Wellness Programs after the Affordable Care Act (and Later Regulations) Presented by: Charles P. Stevens Michael Best & Friedrich

The Window of Opportunity What is legal? What works? Conservative Aggressive MRA Employment Law Update

How far can an employer go? MRA Employment Law Update Education Participation Achievement of Standards Participation in Programs Regarding Identified Health Factors Robust Disease Management

Incentives to Participate Employer Programs  Employer A has a wellness program that encourages participation in a Health Risk Assessment (HRA) with a blood draw, taking vital statistics, and a medical questionnaire. It provides a $50 per month premium discount if the employee participates in the HRA.  Employer B’s program requires participation in the HRA or imposes a 20% higher deductible.  Employer C’s program charges an extra $200/month for health coverage if the employee fails a test that considers tobacco use, blood pressure, cholesterol, and body-mass index. MRA Employment Law Update

Health Risk Assessments (and biometric screening)  Questionnaires about health history, exercise, alcohol and tobacco use, and eating habits.  Basic screenings at the employee’s worksite, to include blood pressure, body mass index, blood sugar, and bone density screenings.  Sometimes, complete physical examinations at a doctor’s office or hospital. MRA Employment Law Update

 HIPAA prohibits plans from providing different eligibility rules or benefits based on an individual’s “health status”  Includes health history, claims, and medical condition  Regulations promulgated in 2006 allowed premium, co- payment, or deductible discounts in return for adherence to health promotion and disease prevention  “Participation Only” programs; and  “Standard-Based” programs limited to 20% Background: HIPAA Nondiscrimination Rules before the Affordable Care Act MRA Employment Law Update

Background: ACA – Congress says...  For plan years beginning on or after January 1, 2014, the reward provided under a standard- based program may be up to 30% of the cost of coverage, with another 20% for tobacco use.  Wellness benefits cannot be reduced or withheld based upon lawful ownership, use, storage, or possession of a firearm or ammunition. MRA Employment Law Update

June 2013 HHS regulations imposed new rules recognizing the impact of the Affordable Care Act on wellness programs. Now, wellness programs are broken down as follows: 1. Participatory wellness programs 2. Health-contingent wellness programs a) Activity-only wellness programs b) Outcome-based wellness programs Compliance Issue #1: HHS Wellness Regulations MRA Employment Law Update

Health Contingent Programs Activity-Only Outcome-Based Health Contingent Programs Activity-Only Outcome-Based A Visual Participatory Programs MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations “Participatory wellness programs” are those that do not condition eligibility for a reward upon a participant’s satisfying a health standard and where participation in the programs is available to all similarly situated individuals. MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations Participatory programs include, for example:  Reimbursement of health club fees  Reimbursement for smoking cessation programs (regardless of whether the program is successful)  Waiver of co-payments or deductibles for well-baby visits  Incentives to participate in health fairs or testing (regardless of testing results)  Rewards for attending monthly health education seminars  and... MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations Participatory programs also include:  Engaging in a health risk assessment regarding current health status (including biometric screening), without any further action (educational or otherwise) required with regard to health issues identified by the assessment.  Once the results of the HRA and biometric screening come back, can you require the employee to come to a meeting to listen to the results? Yes, as long as you require everyone to do so regardless of results.  However, further education required based on health status may convert the program into a health contingent program. MRA Employment Law Update

Health-contingent wellness programs require an individual to satisfy a standard related to a health factor. Two types: 1.“Activity-only wellness programs” require performance or completion of an activity but does not require attainment of a specific health outcome. 2.“Outcome-based wellness programs” require attainment of a specific health outcome. Compliance Issue #1: HHS Wellness Regulations MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations Examples of activity-based wellness programs include:  Walking four miles per week  Participating in an aerobics or exercise class  Engaging in a weight loss program The rule presumes that some people may be unable to participate due to health factors, so the “activity” involves more than mere education and discussion. MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations Outcome-based wellness programs require the attainment of a standard related to a health factor, rather than simply participating or engaging in an activity. Thus, they require the employee to actually succeed at wellness. Examples include:  Discounted premium for individuals who are tobacco free.  Discounted premium for individuals who have a body- mass index within a specified range.  Discounted premium for individuals who have an annual cholesterol test showing a cholesterol level under 200. MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations Permitted penalty for noncompliance :  Participatory programs: Unlimited financial penalties and rewards are permitted, including barring from eligibility to participate in the health plan.  Caution: Other parts of the ACA limits the severity of the penalty:  Final regulations issued in November 2014 provide that required affordability of health coverage is determined by “deeming” all participants in all non-tobacco related wellness programs plans as non-compliant. MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations Permitted penalty for noncompliance: Health-contingent wellness programs (both kinds): The reward or penalty may not exceed 30% of the total cost of employee-only coverage (or if spouses, or spouses and dependent children may participate, then 30% of the total cost of the coverage in which an employee and any dependents are enrolled). The 30% is increased by an additional 20% to the extent that the additional percentage is in connection with a program designed to prevent or reduce tobacco use. MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations Additional Requirements for both kinds of health-contingent wellness programs (activity-only & outcome-based):  Individuals must have the opportunity to qualify at least once per year.  The program must be designed to promote health or prevent disease, not be overly burdensome, and not be a subterfuge.  The program must allow a reasonable alternative standard where it is either unreasonably difficult or medically inadvisable for the individual to either engage in the activity or attempt to attain the standard.  The program must disclose that a reasonable alternative standard is available, that a doctor’s recommendations will be accommodated, and provide contact information for further discussion. MRA Employment Law Update

