Q: My company wants to incentivize our employees to get healthy. Is it legal in New Hampshire to offer insurance premium discounts to employees who reach a certain percentage of body fat, or body mass index (BMI)?
Employers can incentivize good health by offering rewards related to employee group health coverage provided that the reward is part of a wellness program structured according to rules recently promulgated by the U.S. Departments of Health and Human Services, Labor, and the Treasury under the Affordable Care Act. Incentives that fail to comply with these new regulations (which amend and clarify prior regulations relating to employment-based wellness programs) could violate the nondiscrimination provisions of the Health Insurance Portability and Accountability Act (HIPAA). The new regulations go into effect for plan years starting on or after January 1, 2014.
The regulations permit wellness programs in various forms – from discounted gym memberships (a "participatory" program) to reduced deductibles for attaining cholesterol, weight, and blood pressure targets ("health-contingent" programs). Premium discounts based on BMI is a health-contingent wellness program.
With respect to health-contingent wellness programs, generally, the new regulations increase the maximum allowable financial incentive from 20% to 30% of employee costs, and for tobacco cessation standards, employers may reward up to 50% of employee costs.
Health-contingent programs must be reasonably designed to promote health or prevent disease and alternatives for obtaining the reward must be offered to employees who cannot meet the initial standard, without requiring medical verification. Employees must have the chance to qualify for the reward annually. A program is considered reasonably designed if it: has a reasonable chance of improving health or preventing disease; is not overly burdensome; is not a subterfuge for discrimination; and is not highly suspect in the method chosen to promote health or prevent disease.
Given that failure to attain the BMI target could result in 30% higher premiums, your employees may be concerned about the program you have in mind. However, the "reasonable alternative standard" requirement under the new regulations is broad and should provide flexibility for employees to attain the reward if they are unable to meet the initial standard; employees' physicians must even be allowed to recommend alternatives.
Keep in mind that compliance with these regulations does not assure compliance with other applicable laws, such as the Americans With Disabilities Act and the Genetic Information Nondiscrimination Act, which may impose additional requirements on wellness programs.
Published in the Manchester Union Leader, September 2013
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
