Vitality and the Legal Environment of Wellness

Transcription

1 Vitality ad the Legal Eviromet of Welless A TECHNICAL BRIEF This documet is made for both iteral ad exteral use.

2 TABLE OF CONTENTS INTRODUCTION...1 THE LAWS AT PLAY...2 THE AFFORDABLE CARE ACT AND WELLNESS PROGRAMS...3 Requiremets for Icetives i Health-cotiget Welless Programs...4 What Type of Program Is Vitality?...4 Vitality Rewards...5 Vitality ad Reasoable Alterative Stadards (RAS)...6 How the Vitality Cotributio Maager Works...8 Vitality Status...9 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)...10 How Vitality Complies...10 FREQUENTLY ASKED QUESTIONS ABOUT THE NEW LEGAL ENVIRONMENT AND VITALITY...11 OTHER RELEVANT LEGISLATION...14 Age Discrimiatio i Employmet Act (ADEA)...14 Americas with Disabilities Act (ADA)...14 Cosolidated Omibus Budget Recociliatio Act (COBRA)...14 Employee Retiremet Icome Security Act (ERISA)...15 Geetic Iformatio Nodiscrimiatio Act (GINA)...15 GLOSSARY OF TERMS...16 APPENDICES...18

3 INTRODUCTION I 2013, importat federal legislatio was passed that affects all group health plas offerig welless programs. Fial ruligs o the use of icetives i welless programs ad the protectio of a idividual s health iformatio are ow codified ad statutory. How will your welless beefits be affected? O May 29, 2013, the Departmets of Labor (DOL), Treasury (DOT) ad Health ad Huma Services (DHHS) issued fial regulatios that reflect chages made by the Patiet Protectio ad Affordable Care Act (or Affordable Care Act or ACA) to welless programs subject to the Health Isurace Portability ad Accoutability Act of 1996 (HIPAA) odiscrimiatio rules. 1 While the regulatios retai the same geeral priciples ad framework as prior guidace, the departmets ameded some of the cocepts first itroduced i the proposed regulatios. Specifically, they subtly reworked the defiitio ad aalysis for the various types of odiscrimiatory welless programs. They also icreased the maximum reward available to welless program participats from 20 to 30 percet of the total cost of coverage, ad up to 50 percet of the cost of coverage for programs with a tobacco-cessatio compoet. Though certai provisios of the ACA have received a moratorium o eforcemet, the regulatios for welless programs are effective for all group health plas with pla years begiig o or after Jauary 1, As importat, i Jauary 2013 DHHS issued the fial rulig o privacy ad security protectios for idividual health iformatio that were origially established uder HIPAA. 2 Previously, the HIPAA Privacy ad Security Rules focused o healthcare providers, health plas ad other etities that process health isurace claims. The chages expaded may of the requiremets to these etities busiess associates, such as cotractors ad subcotractors, that receive Protected Health Iformatio (PHI). The rulig stregthes these protectios ad also implemets chages to the HIPAA rules uder a umber of authorities, icludig the Health Iformatio Techology for Ecoomic ad Cliical Health Act (HITECH) ad the Geetic Iformatio Nodiscrimiatio Act of 2008 (GINA). Obviously, both ruligs impact the desig of existig or cosidered welless programs, icetive structure(s) ad the maer i which welless programs protect idividual health iformatio privacy ad security. To examie these issues further, Vitality has created this brief to give employers a clearer uderstadig of federal welless regulatios ad what it meas to stay compliat. Legal Disclaimer: The Vitality Group does ot provide legal advice, both i geeral ad i this documet explicitly. This documet provides cotext ad refereces to assist admiistrators ad legal teams i reviewig the legal implicatios of the Vitality program. We strogly urge that you cosult your ow legal advisor with ay cocers you may have. 1

4 THE LAWS AT PLAY This table outlies the basics of the federal regulatios that affect welless programs as well as serves as a resource that details how The Vitality Group iterprets these regulatios ad, i our opiio, provides a program that ca make employers seamlessly stay i compliace. THE LAWS AT PLAY CONCERNS THE LAW PRESENTS HOW VITALITY MAKES IT EASY TO COMPLY ACA Program Structure Welless programs must comply with the ACA s five basic requiremets: 1) Opportuity to qualify 2) Size of reward 3) Reasoable desig 4) Reasoable alterative 5) Notificatio The Vitality program has bee ehaced to satisfy these requiremets i a streamlied maer. As the stadard program is meat to be a 12-moth period, all awards that are part of, or result from, the program ca be eared oce per year. These rewards, which will be explaied i more detail, ca be easily accouted for by the employer to esure appropriate size. Claims aalyses year over year have prove that the program ot oly reasoably promotes health ad welless, but also favorably impacts healthcare costs. Vitality s ability to make the Reasoable Alterative Stadard (RAS) ad otificatio requiremets compliat ad easy o our cliets is explaied i further detail below. ACA Size of the Reward Ay health-cotiget reward must ot exceed 30% (or 50% if tobacco is icluded) of total healthcare coverage costs. Vitality has aalyzed all Vitality Rewards to esure our cliets are fully iformed about the rewards offered through the program ad, therefore, the limit o the rewards that the cliet may offer separately from the program. ACA Reasoable Alterative Stadards To be compliat with the ew regulatios for every health-cotiget outcome that has a reward attached, a Reasoable Alterative Stadard must be provided as well as (if ecessary) a full medical waiver. For every health-cotiget outcome, Vitality s member jourey builds i reasoable alteratives that satisfy the regulatio as well as cotiue to promote improvemet i the member s health ad welless. I additio, for all health-cotiget stadards available o Vitality, Vitality ca fully admiister medical waivers ad provide Vitality Poits TM as eeded without the member ever havig to report or otify their employer. ACA Commuicatio For all rewards attached to a health-cotiget stadard that are commuicated to a member, the member must also be made aware of the Reasoable Alterative Stadard or medical waiver optio i the same commuicatio. Throughout the Vitality program iterface ad o all applicable commuicatios templates, stadard laguage take from the regulatios is provided to make compliace easy. HIPAA Data Security As our cliets welless compay, The Vitality Group will hold, store ad maitai extesive amouts of PHI. Cliets ad members must be sure it is safe. Vitality stores ad maitais all the data i a completely secure ad HITECH-compliat eviromet. Our COO fuctios as our Security Officer ad esures data safety. As laws, rules ad idustry best practices chage, Vitality improves i lie with or i advace of these marketplace chages. HIPAA Member Privacy To participate i a welless program, members must provide extesive iformatio about their health, habits ad eve results. HIPPAA requires strict privacy protectios for this type of idividual health iformatio. Vitality s HIPAA Compliace Committee works to esure we are completely compliat with the law ad cotiues to take a coservative approach to esure compliace ad comfort with both our cliets ad members. More importatly, Vitality works to be completely trasparet to our members regardig what iformatio is beig collected, who it is beig shared with ad why. This ca all be foud i our Terms ad Coditios ad Privacy Statemet, which must be viewed ad agreed upo prior to use of the program. 2 The Other Laws: ADA, ADEA, GINA ad ERISA A umber of additioal regulatios must be take ito accout whe desigig a welless program. Vitality has worked hard to esure its program is ot oly legally compliat i ad of itself, but also makes compliace with all laws easy for cliets to achieve. Our reports are desiged to ever share more iformatio tha ecessary with a employer ad avoid all implicatios of both the ADA ad ADEA. I additio, our medical waivers adhere to all requiremets of the ADA. Moreover, as we are a stad-aloe welless compay, either ERISA or GINA applies, yet we still utilize these laws as guidelies throughout our program.

