More aspects of the Affordable Care Act (ACA) are being officially implemented, and organizations have many questions as to which rules and regulations apply to them. Wellness programs are on the rise, and some wonder if they are governed by the ACA. Know the facts in order to comply.
Must your organization provide an employee wellness plan? If you do, what are the requirements and restrictions? Let’s take a look at the wellness program provisions of the ACA and see what employers should consider.
Must You Provide an Employee Wellness Program Under the ACA?
First things first—are you required to provide an employee wellness program? The short answer is no; there’s no legal requirement to implement such a program under the ACA. But if you do opt to create or continue an employee wellness program, and it’s not part of a grandfathered plan, it should meet or exceed the wellness program guidelines established in the ACA.
There are many benefits to employee wellness programs, and one of the primary benefits is a potential reduction in healthcare costs for both the employee and the employer. This reason alone is why many wellness programs got started. Such initiatives can also improve overall employee health levels, thus reducing absences and increasing productivity—not to mention improving morale and retention—all of which are worthy goals.
Types of Wellness Programs
There are two general types of employee wellness programs as defined in the ACA:
- Participatory programs. This type of program simply gives employees the opportunity to participate in some type of wellness-related activity, event, or benefit. There are no requirements for employees in terms of health improvements, no minimum health requirements to join, and no required outcomes after participation. Here are some examples of participatory programs:
- Health-related training seminars;
- Health screenings; and
- Activities such as a walking group.
The key here is that the participation and/or benefit gained must not be dependent on achieving a specific health-related outcome or qualification. Any reward or benefit must be based solely on participation, and it must be open to anyone to participate.
- Health-contingent programs. These types of programs, on the other hand, are contingent on achieving some type of health goal, and typically a benefit is derived after achieving that goal. For example, an employer could implement a program that rewards achieving a healthier body mass index (BMI) or maintaining an already healthy BMI level. This is just one example of a health-related outcome that some employers may opt to reward through, for example, a reduction in health insurance costs.
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Wellness Program Regulations Under the ACA
Generally speaking, the rules outlined under the ACA are meant to ensure employee wellness programs are run in a nondiscriminatory way while encouraging better health outcomes. This goal applies to both types of employee wellness programs.
For either type of program, the employer must still comply with all applicable laws, including the Health Insurance Portability and Accountability Act (HIPAA), the Genetic Information Nondiscrimination Act (GINA), the Americans with Disabilities Act (ADA), the Family and Medical Leave Act (FMLA), and the Employee Retirement Income Security Act (ERISA).
What to Know for ACA Compliance
The Equal Employment Opportunity Commission (EEOC) maintains that participation in wellness programs should be voluntary because requiring participation could be construed as discriminatory. Mandatory participation requirements could also force employees to submit to nonwork-related health screenings and to divulge genetic information in some cases (which could violate other laws).
However, the ACA does not clarify the point of whether participation can be mandated. Employers should be aware that the EEOC is watching how they’re implemented. While pending lawsuits are pending that will determine final regulations, this is something to be aware of.
Some More Specific Regulations Under the ACA
For health-contingent programs, additional specific regulations are outlined in the ACA:
- The program must be created to either prevent disease or promote health, and it must have a reasonable chance of achieving these goals for those who participate. In other words, it cannot be unreasonably difficult to achieve, and it should not use methods that are highly suspect.
- The program must be available to all similarly situated employees, and alternatives must be available for those who have medical conditions that make the minimum standards unreasonably difficult. For example, going back to the BMI reduction program above, if the standard is to achieve a BMI of 26 within a specified time frame in order to get a reduction in insurance costs, it might be unreasonable to expect that achievement in a short time frame for someone who starts with a BMI of 37. This is, of course, just one example. Employers are not required to think of all eventualities, but alternatives must be made available on request. (The regulations specify that the plan must state that alternatives are available, and it should explain how to request that the minimum standards be waived or altered when applicable.)
- Employees who are eligible for these types of programs should be able to try to achieve the reward at least once per year.
- The rewards offered for achieving the health standards in question cannot be more than 30 percent of the cost of the employee health coverage. (This is increased to 50 percent for health-contingent programs related to reducing or stopping tobacco use.)
In summary, employers should be careful in crafting employee wellness programs to remain in legal compliance across the board. This means ensuring that the wellness program benefits meet the guidelines above and allowing voluntary participation without going against other related laws.
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