Workplace Wellness Programs under the Affordable Care Act

The Affordable Care Act (ACA) includes several reforms directed at promoting and improving the effectiveness of workplace wellness programs. The Department of Health and Human Services (HHS), Employee Benefits Security Administration (EBSA) and Internal Revenue Service (IRS) collectively published final regulations on the ACA’s nondiscrimination requirements for workplace wellness programs which apply to both grandfathered and non-grandfathered group health plans for plan years beginning on or after Jan. 1, 2014.

The final regulations formally adopt nondiscrimination rules for health-contingent wellness programs, such as the reasonable design requirement and the reasonable alternative standards they must offer in order to avoid prohibited discrimination. A health-contingent wellness program is a program that requires an individual to satisfy a standard related to a health factor to obtain a reward. The final regulations divide health-contingent wellness programs into two categories:

  • Activity-only wellness programs require an individual to perform or complete an activity related to a health factor in order to obtain a reward (for example, walking, diet or exercise programs).
  • Outcome-based wellness programs require an individual to attain or maintain a certain health outcome in order to obtain a reward (for example, attaining certain results on biometric screenings or meeting exercise targets).

Additionally, the final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan (and any related health insurance coverage) from 20% percent to 30% of the cost of coverage. The maximum reward is further increased to 50% of the cost of health coverage for health-contingent wellness programs designed to prevent or reduce tobacco use.

Lastly, the ACA created a $200 million grant program for implementing comprehensive workplace wellness initiatives for 2011 through 2015. Under the program, grants will be available to eligible employers who provide their employees with access to a new workplace wellness program. Eligible employers include businesses that:

  • Employ fewer than 100 employees who work 25 hours or more per week; and
  • Did not have a workplace wellness program as of March 23, 2010, the date of the ACA’s enactment.

To be eligible for the grants, the wellness programs must be made available to all employees. In addition, the workplace wellness program must include:

  • Criteria related to health awareness, including health education, preventive screenings and health risk assessments;
  • Efforts to maximize employee engagement;
  • Initiatives to change unhealthy behaviors and lifestyle choices; and
  • A supportive environment at the workplace, including workplace policies to promote healthy eating, increased physical activity and improved mental health.

HHS is responsible for developing specific criteria for the grant program and application process. However, this guidance has not yet been issued.

The ACA authorized the Centers for Disease Control (CDC) to provide employers of any size with access to technical assistance, consultation, resources and other tools to help evaluate, analyze and monitor their wellness programs. The CDC was also directed to conduct a national worksite survey to assess employment-based health programs. Information on workplace health promotion is available on the CDC website.