Health Reform WK-EDGE Maximum wellness incentive allowed based on total cost of the lowest cost self-only coverage available
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Friday, September 9, 2016

Maximum wellness incentive allowed based on total cost of the lowest cost self-only coverage available

By Lauren Bikoff

Both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) rules provide that where an employer offers more than one group health plan but enrollment in a particular plan is not required to participate in a wellness program, the maximum incentive is based on the total cost of the lowest cost self-only coverage under a major medical group health plan that the employer offers, according to a recently-released informal letter from the Equal Employment Opportunity Commission’s (EEOC) Office of Legal Counsel.

The informal letter is in response to an employer’s request for clarification about the incentive limits that apply to wellness programs under the ADA and GINA. The employer asked the EEOC what incentive limit applies if an employer offers a group health plan with multiple benefit options (high, medium, and low medical options) and enrollment in any one of the options is required to participate in the wellness program.

Background. In May 2016, the EEOC issued two final rules on how employer wellness plans should comply with the ADA and GINA. These final rules explain that employers may offer limited incentives for employees and their spouses to provide health information as part of wellness programs, when certain requirements are met.

Each rule explains how to calculate the permissible incentive limits in four situations: (1) where a wellness program is open only to employees (and, for GINA, spouses) enrolled in a particular group health plan; (2) where an employer offers only one group health plan, but enrollment in the plan is not required to participate in the wellness program; (3) where an employer offers more than one group health plan, but enrollment in a particular plan is not required to participate in the wellness program; and (4) where an employer does not offer a group health plan but does offer a wellness program.

The employer’s situation. The inquiring employer offers a group health plan with three major medical options—high, medium, and low—and requires employees to enroll in one of these options in order to participate in a wellness program. The wellness program is the same regardless of the option in which an employee is enrolled. This situation is most closely aligned with the third method of calculating incentive limits referenced above, noted Peggy R. Mastroianni, Legal Counsel, in the letter.

She notes that when an employer has more than one group health plan and enrollment in a particular plan is not required to participate in a wellness program that collects health information, the incentive limit is calculated using the total cost of the lowest cost self-only coverage under a major medical group health plan. This analysis applies when an employer offers a choice of benefit options through more than one group health plan or through multiple benefit options under a single group health plan, provided that participation in the wellness program is offered to employees whether or not they are enrolled in a particular plan or benefit option.

According to Mastroianni, the result of this approach is that where an employer offers a wellness program that seeks health information from employees participating in different health plans (or in different benefit options within a plan), the incentive available to all employees is the same and does not depend on the plan (or benefit option within a plan) in which they happen to participate.

Mastroianni noted that this is an informal discussion of the issues raised and does not constitute an official opinion of the EEOC.

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