Question: We are designing our wellness programs for this year and want to offer a wellness benefit to our non-smokers. Are there special compliance rules surrounding wellness programs?
Answer: A group health plan is allowed to offer a discount to non-smokers if it is part of formal wellness program that is non-discriminatory under HIPAA. The Department of Labor has specific guidelines as follows:
For a group health plan to maintain a premium differential between smokers and nonsmokers and not be considered discriminatory, the plan’s nonsmoking program would need to meet the five requirements for wellness programs that require satisfaction of a standard related to a health factor.
Accordingly, under the final rules, this wellness program would be permitted if:
- The premium differential is not more than 20 percent of the total cost of employee-only coverage
(or 20% of the cost of coverage if dependents can participate in the program)*;
- The program is reasonably designed to promote health and prevent disease;
Individuals eligible for the program are given an opportunity to qualify for the discount at least once per year;
- The program accommodates individuals for whom it is unreasonably difficult to quit using tobacco products due to addiction by providing a reasonable alternative standard (such as a discount in return for attending educational classes or for trying a nicotine patch); and
- Plan materials describing the terms of the premium differential describe the availability of a reasonable alternative standard to qualify for the lower premium.
* The potential incentive for employers offering wellness programs increases to 30 percent of the premium in 2014 for employee participation in the program or meeting certain health standards. Employers must offer an alternative standard for those employees whom it is unreasonably difficult or inadvisable to meet the standard.