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Health Plan Nondiscrimination Rules and Wellness Program Guidance

February 9, 2001
Related Topics: Medical Benefits Law, Health and Wellness, Featured Article
   The Departments of Labor, Health andHuman Services, and Treasury jointly published two separate regulations on thenondiscrimination provisions of the Health Insurance Portability andAccountability Act (HIPAA) on January 8, 2001. Under HIPAA's nondiscriminationrules, HMOs and group health plans (both insured and self-insured) may notdiscriminate against individuals by basing eligibility, enrollment, premiums, orcontributions on any "health status-related factors."

    The interim final rules prohibit grouphealth plans or group insurance issuers from denying an individual eligibility,or charging an individual a higher premium than it charges other similarlysituated individuals, based on a health factor. Health factors include healthstatus, medical condition, claims experience, receipt of health care, medicalhistory, genetic information, disability, and evidence of insurability.

    The proposed rules relate to theapplication of the nondiscrimination requirements to bona fide wellnessprograms. Bona fide wellness programs are permitted exceptions to the HIPAAnondiscrimination requirements. Plans may provide discounts, rebates, andmodifications to copayments or deductibles among similarly situated individualsas incentives for complying with health promotion and disease preventionprograms, which meet certain requirements as a bona fide wellness program.

   The new regulations were generally toapply as of the first day of the first plan year beginning on or after July 1,2001 (January 1, 2002 for calendar year plans), with some provisions beginningMarch 9, 2001. However, the effective date has been delayed by 60 days based ona White House memorandum issued by the Bush Administration. (The ClintonAdministration issued these regulations just before the transition to the BushAdministration).

    The effective date refers to the datethe regulation will have the force of law, although employers may not berequired to actually comply with some of the requirements until a later date.

    The nondiscrimination regulations willbe effective on May 8, 2001 or August 30, 2001, depending on the provision. Itremains to be seen what, if anything, the Bush Administration will do with theseregulations.

   The nondiscrimination regulationsclarify that group health plans may treat different groups of similarly situatedindividuals differently, but only if the definition or creation of the groups isnot directed at individual participants based on health factors. This means thatit is permissible to limit or exclude benefits for one group of similarlysituated individuals compared with another. However, other employment laws suchas the Americans with Disabilities Act may apply and should be considered.

    The majority of wellness programs willnot have to change in order to comply with the proposed requirements for bonafide wellness programs because most wellness programs do not requireparticipants to attain lower risk levels or health status improvements, butinstead focus on participation and risk reduction. Employers should still reviewtheir wellness programs to ensure that they either comply with the proposedregulation or are excepted from the regulations.

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SOURCE: Hewitt Associates LLC

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