5 THE AFFORDABLE CARE ACT (ACA) AND WELLNESS PROGRAMS The use of Vitality icetives of ay kid, icludig the Vitality Mall, subsidies or Vitality Squares TM, makes Vitality a Health-cotiget Welless Program. To help make it easy for our cliets to be compliat, we have desiged Vitality to meet the most striget requiremets of the ew law. The ACA clearly edorses the value of appropriately desiged workplace welless programs as havig the potetial to promote health ad prevet disease. The goal of the fial rulig o Icetives for Nodiscrimiatory Welless Programs i Group Health Plas was to clarify the sustaied cofusio regardig the scope of HIPAA ad origially published ACA rules goverig welless programs. These regulatios set forth criteria for welless programs that must be satisfied i order to qualify as meetig the welless odiscrimiatio exceptio to HIPAA. 3 The ACA regulatios differetiate betwee two types of welless programs, participatory ad health-cotiget, the break dow the latter category further ito activitybased vs. outcome-based programs. 4 Participatory Welless Programs: These are programs that do ot provide a reward or do ot iclude ay coditios for obtaiig a reward that are based o a idividual satisfyig a stadard related to a health factor. A example is a program that provides a reward for participatig i a biometric screeig but does ot base ay of the reward o ay outcomes achieved. So log as a Participatory Welless Program is provided to all similarly situated idividuals, the program is ot required to satisfy ay other stadards. Activity-based Welless Programs: A subcategory of Health-cotiget Welless Programs, these require a idividual to perform or complete a activity related to a health factor i order to obtai a reward or avoid a pealty. However, these do ot require a idividual to attai or maitai a specific health outcome. The regulatios provide safeguards to esure idividuals who may be uable to participate i or complete the activity due to a health factor are give a reasoable opportuity to qualify for the reward or avoid the pealty. Outcome-based Welless Programs: The secod subcategory of Health-cotiget Welless Programs, these require a idividual to attai or maitai a specific health outcome i order to obtai a reward or avoid a pealty. The regulatios provide safeguards to esure that idividuals who may be uable to achieve or maitai a specific health outcome due to a health factor are give a reasoable opportuity to qualify for the reward or avoid the pealty. 3

6 REQUIREMENTS FOR INCENTIVES IN NONDISCRIMINATORY HEALTH-CONTINGENT WELLNESS PROGRAMS All welless programs must be offered to all similarly situated idividuals. Health-cotiget Welless Programs, based o a perso s health status, must meet additioal requiremets. The fial ACA regulatios retai the five requiremets for icetives i odiscrimiatory welless programs origially madated by HIPAA but icrease the maximum icetives employers ca offer for participatio i a desigated program: 1. Frequecy of opportuity to qualify: The program must give idividuals eligible to participate the opportuity to qualify for the reward at least oce per year. 2. Size of reward: The total reward offered to a idividual caot exceed 30 percet of the total cost of employee coverage uder the pla (icludig both employer ad employee cotributios) or 50 percet of that cost if the program icludes a smokig-cessatio compoet. If ay depedets may participate i the program, the reward cap applies to the total cost of coverage for the idividual plus eligible depedets (such as family coverage or employee-plusoe coverage). 3. Reasoable desig: The program must be reasoably desiged to promote health ad prevet disease. 4. Uiform availability ad Reasoable Alterative Stadard (RAS): The reward must be available to all similarly situated idividuals. The program must allow a Reasoable Alterative Stadard (or waiver of the iitial stadard) for obtaiig the reward to ay idividual for whom it is ureasoably difficult due to a medical coditio, or medically iadvisable, to satisfy the iitial stadard. 5. Notice of Availability of Reasoable Alterative Stadard (RAS): The pla must disclose i all materials describig the terms of the program the availability of a Reasoable Alterative Stadard (or the possibility of a waiver of the iitial stadard). WHAT TYPE OF PROGRAM IS VITALITY? Vitality icorporates elemets of all three types i oe comprehesive program. The program was desiged to be iclusive of all ages, geders ad health ad fitess levels. As members use the program, they ca ear Vitality Poits ad icrease their Vitality Status i may differet ways. For those customers who choose the Vitality Mall, each poit eared also ears a Vitality Buck to redeem o the Mall. These rewards ca be based o participatio (gettig a full biometric screeig doe), activity (takig 10,000 steps per day) ad/or outcomes (beig i healthy rage for a give health factor). The program does ot distiguish betwee poits eared for participatory actios vs. poits eared for a specific activity completio or health outcome. The use of Vitality icetives of ay kid, icludig the Vitality Mall, subsidies or Vitality Squares, makes Vitality a Healthcotiget Welless Program. To help make it easy for our cliets to be compliat, we have desiged Vitality to meet the most striget requiremets of the ew law. Cliets that prefer to provide a strictly Participatory Welless Program must be careful ot to utilize ay Vitality icetives. Whether cliets prefer a simple participatory approach or a full outcome-based program, or wish to target sigle or multiple health risks, Vitality offers a solutio that is comprehesive, ucomplicated, accessible, verifiable ad able to support sigle or multiyear strategies. VITALITY OFFERS A RANGE OF WELLNESS STRATEGIES 2. Sigle risk factor approach Target idividual areas of risk Geerally, smokig or obesity 1. Kow your umbers Focus o completio of health reviews, biometric screes Helpful i idetifyig high-risk areas ad providig a baselie for itervetios 3. Multiple risk factor approach Deal with a full rage of health risks Maage more complex co-morbidities that ca geerate high cost The followig page provides a sapshot of Vitality Rewards ad their respective status uder the ew ACA regulatios. 4

