Employers and health plans may have questions about how the Health Insurance Portability and Accountability Act of 1996, and the Americans with Disabilities Act, apply to wellness programs and incentives for their employees or enrollees. In particular, they may want to know whether these laws prevent employers and health insurers from providing incentives for healthy behaviors or imposing penalties for unhealthy behavior.
Health Insurance Portability and Accountability Act (HIPAA)
Under HIPAA, group health insurance plans generally may not charge similarly situated individuals different premiums or contributions, based on a health factor. 1 For example, people whose body mass index is lower may not be charged a different premium or contribution from those having a higher body mass index, based on the body mass differential. However, group health insurance plans are not prohibited from establishing premium discounts or rebates, or modifying otherwise applicable copayments or deductibles in return for “adherence to programs of health promotion and disease prevention.” 2 Such programs are often referred to as “bona fide wellness programs.” 3
A proposed regulation laying out the parameters for such “wellness” programs has been issued 4 ; a final rule is expected to be published in 2005. Until then, the proposed rule indicated that group plans and issuers can currently rely on the proposed requirements in the proposed regulation in establishing bona fide wellness plans. 5 The proposed rule stipulates that, if a program’s reward is contingent upon satisfying a standard related to a health factor:
- The rewards that are offered to an individual must be limited.
- The program must be reasonably designed to promote good health or prevent disease for the individuals in the program, and must give eligible individuals the opportunity to qualify for the reward at least once per year.
- The reward must be available to all similarly situated individuals, and a reasonable alternative standard must be made available for any individual for whom, due to a health factor, it would be unreasonably difficult to meet the initial standard (or for whom it is medically inadvisable to attempt to satisfy that standard).
- All plan materials that describe the terms of the wellness program must disclose the availability of a reasonable alternative standard. 6
Finally, a wellness program that merely provides reimbursement for a health club membership or merely provides a health benefit, regardless of health status, does not have to satisfy the above requirements of a “bona fide wellness program,” because it does not require satisfaction of a standard related to a health factor and since it provides no rewards or penalties. 7
The Americans with Disabilities Act (ADA): Nothing in the Americans with Disabilities Act (ADA) prohibits employers or health insurers from implementing wellness programs that are geared at promoting good health and disease prevention. The ADA prohibits covered entities from denying, on the basis of disability, qualified individuals with disabilities an equal opportunity to participate in, or receive benefits under, programs or activities conducted by those entities. 8
Whether a wellness program that offers rewards or discounts to employees for weight loss or maintaining a certain body mass index violates the ADA will depend on how the program is designed and implemented. Under the proposed HIPAA nondiscrimination regulations, employers are permitted to offer discounts or rebates in return for employees’ adherence to programs of health promotion and disease prevention. The proposed HIPAA regulations for wellness programs describe a wide range of wellness programs that comply with the HIPAA nondiscrimination requirements without having to satisfy any additional standards. 9 In addition, employers would have flexibility to design wellness programs, other than those listed in the proposed regulations, that would also comply with HIPAA’s nondiscrimination requirements, if certain requirements are met. One of the proposed requirements is the reasonable alternative standard. The reasonable alternative standard would require employers to make an alternative standard available to individuals for whom it is unreasonably difficult to meet the initial standard (or for whom it is medically inadvisable to do so).
Under the proposed HIPAA regulations for wellness programs, employers and health plans have considerable flexibility in designing wellness programs. That flexibility would also be useful to them in designing wellness programs that would be permissible under the ADA. However, employers and health plans should be aware that compliance with the proposed HIPAA wellness program requirements is not determinative of compliance with the ADA. 10 Therefore, they should consider the applicability of the ADA to their wellness programs and may want to seek legal guidance in designing and implementing such programs to ensure that they comply with ADA nondiscrimination requirements.
While in general these laws do not prohibit wellness programs, their bearing on specific employer or health plan incentives for health and wellness is a matter of legal interpretation. Therefore, employers and health plans may want to seek legal guidance in designing and implementing wellness programs.
1 45 C.F.R. § 146.121(c); 42 U.S.C. 300gg-1(b)(1).
2 42 U.S.C. 300-gg-1(b)(2)(B)
3 45 C.F.R. § 146.121(c)(3); 66 FR 1421, 1422.
4 66 FR at 1421.
5 66 FR at 1422.
6 45 C.F.R. § 146.121(f), as proposed at 66 FR at 1434.
7 66 FR 1421, 1422.
8 42 U.S.C. § 12101.
9 45 C.F.R. § 146.121(f)(1), as proposed at 66 FR at 1434.
10 45 C.F.R. § 146.121(b) and (h).