[email protected] inforum presentation: wellness programs april 16, 2015 jim rourke

[email protected]

inFORUM PRESENTATION:WELLNESS PROGRAMS

APRIL 16, 2015

JIM ROURKE

www.nexsenpruet.com 2

I. Introduction

II. Basics of Wellness Programs

a. Calculation of discounts

b. Nondiscrimination

III. Wellness Programs and the ACA

IV. Wellness programs and COBRA

V. Wellness Programs and Title VII/ADEA

VI. Wellness Programs and GINA

VII. Wellness Programs and the ADA

VIII. Wellness Programs and FLSA/NLRA

IX. Alternatives to Wellness Programs

OVERVIEW

www.nexsenpruet.com

Incentives and rewards provided by employers and insurance companies to encourage participation in programs designed to:

Lower health care costs

Improve worker productivity

Provide for employee/dependent engagement in their health and well-being

Ultimate goal: Save Healthcare Costs!

3

WHAT ARE WELLNESS PROGRAMS?


• Discounts or rebates on health care premiums or contributions.

• Credits to health care flexible spending or health reimbursement accounts.

• Waiver of all/part of a cost-sharing mechanism (for example, deductibles, copays or coinsurance).

• The absence of a surcharge for the value of benefits that would otherwise be payable under a group health plan.

• Cash incentives and gift cards (but consider effect on FLSA).

SAMPLE WELLNESS PROGRAM FEATURES


From Report to Congress on Workplace Wellness As Required by PHSA, Section 2705(m)(1):

• According to the employer survey conducted for this study, approximately half of U.S. employers with 50 or more employees offer wellness promotion initiatives . . . 75% of employees in organizations with 50 or more employees work for employers offering wellness programs. Programs often include a combination of wellness screening activities to identify health risks and interventions to reduce risks and promote healthy lifestyles. Wellness benefits can be offered by employers directly to all employees or through group health plans to plan members. According to the survey, less than half of employees (46 percent) in those organizations with a wellness program undergo clinical screening and/or complete a Health Risk Assessment (HRA), and fewer participate in interventions (ranging from 7 to 21 percent). Focus group participants indicate that poor accessibility of wellness activities due to rigid work schedules and wait times limit access to wellness benefits.

WHO IS USING WELLNESS PROGRAMS?


From Report to Congress on Workplace Wellness As Required by PHSA, Section 2705(m)(1):

• Benefits for Employers

• Benefits for Participants

• Benefits to Participant Behavior

But see N.Y. Times – “Do Workplace Wellness Programs Work? Usually Not” September 11, 2014

• “. . .while such programs sound great, research shows they rarely work as advertised”

DO WELLNESS PROGRAMS WORK?


A. General HIPAA Nondiscrimination Rule:

Group health plans and health insurance issuers cannot discriminate against similarly situated individuals based upon a health factor in terms of:

• Eligibility

• Premium Contributions

• Benefits

II. BASICS OF WELLNESS PROGRAMS



Similarly situated individual:

Distinctions among groups of similarly situated participants in a health plan must be based on bona-fide employment-based classifications consistent with the employer's business practice (not on health factors)

Examples of employees that can be treated as distinct groups:

• Part-time and full-time employees

• Employees working in different geographic locations

• Employees with different dates of hire, lengths of service or occupations

• Current employees vs. former employees.

• Also – participants vs. beneficiaries, and relationship to plan participant (e.g., spouse vs. child)




Health Factor• Health status.

• Medical condition (including both physical and mental illnesses).

• Claims experience.

• Receipt of health care.

• Medical history.

• Genetic information.

• Evidence of insurability (including conditions arising out of acts of domestic violence).

• Disability.



B. Wellness Exception to HIPAA Nondiscrimination

Wellness programs meeting certain standards can be excepted from the nondiscrimination rules under HIPAA

HIPAA and ACA regulations have divided acceptable wellness programs into two general categories:

(1) Participatory Wellness Programs

(2) Health-Contingent Wellness Programs





- Wellness program is “participatory” if either:

- None of the conditions for obtaining a reward under the wellness program are based on an individual satisfying a standard related to a health factor; or

- The wellness program does not provide a reward.





- Examples:

- Reimbursement for gym membership

- A diagnostic testing program that:

- provides a reward for participation in that program; and

- does not base any part of the reward on outcomes.

- A program that encourages preventive care through the waiver of a group health plan copayment or deductible for the costs of, for example, prenatal care or well-baby visits





- Examples (cont’d):

- A program that reimburses employees for the cost of participating in a smoking cessation program, regardless of whether the employee quits smoking.

- A program that provides a reward to employees for attending a monthly, no-cost health ed seminar.

- A program that provides a reward to employees who complete a health risk assessment regarding current health status, without any further action required by the employee regarding health issues identified in the assessment.




