Wellness Programs Design and Implementation Checklist

These guidelines will assist you in implementing a wellness program that complies with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Patient Protection and Affordable Care Act of 2010 (ACA), the Americans with Disabilities Act of 1990 (ADA), the Genetic Information Nondiscrimination Act of 2009 (GINA), the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code of 1986 (Code).

Program Structure

1. Determine the group health plan status of the wellness program. If the wellness program provides medical care, then it constitutes a group health plan that must comply with group health plan legal requirements and ongoing compliance obligations. A wellness program that simply promotes good health and a healthy lifestyle, does not provide medical care, and is not otherwise part of a group health plan has fewer compliance obligations.
2. Decide whether to structure a wellness program that provides medical care as a stand-alone plan. An employer that sponsors a wellness program that provides medical care must decide whether to structure the wellness program as a stand-alone group health plan, or as part of another group health plan sponsored by the employer, such as the employer’s major medical plan. In counseling employers about this choice, note that it may be very challenging to ensure that a stand-alone wellness program complies with applicable group health plan mandates.
3. Choose the reward/penalty structure. To comply with the ACA’s employer mandate, you must consider the regulatory percentage limitations, tax implications, and impact of incentives on affordability and minimum value determinations.

HIPAA Nondiscrimination Requirements

1. Identify the participation-only aspects of the wellness program. Wellness programs that only require that a participant participate in the program—and do not condition eligibility for a reward on the participant’s ability to meet a particular health standard—entail fewer HIPAA nondiscrimination requirements.
2. Offer the participation-only program to all similarly-situated individuals regardless of health status. However, an employer may be able to treat different groups of similarly-situated individuals differently. In addition, an employer may treat a group of similarly-situated employees with an adverse health status more favorably than a group of similarly-situated employees who do not have that adverse health status (for example, a reward for completing a health coaching session may be offered only to a group of employees with high blood pressure).
3. Identify health-contingent aspects of the wellness program. HIPAA imposes more stringent nondiscrimination requirements on programs that condition eligibility for a reward on the participant’s ability to meet a standard related to a health factor.
4. Determine whether a health-contingent program is activity-only or outcome-based. This determination impacts when and how a program must provide a reasonable alternative standard for a participant who cannot meet the primary standard.
5. Ensure the health-contingent program meets the five applicable requirements. The actions necessary to comply with each of these five requirements may vary depending on whether the health-contingent program is an activity-only program or an outcome-based program.

ACA Requirements

1. Verify that the wellness program complies with the ACA’s market reform provisions. These requirements may be a good reason to structure a wellness program as part of a group health plan that already complies with the ACA’s market reform provisions.
2. Calculate the incentive impact on affordability and minimum value determinations under the ACA’s employer mandate. Incentives affecting major medical plan cost-sharing and/or contribution rates could impact the affordability and minimum value calculations.
3. Confirm whether the wellness program impacts W-2 reporting, Patient-Centered Outcomes Research Institute fees, and/ or reinsurance contributions. Programs for which the employer does not charge a separate COBRA premium, which do not provide significant benefits in the nature of medical care or treatment, and which do not constitute major medical coverage should not be subject to these other ACA requirements.

GINA Requirements

1. Title I: Ensure the wellness program does not collect genetic information for underwriting purposes. Do not condition an incentive on the completion of a health risk assessment (HRA) that includes family medical history, spousal completion of an HRA with medical history questions, or spousal completion of a biometric screening.
2. Title II: Verify that there is no discrimination on the basis of genetic information and that any acquisition of genetic information is voluntary. These requirements apply whether or not the wellness program is itself a group health plan or part of a group health plan.

ADA Requirements

1. Provide reasonable accommodations to enable employees with disabilities to earn wellness program incentives. This requirement exists even for participation-only programs for which HIPAA’s nondiscrimination requirements do not mandate a reasonable alternative standard.
2. Ensure that any aspect of the wellness program involving a medical examination or disability-related inquiry is part of a voluntary employee health program. The ADA generally prohibits an employer from requiring medical examinations or making medical inquiries, unless such examination or inquiry is job-related and consistent with business necessity or is voluntary and part of an employee health program.

Other Legal Requirements

1. Verify compliance with ERISA. Some of the primary compliance obligations under ERISA include having a written plan document, distributing a summary plan description and summaries of material modifications to participants, filing a Form 5500 if there are more than 100 participants in the plan, and following specific claims and appeals procedural requirements.
2. Verify compliance with COBRA. Wellness programs that themselves constitute group health plans or are a part of a group health plan must be offered to COBRA-qualified beneficiaries.
3. Verify compliance with HIPAA privacy and security rules. Some of the primary compliance obligations under HIPAA’s privacy and security rules include having business associate agreements in place with third-party service providers, providing participants with a privacy notice, maintaining and following a policies and procedures document, and notifying individuals of breaches of unsecured protected health information.
4. Verify compliance with the Code. The nature of incentives and how they are structured will determine whether they constitute additional taxable income to employees.

Checklist provided by Emily D. Zimmer and Lynne S. Wakefield, K&L Gates LLP

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