Compliance Issue #1: HHS Wellness Regulations Additional requirement for outcome-based wellness programs:  Where the individual fails to achieve the required health standard (ex. cholesterol below 200), then such individuals are afforded the opportunity to attain a reasonable alternative standard without having to establish that attempting to attain the standard is unreasonably difficult or medically inadvisable. MRA Employment Law Update

 The Americans with Disabilities Act became effective in 1992 and prohibits discrimination on the basis of disability.  An entity subject to ADA:  “Shall not require a medical examination and shall not make inquiries of an employee as to whether such employee is an individual with a disability or as to the nature and severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity”. Compliance Issue #2: ADA, Congress says... MRA Employment Law Update

The ADA makes an exception for certain wellness programs: Voluntary medical exams / inquiries...  Are acceptable as long as:  Medical records are kept confidential  Employer neither requires participation nor penalizes employees who do not participate No ADA regulations concerning wellness programs was issued by the EEOC for 23 years... MRA Employment Law Update Compliance Issue #2: ADA (Existing Guidance)

Compliance Issue #2: ADA  Seff v. Broward County, 778 F. Supp. 2d 1370 (U.S. Dist. Ct., S.D. Fla, 2/11/2011)  The employer imposed a $10/week charge for declining to participate in an HRA including biometric screening. For identified disease states including asthma, hypertension, diabetes, congestive heart failure, or kidney disease, individuals were given the opportunity to participate in a coaching program, after which they received co-pay waivers for certain medications. MRA Employment Law Update

Compliance Issue #2: ADA  Seff v. Broward County (continued)  District Court: The ADA does not prohibit or restrict a covered entity from establishing,... or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with state law. 42 U.S.C. §12201(c); (ADA §501(c)).  Appealed to 11 th Circuit, U.S. Court of Appeals, Affirmed. MRA Employment Law Update

Compliance Issue #2:ADA ( )  In 2014/15, the ADA landscape began to change.  EEOC v. Orion Energy Systems, Inc. (E.D. Wis.)  EEOC alleged employees were required to submit to medical examinations that were not job-related or consistent with business necessity and was terminated for objecting.  The wellness program required employees to complete a health risk assessment disclosing medical history and blood work.  Employee declined to participate in the program. She was required to pay the entire premium cost for single coverage, plus an additional $50 per month for failing to partake in the fitness component of the program. MRA Employment Law Update

Compliance Issue #2: ADA ( )  Changing landscape (cont.)  EEOC v. Flambeau, Inc. (W.D. Wis.)  EEOC alleged the wellness questions were not job-related or consistent with business necessity.  Employees were required to complete a health risk assessment disclosing medical history and permitting blood work.  EEOC alleges the employee was not able to complete the biometric testing/assessment because he was on medical leave and that he was not permitted to take the test upon return.  Failure to complete the test resulted in the loss of coverage and the loss of employer contributions toward the cost of coverage. MRA Employment Law Update

The EEOC and Wellness Programs  Changing landscape (cont.)  EEOC v. Honeywell, Inc. (D. Min.)  Employees and spouses required to undergo biometric testing.  If the employee declined, he or she would incur an annual $500 surcharge (no charge if the spouse declined).  A $1,000 annual tobacco surcharge would apply to employees and also to spouses who declined to undergo biometric testing.  The employer would not pay up to $1500 in annual HSA contributions where the employee declined to undergo biometric testing.  The EEOC had sought a TRO, which the court denied. MRA Employment Law Update

Compliance Issue #2: EEOC Prop. Regs.  On April 20, 2015, EEOC issued proposed regulations to address the vagueness of its “guidance”  Definition of “voluntary”  Addressed incentive levels that can be provided and comply with the ADA  Notice requirements MRA Employment Law Update

