Healthcare Consumerism

IRS Code for Bona fide Wellness Programs

Prop Reg § 54.9802-1. Prohibiting discrimination against participants and beneficiaries based on a health factors.

Bona fide wellness programs. (1) Definition. A wellness program is a bona fide wellness program if it satisfies the requirements of paragraphs (f)(1)(i) through (f)(1)(iv) of this section. However, a wellness program providing a reward that is not contingent on satisfying a standard related to a health factor does not violate this section even if it does not satisfy the requirements of this paragraph (f) for a bona fide wellness program.

(i) The reward for the wellness program, coupled with the reward for other wellness programs with respect to the plan that require satisfaction of a standard related to a health factor, must not exceed (10/15/20) percent of the cost of employee-only coverage under the plan. For this purpose, the cost of employee-only coverage is determined based on the total amount of employer and employee contributions for the benefit package under which the employee is receiving coverage. A reward can be in the form of a discount, a rebate of a premium or contribution, or a waiver of all or part of a cost- sharing mechanism (such as deductibles, copayments, or coinsurance), or the absence of a surcharge.

(ii) The program must be reasonably designed to promote good health or prevent disease. For this purpose, a program is not reasonably designed to promote good health or prevent disease unless the program gives individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.

(iii) The reward under the program must be available to all similarly situated individuals. A reward is not available to all similarly situated individuals for a period unless the program allows—

(A) A reasonable alternative standard to obtain the reward to any individual for whom, for that period, it is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard for the reward; and

(B) A reasonable alternative standard to obtain the reward to any individual for whom, for that period, it is medically inadvisable to attempt to satisfy the otherwise applicable standard for the reward.

(iv) The plan must disclose in all plan materials describing the terms of the program the availability of a reasonable alternative standard required under paragraph (f)(1)(iii) of this section. (However, in plan materials that merely mention that a program is available, without describing its terms, this disclosure is not required.) The following language, or substantially similar language, can be used to satisfy this requirement: “If it is unreasonably difficult due to a medical condition for you to achieve the standards for the reward under this program, or if it is medically inadvisable for you to attempt to achieve the standards for the reward under this program, call us at [insert telephone number] and we will work with you to develop another way to qualify for the reward.” In addition, other examples of language that would satisfy this requirement are set forth in Examples 4, 5, and 6 of paragraph (f)(2) of this section. Download 2006 Bona Fide Wellness Program 54 9802-1

HIPAA & LIfestyle Incentives

 

The goal of this issue brief is to clarify how employers may provide financial incentives

and rewards for healthy lifestyles without violating the nondiscrimination rules of the

Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).

If compliance with a wellness initiative is not linked to eligibility for a health plan,

benefits under the plan, premium discounts, rebates, reduced copays or deductibles,

HIPAA’s Nondiscrimination Rules do not apply. Therefore, fitness programs, cash

bonuses for health goal achievement and discounts on “Healthy Choice” options in

the company cafeteria do not need to comply with the Nondiscrimination Rules.

 

If an employer wishes to provide a financial incentive only to enrollees who satisfy a particular health standard, such as maintenance of normal Body Mass Index, the employer must design a “bona fide wellness program” that meets certain conditions. First, the amount of the incentive must not be greater than 20 percent of the cost of employee-only health coverage. Second, the employer must make the discount available to enrollees who do not satisfy the health goal, if the enrollee offers proof that he or she meets the following two criteria: a) is unable to reach the goal due to a medical condition; and b) participates in a “reasonable alternative” healthy lifestyle program. Finally, the employer must notify enrollees in plan documents that the discount is available to enrollees who cannot meet the health goal due to a medical condition...Download NBGH Lifestyle Incentives

AHRQ Consumer Financial Incentives Guide

The Guide is an evidence summary organized around a series of 21 questions that span incentive design and implementation decisions as identified by user-stakeholders. That is, the users, in this case purchasers and consumers, wrote the outline for the publication and reviewed a formative draft. The Guide reviews the application of incentives to five types of consumer decisions: (1) selecting a high value provider, (2) selecting a high value health plan, (3) deciding among treatment options, (4) reducing health risks by seeking preventive care, and (5) reducing health risks by decreasing or eliminating high risk behavior.

 The rationale for using incentives is to motivate the consumer in a way that the traditional health care system does not. For instance, most patients have had little basis on which to choose a primary care provider other than the recommendations of friends and family and the provider’s proximity to their home or workplace. However, some employers have begun asking their employees to select value from among provider networks of affiliated physicians and hospitals during an open enrollment period. Provider networks are stratified into tiers based on both quality and cost. Employees are rewarded for choosing a higher value provider network through a lower premium—this is referred to as a “premium tiered health plan.”... Download 2008 AHRQ Incentive Report

ERIC - Use of Incentives

Most large employers now offer health management programs to their employees. A related trend is the growing use of incentives as a tool to drive employee participation and engagement in those programs. Program incentives averaging $192 per person per year are part of an overall employer investment that is expected to yield a return.

Key Findings: Health & wellness programs continue to grow. ► Currently 77 percent of employers offer formal health & wellness programs, up slightly from 2007, and more than half of those currently without programs plan to add them, many within 6 to 12 months. In 2008, 48 percent of employers offer formal disease management programs, approximately the same percentage as in 2007.

Incentives to promote healthy behaviors are on the rise. ► Between 2007 and 2008 there was an increase in the proportion of employers offering incentives for health & wellness or disease management programs, from 62 percent of companies with programs to 71 percent in 2008. Analysis of results by type of incentives suggests that the use of incentives with health & wellness programs increased, while the use of incentives with disease management programs declined... Download 2008 Use of Incentives Survey-Results-2008

Download 2007 Use of Incentives Survey-Results