7 VITALITY REWARD DESCRIPTION/EXPLANATION WHAT TYPE OF REWARD IS IT? WHO FUNDS THE REWARD? Vitality HealthyFood TM The Vitality HealthyFood program provides all registered Vitality members a 5% credit o Great for You TM foods purchased at Walmart. Those who complete a Vitality Check receive a 10% credit. Participatory Merely requires a member to participate i the program, ad does ot require ay health-cotiget result. Vitality Vitality Parter Health Club Subsidy A Parter Health Club subsidy is a varied amout based o Vitality Status ad requires that Vitality members Be a active member of a parter health club Work out 12 times per quarter A member ca oly receive a subsidy or a rebate, ot both. Health-cotiget (Outcome-based) Because the size of the subsidy is based o Vitality Status, Vitality cosiders this reward healthcotiget. Cliet Health Club Rebate Vitality members ca receive a aual reimbursemet up to $200 for a o-parter health club membership. To be eligible for this reward, Vitality members must Complete their Vitality Health Review (VHR) Be a active member of the o-parter health club for four moths Participatory Ay member ca receive this beefit without havig to perform ay actual activity or achieve a outcome. Cliet Members may oly receive a subsidy or a rebate, ot both. Smokig-Cessatio Rebate Vitality members ca receive reimbursemet up to $200 oce per lifetime for a smokig-cessatio program. To receive this reward, Vitality members must Be a active member of Vitality Complete their VHR Participatory This reward is ot depedet o the member quittig smokig. Ay member ca receive this beefit without havig to perform ay actual activity or achieve ay outcome. Cliet Weight Loss Rebate Vitality members who have a BMI higher tha 30 ca receive reimbursemet up to $200 oce per lifetime for a i-perso weight loss program. To receive this reward, Vitality members must Be a active member of Vitality Complete their VHR Participatory Because ay member with a BMI over 30 ca receive this beefit without havig to perform ay actual activity or achieve a outcome (i.e., losig weight), the reward is ot health-cotiget. Cliet Vitality Mall The Vitality Mall is a olie mall i which our members ca redeem their Vitality Bucks for various items, such as gift cards, movie tickets, merchadise, etc. Health-cotiget (Outcome-based) Because a member s Bucks are a combied icetive based o poits eared via participatory ad health-cotiget requiremets, Vitality cosiders all Bucks redeemed (ad therefore the Vitality Mall) as a health-cotiget icetive. Cliet Members ca purchase up to six (6) hotel ight vouchers at a discouted rate. The discouted rate is based o Vitality Status, decreasig i cost as members egage i the program Health-cotiget (Outcome-based) Cliet Vitality Hotel Discout The base discout is provided for Broze members (those who complete the VHR) The remaider of Vitality Status levels ca be attaied via poits achieved for havig outcomes withi rage Because the size of the discout varies with Vitality Status, Vitality cosiders this reward healthcotiget. (pays the differece betwee the amout member pays ad the cost of the voucher) The cost ad discout of the voucher varies based o hotel brad ad type of voucher Vitality Squares Vitality Squares is a egagemet tool for all Vitality members to utilize oce per moth to wi prizes based o their Vitality Status. Health-cotiget (Outcome-based) Because members have a opportuity to wi larger prizes as they improve i status, Vitality Squares falls withi the health-cotiget category. Vitality 5

8 VITALITY AND REASONABLE ALTERNATIVE STANDARDS (RAS) Both types of Health-cotiget Welless Programs require the optio of Reasoable Alterative Stadards (RAS) to allow disabled or medically exempt idividuals to ear a reward. The RAS requiremets are similar for activity-oly ad outcome-based programs; however, there are also a few key differeces: For Activity-based Welless Programs, the RAS for obtaiig the reward must be provided for ay idividual for whom (for that period) it is either ureasoably difficult due to a medical coditio to meet the otherwise applicable stadard, or for whom it is medically iadvisable to attempt to satisfy the otherwise applicable stadard. For Outcome-based Welless Programs, a RAS must be provided to all idividuals who do ot meet the iitial stadard to esure that the program is reasoably desiged to improve health ad is ot a subterfuge for uderwritig or reducig beefits based o health status. Vitality makes the ew RAS requiremet simple for all cliets, with built-i alteratives for each health factor ad outcome. REASONABLE ALTERNATIVE STANDARD REQUIREMENTS FOR BOTH ACTIVITY-ONLY AND OUTCOME-BASED WELLNESS PROGRAMS The reward for meetig the alterative stadard must be equal to the reward for meetig the origial stadard. For example, if it takes a few extra moths for a member to complete the alterative stadard ad the icetive is offered mothly, the reward must be prorated back to the date the member failed to meet the origial stadard. The equal reward value must be provided durig the same beefit year. I lieu of providig the alterative stadard, the employer has the optio to waive the origial stadard ad provide the reward. The alterative stadard: Is ot required to be available prior to a idividual requestig it May be provided to the etire class of similar idividuals, or may be determied o a case-by-case basis Must ot require the idividual to icur additioal cost, ad must be made readily available Must iclude a reasoable time commitmet (requirig attedace at a ightly, oe-hour class would be ureasoable, for example) Must meet stadards provided by the idividual s persoal physicia, if applicable Must fulfill the requiremets set forth by the ACA as if the stadard were the origial stadard, subject to special rules for outcome-based alteratives to outcome-based stadards REASONABLE ALTERNATIVE STANDARD ADDITIONAL REQUIREMENTS BY PROGRAM CATEGORY Activity-oly Health-cotiget Verificatio (i.e., physicia s ote) may be requested by employer prior to providig a alterative stadard. Outcome-based Health-cotiget Ay idividual who does ot meet the origial stadard must be provided a Reasoable Alterative Stadard. If the alterative stadard is itself outcome-based, two additioal special rules apply. The stadard 1. Caot be a differet level of the same measuremet used for the origial stadard without allowig additioal time to comply 2. Must allow a secod Reasoable Alterative Stadard to be defied by the idividual s persoal physicia, if the physicia jois i the request 6

9 VITALITY REASONABLE ALTERNATIVE STANDARD EXAMPLES HEALTH MEASURE IN RANGE REASONABLE ALTERNATIVE Body Mass Idex (BMI) 18.5 to 24.9 If > 25, lose 5% of body weight Body Mass Idex (BMI) 18.5 to 24.9 If < 18.5, see your doctor about your low BMI ad submit proof of visit Blood Pressure Diastolic Blood Pressure Systolic Less tha 121/ Less tha 80 Regular physical activity through a fitess device, gym, mobile app or Healthy Habits (preseted as a achieved goal) Olie utritio iteractive cotet (preseted as a achieved goal) Total Cholesterol OR LDL Cholesterol (mg/dl) Fastig Glucose (mg/dl)/ HbA1c Less tha 200 OR CHD risk Low & Less tha 160 CHD risk Med & Less tha 130 CHD risk High & Less tha 100 Less tha 100 Regular physical activity through a fitess device, gym, mobile app or Healthy Habits Olie utritio iteractive cotet Regular physical activity through a fitess device, gym, mobile app, or Healthy Habits Olie utritio iteractive cotet Cotiie Negative result Olie tobacco-cessatio iteractive cotet Pregacy Letter from doctor cofirmig that member is receivig regular (or complyig with) preatal care 7

