popularity. The Patient Protection and Affordable Care Act expanded the opportunities for employers to sponsor wellness programs. In April, the IRS, along with the U.S. Departments of Health and Human Services (HHS) and Labor (DOL), released frequently asked questions (FAQs) about wellness programs.
Wellness programs are generally offered through employer-provided health plans as a means to help employees improve health and reduce health care costs. Participatory wellness programs generally are available without regard to an individual’s health status. These include programs that reimburse for the cost of membership in a fitness center; that provide a reward to employees for attending a monthly, no-cost health education seminar; or that reward employees who complete a health risk assessment, without requiring them to take further action.
Another type of wellness program is health-contingent wellness programs. These programs generally reward individuals who meet a specific standard related to their health. Examples of health-contingent wellness programs include programs that provide a reward to those who do not use, or decrease their use of, tobacco, or programs that reward those who achieve a specified health-related goal, such as a specified cholesterol level, weight, or body mass index, as well as those who fail to meet such goals but take certain other healthy actions.
The agencies issued final regulations in 2013 (T.D. 9620). The final regulations apply to group health plans (both insured and self-insured) and to group health insurance issuers. Under the final regulations, participation in a wellness program must be made available to all similarly-situated individuals, regardless of health status.
In the FAQs, the agencies explained that a health-contingent wellness program must be reasonably designed to promote health or prevent disease. The agencies described some programs that would be contrary to the goals of wellness programs under the Affordable Care Act. For example, a wellness program designed to discourage enrollment in the plan or program by individuals who are sick or potentially have high claims experience would not be considered reasonably designed, the agencies explained. Programs that require unreasonable time commitments or travel may be considered overly burdensome, they added.
FAQs about Affordable Care Act Implementation (Part XXV), http://www.dol.gov