Wellness rules clarified under PPACA

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The IRS released final regulations this week clarifying wellness rules under PPACA. Effective January 1, 2014 employers can charge workers as much as 30% of their medical plan premiums for failing to meet wellness incentive goals, up 10% from current levels.  It also allows a reward of up to 50 percent of programs aimed at smoking cessation. The regulations require a reasonable alternative be offered to employees.

The final regulations divide wellness programs into two categories: “participatory wellness programs” and “health-contingent wellness programs.”

A participatory wellness program is defined as a program available to all similarly situated individuals that either do not provide or a reward or do not include any conditions for obtaining a reward based on an individual satisfying a standard that is related to a health factor. An example of a participatory wellness program would be reimbursement for all or part of the cost of a fitness center, a diagnostic testing program that provides a reward for participation but not on outcome, and more.

Health contingent wellness programs require an individual to satisfy a standard related to a health factor in order to obtain a reward. There are 5 requirements that health-contingent wellness programs must meet: frequency of opportunity to qualify, size of reward, uniform availability, reasonable design and notice of other means for qualifying for the reward. An example of a health contingent wellness program is a program that imposes a premium surcharge based on tobacco use. It may also be a program that uses biometric screening or a health assessment to identify employees with specified medical conditions or risk factors such as high cholesterol, providing a reward to employees identified as within a normal or healthy range, while requiring employees identified as outside the normal range or at risk to take additional steps to obtain the same reward.

As you design your wellness program, it is important to consider these factors. Many programs have an element of participatory and health contingent designs and therefore require additional planning and compliance checks.

For more information about designing a PPACA-compliant wellness program, contact Austin Financial Group at 248-594-5550.



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