Employer Wellness Programs Must Follow Federal Criteria

Final regulations issued in December 2006 by the U.S. departments of Labor, Health and Human Services and Treasury provide guidelines for employers seeking to add incentives or penalties to encourage participation in wellness programs.

    Under the final Health Insurance Portability and Accountability Act rules, employers may vary the amount of premium contributions required from employees as long as the wellness program meets the following criteria:

• The reward or penalty must not exceed 20 percent of the cost of employee-only coverage under the plan.
• The program must be reasonably designed to promote health or prevent disease.
• Employees must be eligible to qualify for the reward at least annually.
• The reward must be available to all similarly situated individuals.
• A reasonable alternative standard or waiver must be available to individuals for whom it is unreasonably difficult to satisfy the otherwise applicable standard due to a medical condition.

    Employers are also permitted to seek verification, such as a statement from an employee’s physician, when a health factor makes it unreasonably difficult or medically inadvisable for that employee to satisfy or attempt to satisfy the otherwise applicable standard.

    The complete HIPAA regulations governing wellness programs which apply to plan years beginning on or after July 1, 2007, were published in the December 13, 2006, issue of the Federal Register.