10 HOW THE VITALITY CONTRIBUTION MANAGER TM (VCM) WORKS The Vitality Cotributio Maager (VCM) is a optioal feature that ca itegrate with employer group payroll systems to allocate a higher or lower share of health pla costs to employees, depedig o their Vitality egagemet. The allocatio ca take the form of reduced or icreased mothly health isurace premium, HRA/HSA cotributios, etc. This approach, as log as it remais compliat with ACA rules, may reduce aual costs to cliets through employee cotributio adjustmets while it ecourages employee accoutability for lifestyle choices. May cliets choose to utilize the VCM i additio to utilizig the Vitality Mall. Others offer rewards o their ow for results obtaied by Vitality; most commoly, these rewards are liked to a member s Vitality Status. Such a hybrid program is simple to desig. Some examples: Separate VCM icetive for achievig a specific Vitality Status This reward structure is the oe most ofte recommeded by Vitality. While status is viewed as health-cotiget, the member jourey provides the eeded RAS to make compliace easy. Separate VCM icetive for specific health outcome(s) This structure is more detailed ad typically has two tiers: 1. A measuremet, test or screeig as part of a iitial stadard 2. A larger program that the targets idividuals who do ot attai or maitai the specific health outcome The RAS requiremet may be met via a educatioal program or a activity may be offered to achieve the same reward, ad, of course, the value caps apply. All rewards provided uder a Outcome-based Welless Program must remai withi the ACA s retroactivity guidelies. If oe member is eligible for a reward upo verificatio of beig i rage ad aother member completed the reasoable alterative but is ot i rage, both rewards must take place at the same time. I other words, if a employer is providig testig to verify i-rage results i November ad perso X is ot i rage but successfully satisfies the Reasoable Alterative Stadard i February, X s reward must be provided as if he satisfied the requiremet i November. This is a importat factor to cosider whe determiig a VCM strategy. Cliets ca avoid the budget cocer of retroactive paymets ad allow ample time for all members to achieve the welless goals if all icetives are awarded i the year followig the outcome. For example, all members who achieve Gold Status i year oe receive the full beefit i year two. 8

11 VITALITY STATUS: A ROBUST, PROPRIETARY MEASURE OF HEALTH ENGAGEMENT Vitality s recommeded structure of the VCM is the requiremet to achieve specific levels of Vitality Status, a pateted approach that liks participatio i a welless program to isurace cotributios. Vitality Status combies activity ad outcomes ito oe simple ad easy-to-uderstad egagemet metric while it balaces icetives for participatio ad outcomes. Vitality offers a variety of icetives ad is desiged to ecourage its members to explore ad egage i activities that promote health or prevet disease. Iformatio obtaied through biometric screeigs is used to ecourage ad guide members to adopt lifestyle behaviors prove to maitai health or prevet disease usig the rewards associated with status as the motivatio. The Vitality Status desig brigs with it built-i Reasoable Alterative Stadards (RAS) so that members of ay age, health or fitess level ca complete a multitude of differet activity combiatios to icrease their status. As members complete various activities, they ear Vitality Poits. The more poits they ear, the higher their Vitality Status ad the greater their rewards. Vitality Poits ad Vitality Status were developed ad desiged to be closely liked to the most importat factors that determie health risks ad outcomes. This likage allows employers to get a robust measure of the level at which their members are takig care of their health, regardless of their startig poit. Oe of the easiest welless program strategies to implemet is to combie participatory requiremets, such as completig a Vitality Health Review ad a Vitality Check, with a requiremet to reach a certai Vitality Status. RAS optios are offered for every healthcotiget factor i the program activities. This structure is ideal for the first year of a welless program. Status allows employers to target each of the key outcomes while givig all employees equitable optios ad ample privacy. Vitality Status is eared i may ways that iclude both activities, such as workouts, ad health outcomes or their reasoable alteratives. A employer will ever kow the specific activities completed to achieve status. The privacy of the Vitality Status allows all of these factors to play a role without a employer requirig more detailed iformatio about the employee s specific egagemets or outcomes. Vitality Status ca also be used by the employer year over year to icrease the degree of challege i the welless program ad still provide a clear ad cocise stadard to its members. Employers ca also use status i cojuctio with other requiremets, such as addig a health factor requiremet (for example, a blood pressure i-rage goal). Of course, this approach will require additioal legths of time for members to achieve goals; however, such a multiyear strategy is also well supported by Vitality with appropriate RAS as eeded. Vitality Status reports provide program egagemet iformatio without divulgig ay member s exact poits, activities or Protected Health Iformatio or PHI. Utilizig Vitality Status as the achievemet requiremet for rewards creates a built-i reasoable alterative to ear rewards, as required by the ACA. The Vitality program has built all of this ito the program as stadard, so employers do ot eed to self-admiister ay alterative or accommodatio. Each status level ca be reached i a variety of ways. Below is a example of five differet ways to reach Silver Status. VARIOUS WAYS TO ACHIEVE VITALITY SILVER STATUS VITALITY STATUS MEMBER A S ACTIVITIES MEMBER B S ACTIVITIES MEMBER C S ACTIVITIES MEMBER D S ACTIVITIES MEMBER E S ACTIVITIES Broze Completes HRA VHR completed VHR completed VHR completed VHR completed VHR completed Silver Participatig i Welless Biometric screeig with the majority of results i rage Biometric screeig with several results out of rage Health calculators CPR certificatio First-aid certificatio Detal screeig Flu shot Sports league participatio Metal Well-Beig Review Maratho athletic evet Biometric screeig with oly blood pressure i rage Olie utritio course Three verified workouts a week for 14 weeks 9

12 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA) HIPAA imposes both a privacy ad security rule to esure that the use, sharig ad disclosure of a idividual s health iformatio (Protected Health Iformatio or PHI) are limited. I additio, HIPAA geerally prohibits group health plas from discrimiatig agaist idividual participats ad beeficiaries i eligibility, beefits or premiums based o a health factor. As a exceptio to this geeral rule, HIPAA does allow for premium discouts or rebates or modificatio to otherwise applicable cost sharig (copaymets, deductibles or coisurace) i retur for adherece to certai programs of health promotio ad disease prevetio, i.e., welless programs. As more ad more compaies embrace welless ad adapt program policies ad parameters, recet ruligs updated ad ameded the origial 1996 HIPAA law to prevet welless programs from discrimiatig agaist a member based o health status. Idividuals, orgaizatios ad agecies that meet the defiitio of a covered etity uder HIPAA must comply with the requiremets to protect the privacy ad security of PHI ad must provide idividuals with certai rights with respect to their PHI. If a covered etity egages a busiess associate to help it perform its healthcare fuctios, HIPAA requires the busiess associate to also comply with the requiremets to protect the privacy ad security of PHI. I other words, covered etities busiess associates are directly liable for compliace with certai provisios of the HIPAA rules. HOW VITALITY COMPLIES As a busiess associate to all our cliets, The Vitality Group abides by HIPAA rules to the fullest extet of the law. I respose to the recetly published HIPAA Omibus Rule, we have appropriately updated our Busiess Associate Agreemet (BAA). We have a iteral HIPAA Compliace Committee that trais ad updates all employees o appropriate chages or improvemets to our compay policies. May committee members have teure sice the April 14, 2003, origial compliace date. We have ever had a reportable disclosure or breach, or have we ever bee a defedat i ay litigatio allegig a breach or violatio of HIPAA. To esure strict HIPAA compliace for our cliets ad members, The Vitality Group maitais strict policies ad procedures surroudig both the privacy ad security of PHI, icludig the sharig of iformatio with cliets ad third parties, via: Cotractual Arragemets The Vitality Group provides its stadard BAA to all ew cliets. Our legal departmet is fully equipped to aswer questios surroudig the BAA, its implicatios ad ay questios or cocers cliets may have. If a cliet prefers to utilize their ow BAA, The Vitality Group is always willig to review a cliet s preferred documet. PHI Disclosure 5 A major purpose of the HIPAA privacy rule is to defie ad limit the circumstaces i which a idividual s PHI may be used or disclosed by covered etities. Uless the iformatio is beig shared with the idividual; DHHS for eforcemet actios; or treatmet, paymet or admiistratio of healthcare operatios, it may ot be disclosed without express authorizatio from the idividual. The Vitality Group does ot disclose ay idetifiable member PHI uless permitted by law. Ay report or sharig of iformatio requested by a cliet is reviewed by our legal team ad chief privacy officer to esure it is permitted by law or is de-idetified. If a cliet requests a customized report or asks The Vitality Group to share iformatio that icludes idetifiable PHI with the employer or aother third party, express authorizatio by each member must be received by The Vitality Group. (This would iclude admiistratio fees.) Third-party Data Itegratio Vitality ca accept data from ay third party for certai welless programs except for health risk assessmets. The data must be trasmitted i a Vitality-prescribed format over a secure etwork, ad acceptace of such data may be subject to a admiistratio fee. Oce the data are received ad maitaied by Vitality, the same policies ad procedures regardig the data s privacy ad security will be maitaied as though Vitality collected the data itself. Maagemet of Coset Requiremets I order for The Vitality Group to legally share ay member PHI, we require that we physically collect ad maage member authorizatios. Should a cliet request the sharig of member data outside of that provided i the stadard Vitality portal, a admiistratio fee could apply. Techology We apply the highest level of security techology to protect member iformatio. (For more iformatio o the exact specificatios o our security techology, please reach out to your Vitality cotact.) 10