Compliance Issue #2: EEOC Prop. Regs.  “Voluntary”  If the wellness program contains disability-related inquiries or medical examinations (including such inquiries as part of a health risk assessment), the program sponsor must not:  Require employees to participate;  Deny coverage under any group health plan or limit the extent of benefits [within limits] for those who do not participate;  Take adverse employment action or retaliate against (etc.) the employee; or  Fail to provide employees with adequate notice.  Confidentiality obligation also attaches. MRA Employment Law Update

Compliance Issue #2: EEOC Prop. Regs.  Limits on Benefits  The benefit/incentive under the program(s) cannot exceed 30% of the total cost of employee-only coverage.  Aggregate all wellness programs offered as part of a group health plan;  In-kind incentives must be valued and factored in.  Time-off, reduced prices, other items of value MRA Employment Law Update

Compliance Issue #2: EEOC Prop. Regs.  Notice Requirements  Must be written so the employee is likely to understand;  Must describe the type of medical information that will be obtained and the specific purposes for which the medical information will be used;  Must describe the restrictions on the disclosure of the medical information, with whom the information will be shared, and the methods of protection the covered entity uses to ensure against improper disclosure of the medical information.  May require a representation that the measures used comply with HIPAA.  Prop. Regs. do not address notice timing. MRA Employment Law Update

Compliance Issue #2: EEOC Prop. Regs.  Smoking cessation programs  Certain tobacco incentives will be limited if the prop. regs. are finalized; however, it depends upon the manner of policing:  Submission to blood draw for detection of tobacco (likely an issue)  Submission of answer to question, “Do you use tobacco?” (likely fine) and permits increasing the incentive to 50%.  Why?  Do employers have to return to the role of being tobacco police?  Again, does it have to be this complicated? MRA Employment Law Update

Compliance Issue 2 ½: Reconciling ACA and HIPAA Wellness Regulations  When do we anticipate EEOC will issue final regulations and when do we anticipate they will be effective?  What are employers doing as they approach open enrollment for 2016 calendar year programs?  Will final regulations be enforceable in 2016? Will non- compliance with proposed regulations be viewed by the EEOC to be in violation of the ADA?  Will the EEOC’s Chicago office sue more employers? MRA Employment Law Update

Compliance Issue 2 ½: Reconciling HHS and EEOC Wellness Regulations  What does a “fully-compliant” program look like?  Maximum non-tobacco incentive is 30% of lowest employee-only coverage premium.  Tobacco-related?  What if a health score takes tobacco into account?  Likely subject to the 30% limit, as opposed to calculating “how much” tobacco is taken into account.  Should tobacco be split into separate incentive? MRA Employment Law Update

Compliance Issue 2 ¾: On-site Clinics Many employers are recognizing the problems high deductible health plans are causing with employees and are establishing or enhancing on-site health care arrangements. Advantages include:  Offering basic low-cost care, valued by employees  Immediate attention to the problem  Integration with wellness program and occupational health  Likely enhances productivity MRA Employment Law Update

Compliance Issue 2 ¾: On-site Clinics Disadvantages of on-site clinics include uncertainty in legal and tax treatment:  Is it a health care provider providing primary care?  Is it a plan?  Will it be subject to the Cadillac Tax?  Is it HIPAA compliant; what is “Protected Health Information?  Is it available to non-participants in the group health plan?  Should the employer charge something for use? How? MRA Employment Law Update

The Genetic Information Nondiscrimination Act (GINA) prohibits discrimination on the basis of genetic information in plan coverage and specifically prohibits group health plans and health insurance issuers from: 1.increasing the group premium or contribution amounts based on "genetic information," 2.requesting or requiring an individual or family member to undergo a "genetic test," and 3.requesting, requiring, or purchasing genetic information prior to or in connection with enrollment, or at any time for "underwriting purposes." Compliance Issue #3: GINA MRA Employment Law Update

“Genetic information” is defined very broadly and I includes:  the individual’s "genetic tests,"  the "genetic tests" of family members,  the "manifestation of a disease or disorder in family members," or  any request for, or receipt of, genetic services or participation in certain clinical research. Compliance Issue #3: GINA MRA Employment Law Update

A group health plan cannot collect genetic information for underwriting purposes. Underwriting includes:  Determination of cost-sharing mechanisms in return for activities such as completing an HRA or participating in a wellness program;  The computation of premium or contribution amounts - including discounts, rebates, or other premium differential mechanisms in return for activities such as completing an HRA or participating in a wellness program; Compliance Issue #3: GINA MRA Employment Law Update

