United Benefit Advisors Insight and Analysis Blog

Wellness Programs: Incentives for Non-Use of Tobacco, Activity-Based Alternatives

By Bill Olson, VP, Marketing & Communications at United Benefit Advisors
  Mar 20, 2014 11:21:00 AM

wellness programs and PPACAOn January 9, 2014, the Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Department of the Treasury/IRS issued Frequently Asked Questions - Part XVIII that provides additional information about requirements in several areas. In this third of a three-part series, we will address some clarifications related to wellness programs.

Wellness programs that have an outcomes-based standard, such as a requirement that the employee achieve a certain body mass index (BMI) or certain blood pressure, glucose, or cholesterol levels, must automatically provide a reasonable alternative. The reasonable alternative may be another outcomes-based standard (with certain additional requirements) or an alternative activity. If the employee satisfies the reasonable alternative, the employee is entitled to the full incentive.

The wellness program regulations also state that the recommendation of the employee’s physician regarding a reasonable alternative must be considered. This raised questions about whether the employer had to completely accept all details of a physician’s recommendation, particularly since the employer generally must pay the cost of a reasonable alternative. The FAQ  says that if an employee’s doctor states that an outcomes-based reasonable alternative is medically inappropriate for the employee, and the doctor suggests an activity-based alternative instead, the employer must accept the suggested alternative, but has leeway on how the alternative is implemented. For example, Rachel exceeds the plan’s body mass index (BMI) standard, and the plan’s usual reasonable alternative is a percentage reduction in BMI. If Rachel’s doctor advises that the reduction in BMI is medically inappropriate and suggests a weight reduction program instead, the plan must accommodate the weight loss program request, but it does have a say in which weight loss program Rachel must complete.

The FAQ also states that a plan that offers an annual opportunity to receive an incentive for non-use of tobacco is not required to offer a mid-year opportunity for an individual who was offered, but declined, the original opportunity. For example, as part of fall open enrollment, Jones Co. offers a non-smoker discount and an opportunity for smokers to enroll in a smoking cessation program for the next calendar year. Mary and John are both smokers. They decline to enroll in the smoking cessation program. John quits smoking in July and Mary asks to enroll in the non-smoker program in August. Jones Co. is not required to give John the non-smoker rate for the rest of the year (although it may if it wishes, on either a full or pro-rata basis). Jones Co. does not need to offer the non-smoker program, or the discount, to Mary (although it may if it wishes, on either a full or pro-rata basis).

To help employers understand all the wellness requirements under PPACA, UBA offers "Frequently Asked Questions about Wellness Program's Legal Requirements". To see what kind of wellness programs employers are implementing, download the UBA Health Plan Survey Executive Summary.

Topics: employee wellness, benefit communication, benefit consultants, benefit management, compliance with health care reform, employee health, group health insurance, healthcare consumerism, health plan compliance, health reimbursement account, insurance solutions, medical plan, HRA administration