After presenting at a recent symposium, I had several audience members approach me with specific questions concerning their outcomes-based wellness incentive plan. They were concerned with the legality and compliance of their design. In most cases, their concern seemed to be more than appropriate!
Although I am not an attorney and Bravo does not profess to be legal experts, we've been involved in vetting the compliance of several hundred outcomes-based plan designs and have fielded hundreds of questions surrounding "gray" areas or topics that are not addressed in the regulations.
Many times we work with our customers' in-house or outside counsel, as well as experts at many of the top consulting firms in the nation. This gives us a "bird's eye view" into how the majority of authorities are interpreting certain regulations, where there is great consistency, and where there is disagreement.
I recently met with a company who did not see an Affordable Care Act (ACA) issue with giving cash rewards as taxable compensation awarded for something like weight loss. I believe that is 100% true! The ACA wellness regulations do not preclude an employer from paying cash outside of the health plan. In fact, they do not address this topic at all. However, it would be employment/labor laws that prevent this from being legal, and would likely give rise to EEOC/ADA/ADEA and a host of other exposure if it's interpreted that a person's wages were lower than their coworkers because they weighed more or didn't lose weight.
Another common misunderstanding is in regard to the payment of wellness incentives when a person achieves a certain health outcome, like a BMI below 30 or a 5% weight loss. These incentives can be very effective and are permitted if you follow the ACA wellness regulations, but recognize that they are permitted as a "safe harbor," allowing discrimination within a health benefit plan that is otherwise non-discriminatory. Most attorneys we've worked with explain that companies cannot offer these outcomes-based designs outside of the health plan, and as such, they need to be aware of the plan requirements.
We all know about the need for an appeals process and "reasonable alternatives", but do you know how long a plan has to reply to a request for one? If an appeal is denied, does the employee have a right to an independent review? What about leaves of absence and people on disability? What about COBRA participants? Do the wellness incentives extend to them as well? The answers are not found in the ACA, but they are available in ERISA standards, the Fair Claims Standards, and other insurance regulations. Most concur that the details of your wellness program, the appeals process and an individual's rights are required to be included in the Summary of Plan Descriptions (SPDs). Many wellness companies have Business Associate Agreements in place with their customers and vendors, but are they running background checks on all employees? Are they time and date stamping when every record was modified or even viewed? Are they taking into account other requirements of the security regulations?
The extra work associated with outcomes-based incentives is worth it! We are gathering more meaningful data, proving that tying incentives to personal health improvement leads to both short-term and long-term health improvement. Companies should be careful not to focus on finding the least expensive wellness solutions at the risk of finding themselves exposed to seven figure penalties for violating regulations they didn't think were applicable to a wellness plan. At Bravo, we have many employees who have spent decades in health insurance and third-party-administrator operations, and we bring a comprehensive knowledge of plan requirements. Working together with our customers and business partners, we administer the most innovative and effective wellness plans around, while bringing unparalleled knowledge of potential pitfalls.