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HHS Issues Proposed Regulations on Wellness Plans

Posted in Plan Administration, Welfare Plans

Earlier this month, HHS  issued new proposed regulations on wellness programs.  These proposed regulations are designed to comply with the provisions of PPACA dealing with wellness programs.  Again, these are proposed regulations and are not final yet, but they provide some insight into what will ultimately be the rules for wellness programs going forward.

The proposed regulations would apply to plan years beginning on or after January 1, 2014 and do not significantly change the 2006 regulations previously issued.  Some key points:

  1. The maximum allowed reward for "standards-based" programs increases to 30% of the cost of coverage.
  2. The maximum allowed reward for programs designed to prevent or reduce tobacco use is 50%.
  3. Reasonable alternatives for rewards must be provided to account for medical conditions (or conditions where it is medically inadvisable to attempt compliance).
  4. Plans and insurers may seek verification of claims for medical exemptions (unless the condition is obvious or known to the plan or insurer already).

The proposed regulations also include sample language on how to provide notice of opportunities to obtain rewards and how to request the alternative from the plan. 

For the most part, the proposed regulations seem to be focused primarily on clarifying certain provisions of the 2006 regulations relating to non-discrimination and options to obtain rewards and benefits as part of an accommodation or exception.  While these are not final yet, sponsors of wellness programs would be wise to review their plans to make sure that they offer appropriate alternatives in both their standards-based and participation-based programs.