Discrimination in health plans – is it ever acceptable?

Generally, health plans may not discriminate against members based on their health status or benefit utilization.  HIPAA provides an important exception to this non-discrimination principle that is the basis of the wellness programs we see today.

A plan may provide favorable terms to members meeting specific health related goals only if it meets 5 specific requirements set out in the HIPAA regulations.  These requirements have recently been modified in response to certain provisions of the Health Care Reform (PPACA) bill.

Beginning January 2014, the maximum allowed value of a wellness reward has been increased from 20% to 30% of the plan cost.  The plan cost includes both the employee paid and the employer paid premiums so this amount could be significant.  Additionally, to the extent that the wellness reward concerns cessation of smoking or tobacco use, the maximum permitted reward may be as much as 50% of the cost of the plan.

When implementing “tobacco surcharges” for employee contributions to a health plan, the 5 HIPAA standards must be followed.

The revised wellness program regulations are found here: http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=26492