Final Guidance on Employment Based Wellness Programs

June 2013 – The Department of Health and Human Services (HHS), Treasury, and the Department of Labor (DOL) recently released the final rules on nondiscriminatory employment-based wellness programs under the Affordable Care Act (ACA).

The final guidance establishes standards for all grandfathered and non-grandfathered group health plans with plan years beginning on or after January 1, 2014.

Wellness programs are divided into two categories, “participatory wellness programs” and “health-contingent wellness programs.”

Participatory Wellness Programs
Programs which are made available to all employees and that either do not provide a reward, or do not include any conditions for obtaining a reward which are based on the participant meeting a health related standard.

Health-Contingent Wellness Programs
Programs which generally reward individuals who meet specific standards related to their health. Examples of these programs include programs that provide a reward to those who do not use or decrease the use of tobacco, or programs that reward for the achievement of specific health related goals such as a specified cholesterol level, weight or body mass index.

The annual reward available under this category of wellness program may not exceed 30 percent of the cost of coverage. If the program is tied to tobacco cessation, an additional 20 percent incentive may be provided. Group health plans have the flexibility to determine how program rewards will be appropriated among family members.

The final rule was issued May 29, 2013.