New rules proposed last week by the Department of Health & Human Services give employers greater flexibility to help employees quit smoking. The total incentive an employer can offer for tobacco cessation has jumped to 50% of the total cost of health coverage, up from 20%.
“What they’ve done is very positive from an employer vantage point,” says Amy Bergner, managing director, PricewaterhouseCoopers human resource solutions health care practice. “It gives this higher amount and greater latitude to design a tobacco [cessation] program.”
The wellness program proposed rules do two things: confirm previous rules that apply to group health plans that offer wellness programs with financial incentives and implement new provisions outlined in the Patient Protection and Affordable Care Act.
The new provisions allow greater latitude in the amount of financial incentives employers can offer employees and family members who participate in certain types of wellness programs. The proposed rules dub wellness programs that require people to meet a particular standard (for example, a certain body mass index or blood pressure level) to get the financial reward “health contingent wellness programs.”
“That’s where the primary changes have come now, both in terms of the size of the reward the program can offer, as well as some of the other requirements the program has to have in order to require people to ring the bell of achieving whatever the standard is,” says Bergner.
Previously, health contingent programs were limited to giving an incentive equal to 20% of the total cost of the coverage. That was bumped up to 30% under PPACA “so we knew that was coming,” says Bergner. “But if part of the wellness program relates to tobacco use, the total reward to an individual can go up to 50%.”
The percentage of premium that can be awarded as an incentive is just one of five requirements these health contingent wellness programs have to meet to avoid violating the law. “The others are typically extremely easy to meet,” Bergner says. The program has to be reasonably designed to promote health or prevent disease. They also have to allow people who can’t meet the requirement for some reason an alternative way to get the incentive.
“For example, if I can’t lower my cholesterol because of some genetic condition, the plan has to give me a reasonable alternative to be able to do that,” Bergner explains.
People also must be given notice of this opportunity to qualify for the reward through other means. “In the past, there was standard language people would use and they’ve given some new sample language they think people will have an easier time understanding,” says Bergner.
She notes it’s important to understand there are still other laws that apply to these wellness programs, namely the Americans with Disabilities Act. “These rules don’t address that and employers need to be aware of it and consult with their advisers,” she says. “I was kind of hoping for it. The ADA is enforced by the Equal Employment Opportunity Commission, which doesn’t have any jurisdiction over the Affordable Care Act.”
Also of note is that the new proposed rules on incentive amounts apply to both grandfathered and non-grandfathered plans. “Any employer-sponsored plan out there, starting on or after Jan. 1, 2014, will be able to qualify. So that’s good news,” says Bergner.
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