The departments of Health and Human Services (HHS), Labor (DOL) and Treasury (IRS) issued final regulations on the Health Insurance Portability and Accountability Act’s (HIPAA) group health plan nondiscrimination and wellness plan rules.   The final regulations are effective February 12, 2007 and apply for plan years beginning on or after July 1, 2007.

A plan is not required to provide coverage for any particular benefit to any group of individuals.  However, benefits provided must be uniformly available to all similarly situated individuals.  Any restriction on a benefit must apply uniformly and must not be directed at individual participants or beneficiaries based on a health factor.

The HIPAA nondiscrimination rules highlight eight health factors that may not be used to discriminate in health coverage among individuals.  The eight health factors are health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence and participation in risky recreational activities, such as motorcycling, skiing, etc.), and disability.

Some other highlights of the final rules are:

The final rules clarify that Health Reimbursement Arrangements (HRAs) do not violate HIPAA nondiscrimination rules because of the variance in coverage over time due to the carry over of unused balances.

The final regulations clarify that benefits may not be denied for injuries (e.g., from a suicide attempt) resulting from a medical condition (depression) even if the medical condition was not diagnosed before the injury.

Plans are prohibited from denying or delaying eligibility based on whether the employee is actively at work unless the individuals who are absent from work due to any health factor are treated, for purpose for health coverage, as if they are actively at work.    Plans may impose a service requirement for all similarly situated individuals, such as working full time (minimum of 30 hours per week).  Health plans and insurers may wish to clarify, in writing, how employees on various types of leave are treated for purposes of determining a service requirement.

The final rules provide the following examples of wellness programs that do not violate the HIPAA nondiscrimination rules.

·        A program that reimburses all or part of the costs for membership in a fitness center.

·        A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes.

·        A program that encourages preventive care through waiver of the copayment or deductible under a group health plan for the costs of, for example, prenatal care or well baby visits.

·        A program that reimburse employees for the costs of smoking cessation programs without regard to whether the employee quits smoking.

·        A program that provides a reward to employees for attending a monthly health education seminar.

Wellness programs that provide a reward based on the ability of an individual to meet a health standard will violate the HIPAA nondiscrimination rules unless it satisfies these five conditions:

·        The reward for wellness program, coupled with the reward for other wellness programs with respect to the plan that require satisfaction of a standard related to a health factor, must not exceed 20 percent of the cost of employee-only coverage under the plan.  If any of the employee’s dependents are enrolled in the program, the reward may not exceed 20 percent of the coverage in which the employee and his or her dependent(s) is enrolled.

·        The program must be reasonably designed to promote health or prevent disease.  This is satisfied if the program has a reasonable chance of improving the health or preventing disease in participating individuals and is not overly burdensome, is not a subterfuge for discriminating based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease.

·        The program must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.

·        The reward under the program must be available to all similarly situated individuals.  A reasonable alternative standard for obtaining the reward must be available for those with a health factor that makes it unreasonably difficult or medically inadvisable to satisfy or attempt to satisfy the otherwise applicable standard. 

·        The plan must disclose in all plan materials describing the terms of the program the availability of the reasonable alternative standard for obtaining the reward.  If the plan materials mention the program, but do not describe its terms, this disclosure of the reasonable alternative standard is not required. 

To qualify as a wellness program, a program must permit employees to qualify for the reward at least once a year.  Rewards can not exceed 20 percent of the coverage in which the employee is enrolled. 

The final rules reiterate the requirement that, if a wellness program requires satisfaction of a health standard, it must also provide a reasonable alternative for obtaining the reward to individuals for whom it is unreasonably difficult to satisfy the standard due to a medical condition.   Plans may require a physician’s statement verifying that the individual’s condition makes it unreasonably difficult or medically inadvisable to meet the health standard.

Click on the following link for complete text of final rules:

http://www.dol.gov/ebsa/regs/fedreg/final/2006009557.pdf