13 FREQUENTLY ASKED QUESTIONS ABOUT THE NEW LEGAL ENVIRONMENT AND VITALITY Q. Whe do the ew welless program rules go ito effect? A. The ew regulatios become effective for all health pla years startig o or after Jauary 1, Q. If I customize icetives, how ca I be sure I am i compliace? A. The Vitality Group ca work with cliets to determie appropriate health goals ad how to achieve them withi the ew regulatios. We are ot, however, i a positio to give legal advice ad so we cautio cliets ad prospects to seek their ow legal cousel whe desigig their welless program. Q. What Reasoable Alterative Stadards does Vitality use? A. Vitality is desiged to make the ew Reasoable Alterative Stadard requiremet simple for all cliets. The program satisfies the most striget legal requiremets ad automatically provides eligible members with appropriate reasoable alteratives for each health factor ad outcome. Q. How does The Vitality Group deliver HIPAA-compliat reportig o outcomes? A. Outcomes will always be cosidered PHI uder HIPAA. Vitality is desiged to make reportig o such factors both simple ad compliat. The Vitality portal provides each member a sectio that idetifies the icetives beig offered by their employer, how to ear them ad a HIPAA-compliat coset selectio that authorizes us to appropriately report to their employer. IMPORTANT: Eve with such authorizatio, Vitality does NOT directly report ay idividual healthfactor details. Istead, our stadard report structure is desiged to cofirm simple yes or o qualificatio for a give reward, ot health factor or outcome details. For example, the member report o a smokig-cessatio program does ot reveal whether a member is: a smoker; a osmoker who has ot received verified cotiie test results; a smoker who is erolled i a smokig-cessatio course; or a smoker who has chose ot to eroll i the smokigcessatio course. Rather, reports are desiged to reflect whether or ot a member is eligible for the icetive. Eve whe more tha oe outcome is required to determie qualificatio for a icetive, our stadard report oly reflects yes or o eligibility. A cliet may, however, request a additioal, aggregate report that shows how may members qualify for the icetive based o the reasoable alterative vs. The followig VCM report would ot require coset from the member to share with a employer; additioal data fields, icludig achievemet of a specific outcome, would require coset from the member. the origially required outcome or activity. Q. What outcome-based icetives does Vitality support? Ca cliets determie proprietary thresholds o which to base outcome improvemets i order to qualify for rewards? A. Vitality is built to support the followig outcomes: BMI, glucose, cholesterol, smokig ad blood pressure. We utilize well-recogized health research ad guidelies to desigate health status for each idicator as low risk, at risk or high risk. Uiformity of thresholds eables us to better serve all cliet populatios effectively ad efficietly. Q. Is a doctor s ote acceptable to Vitality to cofirm the eed for a RAS? If ot, what choices would Vitality provide? A. Yes. We ca accept a doctor s ote via our Medical Accommodatio Form, dowloadable from the Power of Vitality member site. This form icludes required fields for both the member ad the physicia to complete i order to fully verify the eed ad legth of time required for the RAS accommodatio. Upo receipt of the completed form, Vitality will classify the idividual accordigly. For example, if the member caot exercise at all, he or she will ear a equivalet fitess poit for ay poit eared egagig i other o-outcome-based activities, such as completig a olie utritio course or assessmet. Note that Vitality caot make idepedet medical determiatios, treatmets or diagoses. As log as we receive adequate documetatio ad certificatio from the member s physicia, o further ivestigatio will take place. MEMBER NAME AND BASIC INFORMATION STATUS MET VCM REQUIREMENTS DATE MET VCM REQUIREMENTS CONTRIBUTION AMOUNT VITALITY HEALTH REVIEW COMPLETION DATE VITALITY CHECK COMPLETION DATE Joh Smith Gold Yes 10/23/13 $50 8/12/13 9/24/13 Jae Saders Silver No N/A N/A 9/30/13 11

