1. The Affordable Care Act, HIPAA &
Wellness Promotion
John J. Sarno, Esq.
Employers Association of NJ
www.eanj.org

3. ACA – Wellness Promotion
• 75 cents of every dollar is spent on chronic
diseases
• 100 billion dollars of health care is directly
attributed to behavior
The ACA amends HIPAA, permitting premium
discounts to employees who participate in
wellness programs.
Employees who participate in HIPAA-approved
wellness programs can receive up to 30% off in
premium.

4. HIPAA does not mandate benefits
Plans may limit or exclude benefits in relation to
a specific disease or condition (unless state law
provides otherwise)

5. HIPAA was enacted in 1996
Portability of health care insurance
Privacy
Nondiscrimination

6. HIPAA and Wellness Programs
It is unlawful for a group health care plan or a health insurance
issuer to establish enrollment criteria based on any “health status
– related factor.”
“Health status-related factor” means:
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Health status
Medical condition
Claims experience
Receipt of health care
Medical history
Genetic information
Disability

7. Wellness Programs
Employer-sponsored programs that provide educational,
mental or physical fitness activities to promote health and
well-being of employees and their families
These programs may contain health care costs, enhance
productivity and improve employee morale.

8. Typical Wellness Programs:
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Smoking Cessation
Weight Loss
Stress Management
Men’s Health
Women’s Health
Nutrition
Insomnia Program
HIPAA defines a “wellness program” as “any program
designed to promote health or prevent disease.”

9. HIPAA permits a plan or issuer to vary the
amount of premium or contribution it requires
individuals to pay based on whether an
individual has met the standards of a wellness
program.
Such a standard must apply to all “similarly
situated” individuals.

10. “Similarly Situated” means a group of individuals who are treated
the same
Example: A group health plan gives an annual premium discount of
10% of the cost of insurance coverage to participants who adhere
to the Wellness Program. The wellness program consists solely of
an annualized cholesterol test. Participants who score 200 receive
the discount.
The program fails to satisfy the requirements of being available to
all similarly situated employees because some employees may not
achieve 200 because of a medical condition. Another way must be
found for employees to receive the discount.

11. HIPAA permits a plan or issuer to vary deductibles,
co-payments or co-insurance, based on whether an
individual has met the standards of a wellness
program.
If the standards of the wellness program concern a
“health status-related factor,” 5 requirements must
be met.

12. 1) If an award is given, the amount of the reward may
not exceed 30% of the cost of employee-only
coverage under the plan.
Example: An employer sponsors a group health plan.
The annual premium for employee-only coverage is
$3,600 (of which the employees pays $900 per year).
The plan offers a wellness program with an annual
premium rebate of $360.
The wellness program has satisfied HIPAA because the
reward for meeting the standard of the wellness
program does not exceed 30% of the total cost of the
employee-only coverage, $720 ($3,600 x 20% = $720)

13. 2) The wellness program must be reasonably
designed to promote health or prevent disease
a) it must have a reasonable chance of improving the
health of or preventing disease
b) not be overly burdensome
c) not be an excuse for discrimination based on a
health factor
d) not be “highly suspect” in the methods to promote
wellness

14. 3) The program must give individuals eligible for
the program the opportunity to qualify for the
reward under the program at least once per
year.

15. 4) A reasonable alternative standard for obtaining the
reward must be available for individuals for whom it is
unreasonably difficult due to a medical condition to
satisfy the wellness program standard, or it is medically
inadvisable to satisfy the standard.
5) The Wellness Plan must describe the terms of the
program and the availability of a reasonable alternative
standard.

16. Wellness Programs that Automatically Comply
with HIPAA Nondiscrimination Rules
• 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 and
does not base any part of the reward on outcomes;
• A program that encourages preventive care through the waiver of the copayment or deductible requirement under a group health plan for the costs
of, for example, prenatal care or well-baby visits;
• 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.
These programs do not require a reward to be based on meeting a standard
related to a health factor.

17. Wellness Programs and the ADA
Americans with Disabilities Act requires equal
treatment in terms, conditions and privileges
of employment regardless of disability or
medical condition, to the extent feasible.

18. ADA requires employers to provide reasonable
accommodations so that employees may
safely participate in benefits programs.
It is uncertain whether “reasonable
alternative standard” is the same as
“reasonable accommodation.” i.e. morbid
obesity, physical disabilities

19. Medical Examinations
Under the ADA, an employer can conduct a
medical exam as a condition of participation
of the Wellness Program, when employee
participation is “voluntary.”
Is a premium discount a voluntary program?

20. Wellness Programs and Age
Discrimination
Disparate Impact Discrimination
Health-related issues closely correlate with
age, such s cholesterol levels

21. Questions?