(2) Health-Contingent Wellness Program

- Requires an individual to either:

- Satisfy a standard related to a health factor to obtain a reward; or

- Undertake more than a similarly situated individual based on a health factor to obtain the same reward.




(2) Health-Contingent Wellness Program

- 2 types of Health-Contingent Programs:

- Activity-Only

- Outcome-Based




(a) Activity-Only

- These programs:

- Require a participant to perform or complete a health factor-related activity to obtain a reward

- Do not require the individual to reach or maintain a specific health outcome.




(a) Outcome-Based

- These programs:

- Require a participant to reach or maintain a specific health outcome (e.g., stop smoking, reach BMI level)

- Have a measurement, test or screening as part of a standard, and reward the individuals who meet the standard




- 5 Requirements for both types- (1) Opportunity to qualify at least once per

year

- (2) Reward cannot exceed 30% of the cost of employee-only coverage (50% for smoking cessation programs)

- (3) Reasonable Design

- (4) Reasonable alternative standards must be provided

- (5) Must disclose availability of reasonable alternative standard in all plan materials




(1) Opportunity to qualify at least once per year

(2) Size of reward/surcharge

- Cannot exceed 30% of the cost of employee-only coverage (exception for smoking (50%)

- EXAMPLE

- Annual premium for employee only coverage = $6,000 (ER pays $4,500; EE pays $1,500)

- Reward/surcharge = $600/$1,000

- Reward - OK - $600 does not exceed the 30% of the total annual cost of employee-only coverage ($6,000 X 30% = $1,800)

- Surcharge – OK – reward is the absence of surcharge




(3) Must be reasonably designed to promote health or prevent disease – so based on all facts and circumstances, program must:

- have a reasonable chance of improving an individual's health or preventing disease in the individual;

- not be overly burdensome or a pretext for discrimination based on a health factor; and

- not be highly suspect in the method chosen to promote health or prevent disease.




(4) Employer must offer reasonable alternative standard OR ELSE standard must be waived

- For activity-only – must be offered if the primary standard is difficult due to medical condition or medically inadvisable

- For outcome-based – must be offered for any individual that fails to meet the initial standard

- No need to determine alternative ahead of time

- BUT – must assist employee in meeting standard

- EX – alternative educational standard – must offer the program or help employee find acceptable program




(4) Reasonable alternative standard (cont’d)

- Facts and circumstances to consider:

- Requiring employee to pay for alternative class? Or membership/participation fees?

- What is time commitment of alternative?

- Meeting medical appropriateness standards of employee’s physician?

- Offering a reasonable alternative to a reasonable alternative (e.g., walking as an alternative to running program)




(5) Plan must disclose availability of the reasonable alternative standard to qualify for the reward

- Must be disclosed in (1) all plan materials describing the terms of the wellness program and (2) any disclosure that individual did not meet initial standard

- Need to provide contact info for obtaining reasonable alternative standard

- Also must disclose that personal doctor’s recommendations will be accommodated




(5) Disclosure (cont’d)

- Sample language (from 2013 ACA regs)

‣ “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 [insert contact information] 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.”



A. Affordability/Minimum Value

- Generally – in order to comply with ACA, offer of coverage must be affordable (9.5% of annual household income) and offer minimum value (cover 60% of health costs)

- For most programs – test as if employee fails to satisfy requirements

- BUT – there is an exception for tobacco programs. In short, the affordability/minimum value of a plan that charges a higher initial premium for tobacco users will be determined based on the premium that is charged to non-tobacco users.

III. WELLNESS PROGRAMS AND THE ACA


B. Mid-Year Enrollment

- See DOL FAQs about Affordable Care Act Implementation (Part XVIII)

Q8: A GHP charges participants a tobacco surcharge but also provides an opportunity to avoid surcharge if, at the time of enrollment or annual re-enrollment, the participant agrees to participate in (and completes within the plan year) tobacco cessation program. Tobacco user initially declines opportunity to participate in the tobacco cessation program, but joins in middle of the plan year. Is plan required to provide opportunity to avoid the surcharge/provide another reward to the individual for that plan year?

A8: No. If participant is provided reasonable opportunity to enroll in program at the beginning of the plan year and qualify for the reward (i.e., avoiding the surcharge) under the program, the plan is not required (but is permitted) to provide another opportunity to avoid the tobacco premium surcharge until renewal or reenrollment for coverage for the next plan year. But mid-year enrollment is allowed.



C. Grants for Small Employers

- ACA created $200 Million grant program administered by HHS

- Grants available 2011 – 2015

- Applies to wellness programs begun after passage of ACA (May 2010)

- For small employers ~ fewer than 100 employees who work more than 25 hours per week

- Sounds great, but…



Is your Wellness Program subject to COBRA? – Consider:

(1) Does benefit provide medical care?