14 Q. If a member does ot meet a stadard, do the ew regulatios allow that idividual to apply for a exteded time period i which to complete the activity i order to comply? A. If the requiremets are completio of specific activities, such as a HRA or a biometric screeig, the ew regulatios do ot require a extesio of time, provided that every employee is grated a opportuity to meet the requiremet at least oce per pla year. However, time extesios are importat with regard to outcome-based programs. The regulatios for outcome-based programs state that, The Reasoable Alterative Stadard caot be a requiremet to meet a differet level of the same stadard without additioal time to comply that takes ito accout the idividual s circumstaces. So, if a idividual jois the orgaizatio after the cutoff date, they must be accommodated with a extesio. Q. Is a idividual s smokig status cosidered PHI? A. Yes. PHI is defied as all idividually idetifiable health iformatio held or trasmitted by a covered etity or its busiess associate, i ay form or media, whether electroic, paper or oral. This is iformatio, icludig demographic data, that relates to: the idividual s past, preset or future physical or metal health or coditio; the provisio of healthcare to the idividual; or the past, preset or future paymet for the provisio of healthcare to the idividual; ad idetifies the idividual, either clearly or for which there is a reasoable basis to believe it ca be used to idetify the idividual. Q. Is there a differece betwee sharig oe piece of PHI, full biometrics or VHR results? A. No. A member s PHI, whether oe aspect, certai parts or i full, are all cosidered PHI. It does ot matter if Vitality shares oe piece of iformatio or a collectio of data, the HIPAA privacy ad security rules are fully applicable ad must be obeyed. If the sharig of iformatio does ot fall withi a required or permitted disclosure, express authorizatio must be give to share the member s data. Q. Whe does Vitality require idividual member coset to share iformatio ad why? A. Idividual coset or authorizatio is required by the HIPAA Privacy Rule for uses ad disclosures of PHI ot otherwise allowed by the rule. I other words, Vitality is ot allowed to share with ay third party iformatio that icludes PHI or ca directly or idirectly ifer PHI about a member. The sharig of aggregated data does ot require member coset as it is ot idetifiable at the member level, ad therefore ot protected uder HIPAA. Withi the Vitality program, Vitality cosistetly requires member coset i two istaces. First, if a cliet would like to receive a detailed VCM report, which icludes idividual PHI rather tha merely showig whether a member has or has ot satisfied a requiremet, member coset to share this iformatio with the employer is required. I additio, if a cliet would like to use either a parter or third-party disease maagemet vedor for outreach, Vitality will require the member to ot oly coset, but authorize the method of cotact that the disease maagemet vedor may use. Q. What is required to satisfy the authorizatio requiremet? Ca members chage authorizatio? A. A authorizatio or coset must specify a umber of elemets, icludig a descriptio of the PHI to be used ad disclosed, the perso authorized to make the use or disclosure, the perso or etity receivig the iformatio ad, i some cases, the purpose for which the iformatio may be used or disclosed. Members must always have the ability to revoke their authorizatio ad opt out of the further sharig of their iformatio. Q. What laguage is Vitality plaig to utilize to properly commuicate the Reasoable Alterative Stadards, medical accommodatios or medical waivers, where applicable? A. O the portal as a footer for each page: If you ever feel you are medically uable to satisfy the requiremets or the provided Reasoable Alterative Stadard eeded to ear Vitality Poits, you ca complete a medical waiver form ad have it siged by a medical professioal or physicia. The Medical Waiver Form ca be foud uder Forms o the bottom of your Power of Vitality website. O the medical waiver forms: Vitality is structured to ecourage its members to improve their health ad offers each idividual alteratives that are appropriate to their circumstaces. Vitality will always accept physicia-certified documetatio to waive a out of reach requiremet due to a medical coditio. Please have this form filled out by you ad your physicia. Oce this form is tured i ad processed, the appropriate Vitality Poits will be awarded. I cases where Vitality may eed geeric wordig: 12

15 (such as Icetive commuicatios, etc.) Ay participat for whom it is ureasoably difficult or medically uadvisable due to a medical coditio to comply with the Vitality program, or oe of its stadards, is give the same reward if the participat reaches a alterative stadard that satisfies the followig criteria: 1) reasoably takes ito cosideratio the participat s medical situatio, 2) is ot ureasoably burdesome or impractical to comply with ad 3) is otherwise reasoably desiged based o all the relevat facts ad circumstaces. Q. Is the Vitality program cosidered part of a employer s health pla? A. The Vitality program is a stad-aloe third-party, icetive-based welless program. Vitality does ot provide treatmet or paymet, but rather is a resource to allow our cliets to better admiister their ow health plas ad promote health ad welless. Q. What does it mea to be a similarly situated idividual? Whe does this eed to be take ito accout? A. Distictios amog groups of similarly situated participats i a health pla must be based o boafide employmet-based classificatios cosistet with the employer s usual busiess practice. Distictios caot be based o ay of the health factors. For example, part-time ad full-time employees, employees workig i differet geographic locatios ad employees with differet dates of hire or legths of service ca be treated as distict groups of similarly situated idividuals, with differet eligibility provisios, differet beefit restrictios or differet costs, provided the distictio is cosistet with the employer s usual busiess practice. This should be cosidered whe desigig the VCM, ad evets such as corporate challeges. If a reward/icetive is i ay way ivolved icludig the right to participate i the welless program itself we must cosider where the lie is beig draw betwee groups of people ad why. Q. Ca Vitality release member-specific Vitality Poits reports? A. No. We do ot share a report of Vitality Poits at the member level. At the core of the Vitality program desig is the cocept of Vitality Status. Vitality Status is icluded i each quarterly ad aual report provided to our cliets. These reports allow cliets to make icetive decisios without kowig the exact umber of Vitality Poits ay idividual has attaied or how those poits were eared. (See page 9 for more o Vitality Status.) Q. What data ca be shared with employers or third parties ad what factors determie whether iformatio ca be shared at all? A. The Vitality Group strictly adheres to the policies ad procedures prescribed by the HIPAA Privacy ad Security Rule regardig sharig ay member iformatio. Uless the disclosure of protected iformatio is required by law or is a permitted disclosure for the admiistratio of the health pla, we will ot share ay idetifiable iformatio without authorizatio from the idividual member. Each determiatio whether or ot a disclosure is permissible uder law is based o the idividual s circumstaces ad factors to be reviewed at the time. Q. What additioal agreemets are ecessary for data sharig? A. If data sharig is permissible, with or without idividual member authorizatio, certai agreemets must be i place. Vitality must have a fully executed BAA with the covered etity whose iformatio is beig shared. I additio, the covered etity will have to execute a Data Sharig Agreemet to: describe the exact iformatio to be shared; determie whether idividual member coset is required; ad describe what the iformatio is beig used for so it is clear betwee the parties. Oce both documets are completed, the implemetatio team will fialize the proposal ad begi the work eeded to share the iformatio. Q. What is marketig as defied by HIPAA? A. The HIPAA Omibus Rule, published i early 2013 ad effective September 23, 2013, defies marketig as: commuicatio that ecourages the purchase or use of a product or service where the covered etity or busiess associate receives fiacial remueratio from a third party for makig the commuicatio. As a result, the rule departs from prior versios i that it requires idividual authorizatio for all commuicatios, whether for treatmet or healthcare operatios purposes, i which the covered etity receives fiacial remueratio from the party whose product or service is beig marketed for makig the commuicatios. Fiacial remueratio meas direct or idirect paymet from or o behalf of a third party whose product or service is beig described. It is the opiio of The Vitality Group that ay third party, parter or otherwise, who uses iformatio provided by Vitality to gai more customers, whether through outreach or directed commuicatios, is practicig marketig. 13

