Keeping Your Wellness Program Compliant. Goals of Wellness Programs. Today s Focus Wellness Rewards

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1 Keeping Your Wellness Program Compliant Norbert F. Kugele Stephanie H. Grant 2017 Warner Norcross & Judd LLP. All rights reserved. Goals of Wellness Programs Improve employee health/reduce absenteeism Increase morale and productivity Reduce health care expenditures related to chronic/preventable condition 2017 Warner Norcross & Judd LLP. All rights reserved. Page 2 Today s Focus Wellness Rewards Common examples of wellness program rewards What laws apply to wellness program rewards How different laws that apply to wellness program rewards interact 2017 Warner Norcross & Judd LLP. All rights reserved. Page Warner Norcross & Judd LLP. All rights reserved. 1

2 Common Examples of Wellness Program Rewards $50 for completing a health risk assessment (HRA) Reimbursement of gym membership Reduction in the employee s contribution for completing a health risk assessment questionnaire, regardless of results Deductible credit for participating in biometric screening regardless of results Reduction in employee s contribution based on specified dietary change Reduction in the employee s contribution if employee s BMI < Warner Norcross & Judd LLP. All rights reserved. Page 4 Three Main Federal Laws That Apply To Wellness Program Rewards 2017 Warner Norcross & Judd LLP. All rights reserved. Page 5 ABC Company Wellness Program Examples See Handout For all examples, assume the following facts about ABC Company s group health plan: Total Premium Employee Share of Premium Deductible Out-of- Pocket Maximum Self-only $4,000 $1,000 $1,000 $3,000 Self-plus-one $8,000 $2,560 $2,000 $5,000 Family $12,000 $4,000 $3,000 $7, Warner Norcross & Judd LLP. All rights reserved. Page Warner Norcross & Judd LLP. All rights reserved. 2

3 ABC Company Wellness Program Examples - Objectives Identify when HIPAA, ADA and/or GINA rules apply to different wellness program components Properly calculate wellness rewards under HIPAA, ADA and/or GINA rules Identify compliance problems in examples and work through solutions 2017 Warner Norcross & Judd LLP. All rights reserved. Page 7 What s Wrong With Example #1? Reward is too high Can t combine 50% max reward for tobacco reduction on top of 30% max reward for other health-contingent activities No annual opportunity to earn reward No reasonable alternatives 2017 Warner Norcross & Judd LLP. All rights reserved. Page 8 What s Wrong With Example #2? Reward is too high 50% discount for tobacco-free status only permitted if employee is not tested for tobacco use If biometric screening tests for presence of tobacco in system, ADA rules apply and reward is limited to 30% Asking whether a person smokes is not a disability-related inquiry 2017 Warner Norcross & Judd LLP. All rights reserved. Page Warner Norcross & Judd LLP. All rights reserved. 3

4 What s Wrong With Example #2? Con t COBRA issue Wellness program must be offered to COBRA enrollees Must allow COBRA enrollees to earn deductible and OOP maximum rewards Not required to give premium discount rewards to COBRA enrollees 2017 Warner Norcross & Judd LLP. All rights reserved. Page 10 What s Wrong with Example #3? Reward is too high for employee+1 and family coverage ADA rules apply, so reward limited to 30%, calculated on cost of self-only coverage 2017 Warner Norcross & Judd LLP. All rights reserved. Page 11 What s Wrong with Example #4? Can t require spouse s family medical history Can only ask about spouse s manifested health conditions Can t require child s manifested health conditions 2017 Warner Norcross & Judd LLP. All rights reserved. Page Warner Norcross & Judd LLP. All rights reserved. 4

5 What s Wrong with Example #4? Con t Reward is too high for family coverage ADA & GINA permit both employee and spouse to separately earn reward If employee and spouse both satisfy wellness program requirements, can earn a total reward equal to 60% of cost of selfonly coverage (30% for employee and 30% for spouse) 2017 Warner Norcross & Judd LLP. All rights reserved. Page 13 What s Wrong with Example #5? Trick question! EEOC says this type of wellness reward program ok Caution: EEOC may scrutinize such a program Also compliant with HIPAA 2017 Warner Norcross & Judd LLP. All rights reserved. Page 14 Status of EEOC s Bona Fide Benefit Plan Safe Harbor ADA generally prohibits medical exams and disability-related inquiries Exception: Bona fide benefit plan EEOC regulations expressly prohibit application of the safe harbor provisions to wellness programs, even if the wellness programs are part of employer s health plan 2017 Warner Norcross & Judd LLP. All rights reserved. Page Warner Norcross & Judd LLP. All rights reserved. 5

6 Other Considerations Taxation of wellness program rewards HIPAA Privacy and Security rules 2017 Warner Norcross & Judd LLP. All rights reserved. Page 16 Questions & Answers Thank you! Norbert F. Kugele Warner Norcross & Judd LLP 900 Fifth Third Center 111 Lyon St., NW Grand Rapids, MI (616) Stephanie H. Grant Warner Norcross & Judd LLP 2000 Town Center Suite 2700 Southfield, MI (248) These materials are for educational use only. This is not legal advice and does not create an attorney-client relationship Warner Norcross & Judd LLP. All rights reserved. Page Warner Norcross & Judd LLP. All rights reserved. 6

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