Long before the Affordable Care Act (ACA) health care reform law, there was the Health Insurance Portability and Accountability Act—HIPAA. Among other provisions, HIPAA sets rules for wellness programs, limits pre-existing condition exclusion periods to no longer than 12 months and requires plans to provide employees with certificates of coverage.
The ACA and the law’s implementing regulations amend several HIPAA provisions.
Many wellness programs provide incentives for employees to quit smoking, lose weight and make other lifestyle changes to improve their health. Under HIPAA, incentives are limited to 20% of the total cost of employees’ coverage.
HIPAA divides wellness plans into two categories:
- Participation-only plans, where, for example, all employees need to do earn a reward is take blood pressure/cholesterol tests
- Health-contingent plans, where employees must meet a health-related standard before they can collect rewards (e.g., lose weight, lower blood pressure). Health-contingent plans must satisfy five nondiscrimination requirements.
THE ACA SAYS: Final ACA regs, which apply to plan years beginning in 2014 and to grandfathered and nongrandfathered plans, increase the maximum reward to 30%. Rewards to quit smoking can climb as high as 50%. The regs keep intact HIPAA’s nondiscrimination requirements, but further split health-contingent plans into activity-only and outcome-based plans.
- Activity-only plans, such as walking, don’t require employees to attain or maintain a health outcome. They must provide reasonable alternatives (or waive an applicable standard) to those for whom participating is medically inadvisable or unreasonably difficult due to a medical condition. Plans may seek verification from employees’ physicians regarding their inability to participate.
- Outcome-based plans require employees to attain or maintain a specific health outcome in order to obtain a reward. They must provide a reasonable alternative standard (or waive a standard) to all participants who don’t meet the plan’s initial standard. Plans can’t seek verification from physicians as a condition of providing a reasonable alternative standard. The regs update model language wellness plans can use to satisfy their notification duties. (78 F.R. 33157, 6-3-13)
Pre-existing condition exclusion periods
Under HIPAA, plans can’t impose pre-existing condition exclusion periods of longer than 12 months, must use a six-month look-back period to determine if treatment for a pre-existing medical condition occurred and must credit all time employees and dependents were insured against the 12-month exclusion period.
THE ACA SAYS: Under proposed regs, which apply to grandfathered and nongrandfathered group plans, plans are prohibited from imposing any pre-existing exclusion period, beginning with the 2014 plan year for adults. For children under 19, the prohibition on pre-existing conditions has been in effect since Sept. 23, 2010.
Certificates of creditable coverage
HIPAA also requires plans to provide certificates of creditable coverage to terminating employees and dependents. New employees present certificates to the new group plan, which must credit any coverage against any pre-existing condition exclusion period. The Department of Labor provides model certificates.
THE ACA SAYS: Since plans are prohibited from imposing any pre-existing condition exclusion period, ACA regs remove the requirement for plans to furnish certificates of creditable coverage, beginning Dec. 31, 2014. (78 F.R. 7313, 3-21-13)
Special enrollment periods
HIPAA establishes special enrollment periods for employees and dependents that last for 30 days after the loss of eligibility for other private insurance or after a person becomes a dependent through marriage, birth, adoption or placement for adoption. HIPAA was amended in 2009 to require 60-day special enrollment periods if an employee or dependent becomes eligible for premium assistance under Medicaid or the Children’s Health Insurance Program (CHIP) or loses eligibility for Medicaid or CHIP.
THE ACA SAYS: Final regs, which apply to qualified health plans purchased by small employers through the state-based insurance exchanges, adopt HIPAA’s 30-day and 60-day special enrollment periods. (78 F.R. 33233, 6-4-13)
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