16 OTHER RELEVANT LEGISLATION Age Discrimiatio I Employmet Act (ADEA) The ADEA prohibits employmet discrimiatio based o age. I geeral, it requires that age is ot a factor i employmet ad health pla decisios. 6 Vitality ad ADEA All Vitality members have a equal opportuity to egage i the program ad ear status, regardless of their age. Americas with Disabilities Act (ADA) The purpose of the ADA is to protect idividuals with disabilities agaist employmet discrimiatio. Regardig welless programs, the ADA limits the circumstaces i which a employer may require physical exams or aswers to disability-related iquiries. A iquiry is disabilityrelated if a idividual s respose could reasoably be expected to disclose the presece of a ADA-protected disability. For example, How ofte do you exercise? is a questio that could hit that a disability exists. Note that disabilities protected by the ADA iclude obesity, diabetes ad hypertesio. The ADA does permit geeralized disability-related iquiries if they are completely volutary ad medical iformatio is kept cofidetial ad separate from persoel records. However, a volutary respose to a iquiry may be cosidered required if there is a high icetive or pealty tied to participatio. While the amout of icetive required to be cosidered volutary has ot bee specified, welless programs are widespread ad have ot typically bee challeged o the grouds of requirig resposes to iquiries by use of icetives. Vitality ad the ADA Because The Vitality Group collects ad secures all member iformatio, it is ot possible for the employer to access idividual health iformatio. This precludes the possibility of employmet discrimiatio via use of welless iformatio ad removes the risk iheret i offerig health assessmets ad screeigs iterally. While a typical outcome-oly icetive may be i dager of legal challege, icetives based o Vitality Status do ot discrimiate because there is always a alterative way for members with a disability to fulfill the requiremets. Vitality also supports a cofidetial process i which a disabled employee may cotact The Vitality Group to seek a alterative method to attai status ad ear icetives. Cosolidated Omibus Budget Recociliatio Act (COBRA) COBRA esures cotiued health beefits for workers ad their families for a limited duratio i certai situatios. The act was passed to help idividuals maitai coverage durig trasitio periods. COBRA provisios may also apply whe ERISA applies, or if the welless program is cosidered part of the employee health pla. COBRA may require that employees have the optio of payig out-of-pocket to cotiue their welless program eligibility after termiatio of employmet. 7 Vitality ad COBRA Vitality allows the employer to make the decisio whether or ot the Vitality program will be exteded to idividuals eligible for COBRA. If selected, these members Vitality accouts will be maitaied as log as the cliet deems them eligible. 14

17 Employee Retiremet Icome Security Act (ERISA) ERISA was established to protect the assets of workers ad esure that fuds placed i retiremet plas or welfare beefit plas are there whe employees actually retire or eed them. ERISA applies oly to welless programs that provide medical care, such as biometrics or flu shots, ad are preseted as a service separate from a existig health pla. If a program directly provides these services ad is set up separately from other beefits, the law may require the same pla documetatio as a health pla icludig Summary Pla Documets (SPDs), Form Vitality ad ERISA As medical services are ot provided by The Vitality Group, ERISA does ot apply. However, if ecessary, templates for required Vitality documetatio are available. Geetic Iformatio Nodiscrimiatio Act (GINA) GINA protects idividuals from discrimiatio based o geetic iformatio. Geetic iformatio is defied as geetic tests, geetic tests of family members or the maifestatio of a disease or disorder i a family member. A idividual s gees may affect their chaces of disease icidece, but this is ot a acceptable basis for employmet or health pla decisios. GINA allows employers to gather geetic iformatio from their employees as part of a welless program oly if provided o a volutary basis, but this iformatio caot be used by the employer i employmet or health pla decisios. A icetive tied to geetic iformatio may be viewed as discrimiatory, ad idividuals must give prior volutary coset before ay geetic iformatio ca be gathered. 9 Vitality ad GINA GINA applies to health plas ad their admiistratio. While Vitality is ot a health pla, ad therefore is ot required to abide by GINA, we have desiged our program to satisfy GINA requiremets. For example, the Vitality Health Review does ot require a member to provide geetic iformatio i order to receive a icetive. I additio, if a employer chooses to iclude spouses o their program, the popup box to the right is displayed o-scree to esure that spousal members fully uderstad they are ot required to provide ay iformatio i cojuctio with the employee s that could be viewed as geetic iformatio. I accordace with the Geetic Iformatio Nodiscrimiatio Act of 2008 the completio of your medical history questios o the first scree is volutary. Ay fiacial icetives associated with the completio of this VHR will be provided whether or ot your medical history questios are aswered. The iformatio will be used to persoalize your Vitality experiece ad recommedatios ad will ot be available to your employer o a idividually idetifiable basis. Please click ACCEPT if you volutarily agree to provide this iformatio: Declie Accept No other portio of the Vitality program, icludig our Vitality Check biometric screeig, gathers geetic iformatio as it is defied i the legislatio. 15

18 GLOSSARY OF TERMS Authorizatio: If a covered etity wishes to use or disclose a idividual s Protected Health Iformatio (PHI) i a maer that is either required or permitted, the covered etity must obtai the idividual s writte authorizatio. Such a authorizatio: Must be writte i specific terms May allow the use or disclosure by either the covered etity or a third party Must be i plai laguage Must cotai specific iformatio regardig the iformatio to be disclosed or used, the perso disclosig ad receivig the iformatio, expiratio, right to revoke i writig as well as ay other pertiet data 10 Busiess Associate: A perso or orgaizatio, other tha a member of a covered etity s workforce, that performs certai fuctios or activities o behalf of, or provides certai services to, a covered etity that ivolve the use or disclosure of idividually idetifiable health iformatio. Services must be limited to legal, actuarial, accoutig, cosultig, data aggregatio, maagemet, admiistrative, accreditatio or fiacial services. 11 The Vitality Group is a busiess associate to each of its cliets as a holder ad maager of their members PHI. Busiess Associate Agreemet: Whe a covered etity uses a third party to perform busiess associate services, HIPAA requires certai protectios for the iformatio to be put i a cotract. A covered etity must impose specified writte safeguards o the idividually idetifiable health iformatio used or disclosed by its busiess associates. Moreover, a covered etity may ot cotractually authorize its busiess associate to make ay use or disclosure of PHI that would violate HIPAA. 12 Covered Etity: Ca be a healthcare provider, a health pla or a healthcare clearighouse. 13 All Vitality cliets, or the third-party etity i charge of admiisterig their health plas, are covered etities. De-idetified Health Iformatio: Iformatio that either idetifies or provides a reasoable basis to idetify a idividual or their health iformatio. Iformatio is oly de-idetified if the covered etity has o actual kowledge that the remaiig iformatio could be used to idetify the idividual. 14 There are o restrictios uder HIPAA o the use or disclosure of de-idetified health iformatio. Icetives: The possibility of a idividual obtaiig rewards ad/or avoidig a pealty. Pealty: The ACA allows icetives to be offered i the form of a surcharge or other fiacial or ofiacial disicetive. Protected Health Iformatio (PHI): All idividually idetifiable health iformatio held or trasmitted by a covered etity or its busiess associate, i ay form or media, whether electroic, paper or oral. This meas iformatio, icludig demographic data, relatig to: the idividual s past, preset or future physical or metal health or coditio; the provisio of healthcare to the idividual; or the past, preset or future paymet for the provisio of healthcare to the idividual; ad either clearly idetifies the idividual or provides a reasoable basis to believe it ca be used to idetify the idividual. 15 Required v. Permitted Uses or Disclosures: A covered etity must disclose PHI i oly two situatios: 1. to idividuals specifically whe they request access to, or a accoutig or disclosure of, their PHI; ad 2. to Health ad Huma Services (HHS) whe it is udertakig a compliace ivestigatio, review or eforcemet actio