- Merely Promoting healthy living – likely not enough to invoke COBRA

- Drug/Alcohol treatment program – likely would

- Limited exception for on-site clinic – no COBRA

(2) Is the incentive itself medical care?

- Cash incentives (e.g., gym reimbursement or monetary reward) not subject to COBRA

(3) Is the program part of the health plan?

IV. WELLNESS PROGRAMS AND COBRA


Title VII of the Civil Rights Act/Age Discrimination in Employment Act

- Consider protected groups/classes

- Ex. - Wellness program rewards for immunizations

- Applicability

- ADEA – employer with more than 20 employees

- Title VII – employer “engaged in an industry affecting commerce who has 15 or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year, and any agent of such a person"

V. WELLNESS PROGRAMS AND TITLE VII/ADEA


Genetic Information Nondiscrimination Act

- Health insurance and employment discrimination provisions

- “Genetic info” include genetic tests and appearance of disease in family members (i.e., family history chart)

- Employers can acquire genetic info through employer-sponsored health/genetic services, BUT:

- Program must be voluntary and without penalty

- EE provides prior, knowing written authorization

- Identifiable info provided only to health provider

- Employer gets info in aggregate form

- No financial inducements in return for providing info

VI. WELLNESS PROGRAMS AND GINA


Americans with Disabilities Act – generally:

- Prohibits employers from discriminating or harassing on the basis of a disability.

- Requires that employers reasonably accommodate disabled individuals unless doing so would pose an undue hardship

- Limits the employer's ability to make disability-related inquiries, which may have an effect on the type of questions asked on a health risk assessment.

Administered by the Equal Employment Opportunity Commission (EEOC)

VII. WELLNESS PROGRAMS AND ADA


Employers may require employees to undergo medical inquiries or exams, but must show that the testing is:

- Job-Related

- Consistent with medical necessity

- Uniformly administered

‣ Examples:

- Drug testing for operators of heavy machinery

- Sleep apnea testing for long-haul truckers



Wellness programs typically comply with the ADA if:

(1) Participation is voluntary

(2) Health information is confidential and kept separate from other records.

(3) Information is not used to:

- limit health coverage eligibility; or

- make an adverse employment decision.



What is VOLUNTARY according to the EEOC?

- 1998 letter – providing a monetary incentive may render a program involuntary

- March 2009 letter – wellness program not voluntary because individuals who did not participate were denied a benefit (i.e., penalized for non-participation) as opposed to those employees who chose to participate

- August 2009 letter – wellness program not voluntary because it penalized employees who did not complete questionnaire by making them ineligible for a health expense reimbursement

- 2012 – Seff v. Broward County (11th Cir.)



What is VOLUNTARY according to the EEOC?

- Late 2014

- EEOC’s regional attorney in Chicago district office files three complaints:

- Orion Energy Systems (WI)

- Flambeau, Inc. (WI)

- Honeywell (MN)

- January 2015 – Senate Committee on Health Education Labor and Pensions (HELP) convenes and voices frustration with litigation and lack of guidance from EEOC

- March 2015 - H.R. 1189 – Preserving Employee Wellness Programs Act



March 20, 2015

- EEOC announces it has sent a proposed rule to the White House OMB addressing the interaction between ADA and financial incentives in corporate wellness programs

- Focus on the interplay between the ADA and the Affordable Care Act and will “amend the regulations implementing the equal employment provisions of the ADA to address the interaction between Title I of the ADA and financial incentives as part of wellness programs offered through group health plans.”

- Proposed regulations have NOT been published



Fair Labor Standards Act

- Establishes rules regarding wage payment and overtime pay

- Non-exempt employees must be paid for all hours worked, including a premium for hours worked over 40 hours in a workweek

- What about time spent completing health risk assessment or other wellness program activity – compensable??

National Labor Relations Act

- Imposition of wellness program for unionized employees

- Most likely an employee benefit considered a term or condition of employment - -must be bargained for

- Unilateral action could be an unfair labor practice

VIII. WELLNESS PROGRAMS AND FLSA/NLRA


Enforcement or amendment of plan’s current eligibility provisions

• Dependent audit

Adopt a consumer-driven model

Modify cost-sharing (but consider affordability)

Modify coverage (but consider minimum value)

IX. ALTERNATIVES TO WELLNESS PROGRAMS


QUESTIONS?

Jim RourkeAssociate

Columbia, SC803.540.2030

[email protected]

[email protected] inforum presentation: wellness programs april 16, 2015 jim rourke

Documents

wellness benefits

basics of wellness programs

wellness promotion initiatives

health risks

health factor

group health plans

employers benefits

health care premiums