Nondiscrimination and Wellness Regulations: Final Rules

1
Nondiscrimination and Wellness RegulationsFinal
Rules

• Presented by
• Patricia M. Wagner
• Epstein Becker Green, P.C.

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Nondiscrimination and Wellness Regulations

• Final Rule Issued December 13, 2006
• Replace interim rule issued in 2001
• Effective Date Apply for plan years beginning
  on or after July 1, 2007

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Nondiscrimination and Wellness Regulations

• Issued by
• Department of Treasury (26 CFR Part 54)
• Department of Labor (29 CFR Part 2590)
• Department of Health and Human Services (45 CFR
  Part 146)

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Nondiscrimination and Wellness Regulations

• Changes from interim rule
• Clarification of the interplay of the ADA and
  Title VII and nondiscrimination
• Clarification of source of injury rule
• Clarification of wellness program requirements
• Clarification of the prohibition on
  non-confinement clauses in relation to state law

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Nondiscrimination

• Review the basic premise of nondiscrimination
  hasnt changed
• A group health plan, and a health insurance
  issuer offering health insurance coverage in
  connection with a group health plan, may not
  establish any rule for eligibility . . . that
  discriminates based on any health factor . . ..
• 45 CFR 146.121(b)

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Nondiscrimination

• What is a rule for eligibility? -- includes
  rules related to
• Enrollment
• The effective date of coverage
• Waiting (or affiliation) periods
• Late and special enrollment
• Eligibility for benefit packages
• Benefits
• Continued eligibility and
• Terminating coverage.
• 45 CFR 146.121(b)
• Plan may not establish any rule for any of the
  above that discriminates based on health factor

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Nondiscrimination

• Health Factors include
• Health status
• Medical condition
• Claims experience
• Receipt of health care
• Medical history
• Genetic information
• Evidence of insurability or
• Disability.
• 45 CFR 146.121(a)

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Nondiscrimination

• Evidence of insurability include
• Conditions arising out of acts of domestic
  violence and
• Participation in activities such as
  motorcycling, snowmobiling, all-terrain vehicle
  riding, horseback riding, skiing, and other
  similar activities.
• 45 CFR 146.121(a)(2)

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Nondiscrimination

• Group health plans and health insurance issuers
  cant establish a rule for eligibility that
  discriminates based on a health factor
• BUT
• A group health plan or group health insurance
  issuer is not required to provide coverage for
  any particular benefit to any group of similarly
  situated individuals.
• 45 CFR 146.121(b)

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Nondiscrimination

• Similarly Situated Individuals
• Participants
• May be treated as distinct groups based on bona
  fide employment based classifications
• Beneficiaries
• May be treated as distinct groups if based on
  employment based classification of participant
  relationship to participant marital status for
  children (age or student status) or any other
  factor not a health factor

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Nondiscrimination

• Similarly Situated Individuals
• Cant do indirectly what you cant do directly
• E.g., cant create an employment classification
  as a way to discriminate.

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Nondiscrimination

• Reminderother state and federal laws may apply
• An exclusion of a benefit that might be
  acceptable under nondiscrimination regulations
  may not be in compliance with other federal laws
  (e.g., ERISA, ADA, Title VII etc.)

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Nondiscrimination

• The Equal Employment Opportunity Commission
  (EEOC) supplied comments specifically
  referencing the ADA and Title VII, e.g.
• Benefit limits applied to AIDS would be a
  disability-based distinction that violates ADA
• Exclusion of prescription contraceptives but not
  other preventative measures would violate Title
  VII

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Nondiscrimination

• Timing of benefit decisions may make a difference
• Example A corporate board determines to impose a
  lifetime limit on AIDS treatment shortly after a
  participant files a claim for treatment of AIDS.
  
• Regulations conclude that the facts of this
  Example . . . strongly suggest that the plan
  modification is directed at the participant.
  Absent outweighing evidence to the contrary, the
  plan violates the rule.
• 45 CFR 146.121(b)(2)(D)(Example 2).

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Nondiscrimination

• Issuers can be in violation if they selectively
  apply riders to groups with individuals with
  health conditions
• Example issuer applies a rider to a group health
  plan which has individuals with a particular
  health condition. Conclusion the benefits are
  not uniformly available to all similarly situated
  individuals.
• 45 CFR 146.121(b)(2)(D)(Example 3).

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Nondiscrimination

• What can issuers/plans allow?
• Exclusion of payment for non-formulary drugs
  acceptable
• Different deductibles or coinsurance requirements
  for different services (provided not directed at
  individuals)
• A variable annual limit on reimbursement based on
  the length of time an employee has participated
  in a plan

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More Favorable Treatment

• Rule confirms providing more favorable treatment
  to individuals with adverse health factors is
  allowed e.g.,
• Allowing coverage for dependent children with
  disabilities past the age otherwise designated

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Wellness Programs

• Final rule clarifies requirements for wellness
  programs
• A wellness program is any program designed to
  promote health or prevent disease.
• 45 CFR 146.121(f).

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Wellness Programs

• Five requirements of wellness programs
• The reward must not exceed 20 of the cost of
  coverage
• Be reasonably designed to promote health or
  prevent disease.
• Give opportunity to qualify for the reward at
  least once a year.
• Available to all similarly situated individuals.
• Plan must disclose in plan materials

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Wellness Programs

• The reward must not exceed 20 of the cost of
  coverage
• must include all wellness programs
• Based on total of employer and employee
  contributions
• Reward can be
• Discount
• Rebate of premium or contribution
• Absence of surcharge
• Value of benefit not otherwise provided under the
  Plan

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Wellness Programs

• Be reasonably designed to promote health or
  prevent disease-reasonably designed intended to
  be an easy standard to satisfy
• reasonable chance of improving the health of
  participants
• not overly burdensome
• not subterfuge for discriminating based on health
  factor
• not highly suspect in method chosen to promote
  health or prevent disease

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Wellness Programs

• Opportunity to qualify for the reward at least
  once a year

23
Wellness Programs

• Available to all similarly situated individuals.
• Must allow reasonable alternatives for those for
  whom it would be unreasonably difficult or
  medically inadvisable to satisfy standard
• May ask for verification that a health factor
  makes it unreasonably difficult or medically
  inadvisable

24
Wellness Programs

• Reasonable Alternatives
• Examples provided by the Rule
• Following recommendations of physician
• Participating in smoking cessation program
• Watching a series of videotapes

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Non-confinement Clauses

• Non-confinement and Actively at Work Clauses
• Plan may not establish eligibility rule or set
  premium or contribution based on whether an
  individual is confined to a hospital or health
  care institution
• Plan may not establish eligibility rule or set
  premium based on whether an individual is
  actively at work.
• But can require employee to begin a job before
  coverage effective as long as rule applies
  regardless of reason for absence

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Non-confinement Clauses

• Relationship of non-confinement clauses to state
  law
• Many states require preceding issuer to provide
  coverage for individuals hospitalized until end
  of stay
• State law does not change succeeding issuers
  obligations under HIPAA
• If prior issuer has obligation under state law
  and succeeding issuer has obligation under HIPAA
  then coordination of benefits laws apply