Over five years after regulations were first proposed, the Departments of the Treasury, Labor, and Health and Human Services have finally issued final HIPAA nondiscrimination and wellness program regulations. While the final regulations clarify certain aspects of the 2001 interim and proposed regulations, other questions remain unanswered.
The final regulations are effective on the first day of the first plan year starting on or after July 1, 2007. This means that, for calendar year plans, the regulations will first apply on January 1, 2008. Nondiscrimination Regulations
The final rules make very few substantive changes to the previously released interim nondiscrimination rules. They do, however, clarify how the nondiscrimination rules apply in specific benefit situations.
Health Reimbursement Arrangements (HRAs). The new rules clarify that an HRA does not violate HIPAA’s nondiscrimination rules, even if participants’ coverage amounts for a given year vary because of the carryover of unused account balances. An example in the final rule explains that such a result does not constitute discrimination on the basis of prior claims experience because employees who have participated in the plan for the same amount of time are ultimately eligible for the same total benefit for the period, notwithstanding any fluctuations in available benefits in a particular year on account of carryovers.
Source of Injury Exclusions. A health plan may not deny benefits due to the fact that the injury results from a medical condition or an act of domestic violence. The final regulations clarify that this rule applies even if the medical condition was not diagnosed before the injury. Thus, for example, benefits may not be denied for injuries associated with a suicide attempt resulting from depression, even if the individual had never been diagnosed or treated for depression.
To some extent, however, this begs the question. How does a claims administrator determine whether a suicide attempt resulted from depression if there is no prior diagnosis or treatment? In the past, some claims administrators interpreted the regulations to permit the application of suicide exclusions in the absence of specific documentation or evidence of a contributing mental condition (e.g., medical records). It now appears that such investigations may be pointless. Wellness Programs
Generally, HIPAA prohibits a health plan from discriminating against participants and beneficiaries, in either eligibility or benefits, on the basis of a “health factor.” A health factor includes health status, medical condition, claims experience, receipt of medical care, medical history, genetic information, evidence of insurability, and disability.
The 2001 proposed regulations first introduced the concept of “bona fide wellness programs” as an exception to the general nondiscrimination rule. The final regulations continue to allow plans to “discriminate” by offering premium discounts or lower deductibles to healthy individuals in connection with certain wellness programs, but eliminate the term “bona fide” in connection with wellness programs.
Wellness Programs Based on Health Factors. Under the final regulations, a wellness program that requires satisfaction of a standard that is based on a health-related factor (e.g., nicotine addiction) will qualify only if:
- The reward does not exceed 20% of the cost of coverage;
- The program is reasonably designed to promote health or prevent disease;
- The program gives eligible individuals the opportunity to qualify for the reward at least once a year;
- The reward is available to all similarly situated individuals (including making available a reasonable alternative standard to qualify for the reward if it is unreasonably difficult for an individual to satisfy the otherwise applicable standard because of a medical condition, or if it is medically inadvisable for an individual to attempt to satisfy the standard); and
- The plan discloses the availability of a reasonable alternative standard in all plan materials that describe the terms of the program.
The final regulations make clear that a plan may require verification, such as a statement from an individual’s physician, that it is unreasonably difficult or medically inadvisable for an individual to satisfy or attempt to satisfy the otherwise applicable standard. Additionally, if dependents may participate in the program, the reward limit is measured as 20% of the cost of the family coverage category.
While not explicitly addressed in the regulations, the cost of any “reasonable alternative standard” made available to participants (e.g., participation in a smoking cessation program in lieu of a participant’s certification of non-smoker status) must presumably be paid for by the health plan. Forcing a participant to bear this cost would deny the participant access to the full amount of the wellness program reward.
Wellness Programs Not Based on Health Factors. The rules also clarify that wellness programs need not satisfy any of these conditions if none of the requirements for obtaining the reward are based on achieving a health standard. Examples include:
- A program that reimburses all or part of the cost for memberships in a fitness center;
- A diagnostic testing program that provides a reward for participation, rather than minimum test results;
- A program that encourages preventive care through the waiver of copayments or deductibles;
- A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking; and
- A program that provides a reward to employees for attending a monthly health education seminar.