The Affordable Care Act (ACA) / HIPAA wellness program regulations recognize three different types of wellness programs:
1. Participatory wellness programs either do not offer a reward or do not make a reward contingent on an individual satisfying a condition related to a health status factor. A participatory program might simply pay for a gym membership or a smoking cessation program or reward an employee who completes a health risk assessment. Participatory programs must be offered to all similarly situated employees on a nondiscriminatory basis.
2. Activity-only health contingent wellness programs require an employee to perform or complete an activity related to a health factor in order to obtain an award.
3. Outcome-based health contingent wellness programs further require a participant to achieve a certain health-based outcome, such as cessation of smoking or achieving a certain biometric measure, to obtain an award.
Requirements For Activity-Only or Outcome-Based Health Contingent Wellness Programs
Activity-only or outcome-based health contingent programs must meet five requirements under the ACA/HIPAA rules:
- All eligible individuals must be given the opportunity to qualify for the reward at least once per year.
- The total reward offered under health contingent programs cannot exceed 30% of the total cost of employee-only coverage under the plan (50% for tobacco prevention and reduction programs), including both employer and employee contributions.
- Health-contingent wellness programs must be reasonably designed to promote health or prevent disease.
- The full reward must be available to all similarly situated individuals. Activity-only programs must thus allow a reasonable alternative standard or waive of an otherwise applicable standard for individuals for whom it is unreasonably difficult or medically inadvisable to achieve a program standard. An outcome-based program must allow a reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward to any individual who does not meet the initial standard based on a measurement, test, or screening.
- Plans and issuers must disclose the availability of reasonable alternatives for meeting standards in any plan materials and at the time individuals are notified that they did not achieve program standards.