19 A covered etity may use ad disclose PHI without a idividual s authorizatio for the followig purposes or situatios: to the idividual; treatmet, paymet ad healthcare operatios; opportuity to agree or object; icidet to a otherwise permitted use ad disclosure; public iterest ad beefit activities; ad limited data set for the purposes of research, public health or healthcare operatios. Of course, a covered etity may disclose PHI to the idividual who is the subject of the iformatio at ay time. 17 Rewards: ACA regulatios broadly defie a reward as: a discout or rebate of a premium or cotributio; a waiver of all or part of a cost-sharig mechaism (such as a deductible, copaymet or coisurace); or a additioal beefit or ay fiacial or other icetive. Vitality is cosidered a employee beefit that offers additioal icetives or rewards via the Vitality Mall as well as health club subsidies ad Vitality Squares, a iteractive game that educates players o healthy food choices. I additio, our Vitality Cotributio Maager ca be used to discout or rebate a premium or portio of a premium. If a cliet chooses to utilize the Vitality Mall ad o other icetives, our program has bee re-desiged to fully comply with the five requiremets of odiscrimiatory welless programs. To accout for the 30 percet threshold for Mall rewards, we will provide the maximum dollar retail value of available rewards. The cliet is resposible for factorig i ay other icetives it chooses to offer ad makig sure that the total amout is less tha or equal to the 30 percet threshold (or 50 percet if tied directly to tobacco cessatio). Similarly Situated Idividuals: Distictios amog groups of similarly situated participats i a health pla must be based o boafide employmet-based classificatios cosistet with the employer s usual busiess practice. Distictios caot be based o ay health factor. A pla may treat participats ad beeficiaries as two separate groups; however, a pla caot create or modify a classificatio directed at idividual participats or beeficiaries based o oe or more health factors. Vitality Cotributio Maager: This is ot a reward or a beefit, but rather a vehicle to maage employer rewards/ pealties. See the sidebar o page 8 for a complete descriptio. 17

20 APPENDIX A OUTCOME-BASED INCENTIVE PROGRAMS, CONTRIBUTION STRUCTURES AND EXAMPLES OF LEGALITY PER ACA REGULATIONS EXAMPLE PROGRAM DETAILS CONCLUSION BMI screeig with walkig program alterative recommedatios A group health pla provides a reward to participats who have a body mass idex (BMI) that is 26 or lower, determied shortly before the begiig of the year. Participats who do ot meet the target BMI are give the same discout if they comply with a exercise program that cosists of walkig 150 miutes a week. Ay participat for whom it is ureasoably difficult to comply with this walkig program due to a medical coditio (or medically iadvisable to attempt to comply) durig the year is give the same discout if they satisfy a Reasoable Alterative Stadard that is ot ureasoably burdesome or impractical to comply with. All pla materials describig the terms of the welless program iclude this statemet: Fitess is Easy! Start Walkig! Your health pla cares about your health. If you are cosidered overweight because you have a BMI higher tha 26, our Start Walkig program will help you lose weight ad feel better. We will help you eroll. (**If your doctor says that walkig is t right for you, that s okay too. We will work with you to develop a welless program that is.) Participat X is uable to achieve a BMI that is 26 or lower withi the pla s time frame ad receives otificatio. Also, due to a medical coditio, it is ureasoably difficult for X to comply with the walkig program ad so he proposes a program based o the recommedatios of his physicia. The pla agrees to make the same discout available to X that is available to other participats i the BMI program or the alterative walkig program, but oly if X actually follows the physicia s recommedatios. The program satisfies the requiremets because: It is reasoably desiged to promote health ad prevet disease. It makes available to all idividuals who do ot satisfy the BMI stadard a reasoable alterative to qualify for the reward (i this case, a walkig program that is ot ureasoably burdesome or impractical for idividuals to comply with ad that is otherwise reasoably desiged based o all the relevat facts ad circumstaces). The walkig program is itself a activity-oly stadard ad the pla complies with the requiremets that, if there are idividuals for whom it is ureasoably difficult due to a medical coditio to comply, or for whom it is medically iadvisable to attempt to comply with the walkig program, the pla provide a reasoable alterative to those idividuals. It discloses the availability of a RAS i all materials describig the terms of the program ad i ay disclosure that a idividual did ot satisfy the iitial outcome-based stadard. BMI screeig with alteratives available to either lower BMI or meet persoal physicia s recommedatios Same as above except that participats who do ot meet the target BMI are expected to reduce BMI by oe poit istead of a walkig program. At ay poit durig the year, upo request, ay idividual ca obtai a secod Reasoable Alterative Stadard that is i compliace with the recommedatios of the participat s persoal physicia regardig weight, diet ad exercise as set forth i a treatmet pla that the physicia recommeds or to which the physicia agrees. The participat s persoal physicia is permitted to chage or adjust the treatmet pla at ay time ad the optio of followig the participat s persoal physicia s recommedatios is clearly disclosed. The program is compliat because: The stated RAS of qualifyig for the reward via a oe-poit reductio i BMI does ot make the program ureasoable because the program makes available a secod RAS to qualify for the reward via compliace with the recommedatios of the participat s persoal physicia, which ca be chaged or adjusted at ay time. Tobacco use surcharge with smokig-cessatio program alterative I cojuctio with a aual ope erollmet period, a group health pla provides a premium differetial based o tobacco use, determied usig a health risk assessmet. The followig statemet is icluded i all pla materials describig the tobacco premium differetial: Stop smokig today! We ca help! If you are a smoker, we offer a smokig-cessatio program. If you complete the program, you ca avoid this surcharge. The pla accommodates participats who smoke by facilitatig their erollmet i a smokig-cessatio program that requires participatio at a time ad place that are ot ureasoably burdesome or impractical for participats. The pla is otherwise reasoably desiged based o all the relevat facts ad circumstaces, ad discloses cotact iformatio ad the idividual s optio to ivolve his or her persoal physicia. The pla pays for the cost of participatio i the smokig-cessatio program. Ay participat ca avoid the surcharge for the pla year by participatig i the program, regardless of whether the participat stops smokig, but the pla ca require a participat who wats to avoid the surcharge i a subsequet year to complete the smokig-cessatio program agai.- The premium differetial satisfies the requiremets. The program is reasoably desiged because the pla provides a RAS to all tobacco users to qualify for the reward (a smokig cessatio program). The pla discloses the availability of the RAS i all materials describig the terms of the program. Tobacco use surcharge with alterative program The pla does ot provide participat X with the reward i subsequet years uless X actually stops smokig after participatig i the tobacco-cessatio program. The program is NOT compliat because: It is ot reasoably desiged ad does ot provide a RAS. The pla caot cease to provide a RAS merely because the participat did ot stop smokig after participatig i a smokigcessatio program. The pla must cotiue to offer a RAS whether it is the same or differet (such as a ew recommedatio from X s persoal physicia or a ew icotie replacemet therapy). Same as above, but with tobacco-cessatio requiremet. 18