HR Management & Compliance

Health Plans: HIPAA Nondiscrimination Rules to Take Effect

On July 1, 2007, new rules take effect regarding group health plan compliance with the nondiscrimination provisions of the Health Insurance Portability and Accountability Act (HIPAA) and wellness programs in particular. The rules are effective on the first day of the plan year beginning on or after July 1, 2007. For calendar year plans, the new rules generally apply beginning January 1, 2008.

The HIPAA nondiscrimination provisions generally prohibit group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductible, copayment, or other cost sharing requirements based on a health factor.


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The nondiscrimination rules, however, contain an exception that permits plans to offer wellness programs. In particular, if none of the conditions for obtaining a reward under a wellness program are based on an individual satisfying a standard related to a health factor, or if no reward is offered, the program complies with the nondiscrimination requirements (assuming program participation is available to all similarly situated individuals). Examples of compliant programs include:

  • A program that reimburses all or part of the cost for memberships in a fitness center.
  • A diagnostic testing program that provides a reward for participation rather than outcomes.
  • A program that encourages preventive care by waiving the copayment or deductible requirement for the costs of, for example, prenatal care or well-baby visits.
  • A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking.
  • A program that provides a reward to employees for attending a monthly health education seminar.

On the other hand, wellness programs that condition a reward on an individual satisfying a standard related to a health factor must meet five requirements described in the final rules in order to comply with the HIPAA nondiscrimination provisions. For more details on the rules, check out the April 2007 issue of the California Employer Advisor