Scenario: A plan provides a premium reduction to an enrollee who completes an HRA after enrollment. The HRA includes questions about the individual’s family medical history. This request for family medical history will be for "underwriting" purposes because completion of the HRA provides the enrollee with a premium reduction. This arrangement violates GINA. Compliance Issue #3: GINA MRA Employment Law Update

Compliance Issue #3: GINA  The EEOC issued proposed regulations on the interaction between wellness programs and GINA in October  An employer’s providing incentives for information on an HRA about a spouse’s current or past health status could result in GINA liability. MRA Employment Law Update

Compliance Issue #3: GINA  Where both employee and spouse are included in the wellness program, the total incentive cannot exceed 30% of the total cost of the coverage, the employee’s incentive is capped at 30% of the cost of self-only coverage and the spouse can receive the balance, up to the maximum total incentive. MRA Employment Law Update

Compliance Issue #3: GINA  A spouse must provide prior, knowing, written, and voluntary authorization for the employer to collect the spouse’s health status information, just as the employee must do, and authorization forms must describe the confidentiality protections and restrictions on the disclosure of genetic information  Employers may not require employees (or spouses or dependents covered by the employee’s health plan) to agree to the sale, or waive the confidentiality, of their genetic information as a condition for receiving an incentive. MRA Employment Law Update

Solutions:  Modify the HRA to provide for no reward (or penalty) for completing it (or failing to complete it) so that it would not be for “underwriting purposes.” or  Split it into two HRAs, one that asks for family medical history (with no reward or penalty) and one that does not (with reward/penalty). or  Modify the HRA to not seek family medical history. Compliance Issue #3: GINA MRA Employment Law Update

Compliance Issue #4: Wisconsin Fair Employment Act  An employer may not make hiring or firing decisions, or otherwise discriminate against an individual, on the basis of the individual’s “use or nonuse of lawful product off the employer’s premises during nonworking hours.”  Intended application: cigarettes, alcohol, pharmaceuticals prescribed by a doctor for the person taking them, etc. MRA Employment Law Update

Compliance Issue #4: Wisconsin Fair Employment Act Exception for life, health, or disability insurance coverage: An employer may not charge employees using lawful products different rates for coverage unless:  The difference between the premium rates charged to a person who uses that lawful product and one who does not reflects the difference in cost between providing the coverage to the individuals who use the lawful product and those who do not  The employer provides each individual who is charged a different premium rate based on the use or nonuse of lawful products with a written statement specifying the premium rate differential used by the insurance carrier MRA Employment Law Update

Are the benefit provisions preempted by ERISA? The Employee Retirement Income Security Act preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan….” ERISA §514(a) (some exceptions apply)  Insured plans?  Self-funded plans? Compliance Issue #5: Wisconsin Fair Employment Act MRA Employment Law Update

Other States Protecting Tobacco Use  18 jurisdictions have enacted protecting use of "tobacco only.” These include: Connecticut, District of Columbia, Indiana, Kentucky, Louisiana, Maine, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Virginia, West Virginia, and Wyoming.  8 states protect the use of lawful products. These are Illinois, Minnesota, Missouri, Montana, Nevada, North Carolina, Tennessee, and Wisconsin.  4 states offer statutory protection for employees who engage in lawful activities. These are California, Colorado, New York, and North Dakota. MRA Employment Law Update

Scenario #1 ABC Company offers employees and spouses a $75 cash gift for taking a Health Risk Assessment, including biometric screenings offered by a 3 rd party vendor. Issues? How would the analysis change if ABC Company requires an employee to take a Health Risk Assessment as a condition of eligibility for coverage in the Company’s group health plan? MRA Employment Law Update

Scenario #2 DEF Company discounts employee contributions toward the cost of coverage by $25 per pay period for employees who attain a particular favorable score on a wellness factor scoring matrix, which considers, body mass index, several cholesterol factors, blood pressure, and nicotine use. Issues? MRA Employment Law Update

Scenario #3 GHI Company charges smokers $50 more in monthly premium contributions. Issues? What if GHI Company refuses to provide any coverage for smokers, and not even if the individual would pay 100% of the cost. MRA Employment Law Update

Scenario #4 XYZ Company maintains a self-funded health plan. In addition to its robust wellness program, the health plan includes a robust disease management plan. If the individual is identified as having various disease factors, various co-pays will be waived if the individual engages in health coaching as to the disease. Issues? What if XYZ Company denies or limits coverage if an individual does not comply with disease management recommendations? Can XYZ Company pay an individual to drop the health plan? MRA Employment Law Update

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