Nondiscriminatory Wellness Incentives

Federal agencies have issued final regulations for the Patient Protection and Affordable Care Act (PPACA).  Group health plans may not discriminate against individuals on the basis of health factors.  However, there is an exception to the nondiscrimination rules for wellness programs.  Wellness programs have been divided into two categories: (1) participatory wellness programs and (2) health-contingent wellness programs.

Participatory wellness programs must be set up to improve the health risk of all similarly situated individuals and not simply reward those who are already in good health.

Health contingent wellness programs must be designed to promote good health and prevent disease.  The program must not be overly burdensome, used to implicitly discriminate based on a health factor, and highly suspect in the method chosen.  The reward must allow a reasonable alternative standard, if it is unreasonably difficult because of an individual’s existing medical condition and it is medically inadvisable for an individual to attempt to satisfy the normal standard.  A plan does not need a specific reasonable alternative standard, but only the disclosure that one can be made available.

© 2013 Parsonage Vandenack Williams LLC

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