Is your wellness program discriminatory?

It is no secret that health care costs for employers and their employees are out of control in this country. Many employers have attempted to hold down these rising costs by offering wellness-program incentives — insurance premium reductions to employees who meet certain health-related incentives such as tobacco-use cessation, BMI goals, or minimum cholesterol levels.

Yesterday, however, the Obama administration made these wellness incentives more difficult for employers to implement. Pursuant to the Affordable Care Act, the administration issued final regulations on Incentives for Nondiscriminatory Wellness Programs in Group Health Plans [pdf].

Among other restrictions, these regulations require companies to provide “reasonable alternatives” to employees who cannot meet health benchmarks but still want the discounts. The regulations further clarify that this “reasonable alternative” standard is different than an ADA-required reasonable accommodation, and providing a reasonable alternative to achieve a wellness-program incentive does not mean that an employer has met its obligations under the ADA. Note that earlier this month, the EEOC held a public meeting discussing the treatment of employer wellness programs under the ADA.

These new rules will affect all group health plans for plan years beginning on or after January 1, 2014.

If you are among the many of employers that has implemented a wellness program, these regulations are required reading to ensure that your program meets these new nondiscrimination rules.