The Internal Revenue Service, in conjunction with the Labor and Health and
Human Services departments, Nov. 20 released proposed regulations
(REG-122707-12) that would increase the maximum permissible reward of a
health-contingent wellness program offered through a group health plan from 20
percent to 30 percent.
The regulations also proposed increasing the maximum allowed reward to 50
percent for wellness programs intended to prevent or reduce tobacco use, the
The proposed rules include clarification on the reasonable design of health
wellness programs and the reasonable alternatives they must offer in order to
avoid prohibited discrimination, the agencies said.
“The Affordable Care Act recognizes that well-run, equitable workplace
wellness programs allow workers to access services that can help them and their
families lead healthier lives,” said Secretary of Labor Hilda Solis in remarks
released with the proposed rules. “Employers, too, can benefit from reduced
costs associated with a healthier workforce,“ Solis said.
The proposed regulations would continue to divide wellness programs into two
categories: “participatory wellness programs,” which make up the majority of
wellness programs, the agencies said, and “health contingent wellness
The agencies define participatory wellness programs as programs that are
available to all similarly situated individuals and that either do not provide a
reward or do not include any conditions for obtaining a reward that are based on
an individual satisfying a standard that is related to a health factor.
Examples of such programs include fitness center memberships or monthly,
no-cost health education seminars, the agencies said. These participatory
programs are not required to meet the five requirements applicable to
health-contingent wellness programs, the agencies said.
However, health contingent wellness programs must meet the following five
regulatory requirements, according to the proposed regulations:
of opportunity to qualify: Individuals eligible for the program must receive the
opportunity to qualify for the reward at least once per year.
of reward: The proposed rules would continue to limit the total amount of the
reward for health-contingent wellness programs with respect to a plan, whether
offered alone or coupled with the reward for other health-contingent wellness
availability and reasonable alternative standards: The same, full reward must be
available to individuals who qualify for the program. A reasonable alternative
standard must be provided to individuals who qualify by satisfying the program's
otherwise applicable standard.
design: The health-contingent wellness programs must be reasonably designed to
promote health or prevent disease, must not be overly burdensome, must not be a
subterfuge for discrimination based on a health factor, and must not be highly
suspect in the method chosen to promote health or prevent disease.
of other means of qualifying for the reward: Plans and issuers would be required
to disclose the availability of other means of qualifying for the reward or the
possibility of waiver of the otherwise applicable standard in all plan materials
describing the terms of a health-contingent wellness program.
The proposed changes are intended to be consistent with the Affordable Care
Act and would take effect beginning on or after Jan. 1, 2014, the agencies
The proposed rules would apply to both grandfathered and non-grandfathered
group health plans and group health insurance coverage for plan years beginning
on or after Jan. 1, 2014, according to the proposed rules.
Comments on various aspects of the proposed regulations' changes to wellness
program incentives are due by Jan. 25.
Text of an HHS news release on ACA guidance changes is at http://op.bna.com/dt.nsf/r?Open=emcy-928nku.