Wellness Programs

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As previously reported, the federal agencies responsible for drafting the rules implementing the Affordable Care Act (ACA) (the U.S. Labor Department, the U.S. Department of Health and Human Services and the U.S. Treasury Department (together, the “Departments”)) on January 9, 2014 issued FAQ Part XVIII, regarding implementation of the market reform provisions of the ACA.

These FAQs are part of the government’s efforts to provide so-called “subregulatory guidance” – that is, guidance providing relatively quick helpful answers to respond to issues and trends affecting group health plans and insurers. FAQ Part XVIII includes guidance for employers sponsoring wellness programs that contain tobacco cessation components, and on the “reasonable alternatives” required to be made available under health-contingent wellness programs.

On May 29, 2013, the Departments of Health and Human Services, Labor and Treasury (the “Departments”) issued final regulations on implementing and expanding employment-based wellness programs. The rules set forth in the final regulations remain largely unchanged from the proposed rules issued on November 20, 2012. For example, as provided for in the proposed rules, the final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20 percent to 30 percent of the cost of coverage. The final regulations also increase the maximum permissible reward to 50 percent for wellness programs designed to prevent or reduce tobacco use. http://www.proskauer.com/publications/client-alert/new-guidance-on-wellness-programs-issued/.  However, a few points and clarifications are particularly noteworthy:

Despite the clear support for employers’ continued and expansive use of wellness programs as a means of promoting health and preventing disease expressed in the Affordable Care Act and the recently-proposed rules implementing and expanding employment-based wellness programs [http://www.proskauer.com/publications/client-alert/new-guidance-on-wellness-programs-issued/], the Equal Employment Opportunity Commission (“EEOC”) has still not provided more definitive guidance on permissible…