Corporate Wellness Programs: Are They a Wise Investment for Employers?

With the permission of TLNT and Jeremy Sharp I am reposting a terrific article that lends clarification regarding the new GINA regulations issued in November 2010, ADA and HIPAA compliance for wellness programs. TLNT is a HR blog about “The Business of HR,” with news, insight, and topical information from experts and thought leaders in HR, talent management, and all areas related to HR and managing a workforce. Jeremy Sharp, a partner at Walter & Haverfield in Cleveland, concentrates his practice primarily in the field of employee benefits and executive compensation. He also has experience handling related legal issues involving taxation, labor and employment law, school law and health care reform. You can contact him at

 Corporate Wellness Programs: Are They a Wise Investment for Employers?

Final Regulations on Excise Taxes for Group Health Plans Released

Group health plans are responsible for compliance with a number of federal laws governing issues such as continuation coverage and portability of health coverage. If a group health plan does not comply with applicable group health plan requirements, the employer maintaining the plan is subject to an excise tax. Employers are also subject to an excise tax if they do not satisfy comparable contribution rules for health savings accounts (“HSAs”) and Archer medical savings accounts (“MSAs”). The Internal Revenue Service (IRS) has issued final regulations on reporting and paying the applicable excise tax, which are effective January 1, 2010

Group Health Plan Rules Subject to Excise Tax

Generally, an excise tax of $100 per individual per day will apply to violations of the following rules (“Group Health Plan Requirements”):

  • Continuation coverage (COBRA);
  • Portability and nondiscrimination for health coverage (HIPAA);
  • Genetic information nondiscrimination (GINA);
  • Parity between mental health benefits and medical/surgical benefits (Mental Health Parity and Addiction Equity Act);
  • Minimum hospital lengths of stay in connection with childbirth (Newborns’ and Mothers’ Health Protection Act); and
  • Continued coverage for post-secondary students with a serious medical condition (Michelle’s Law).

For violations of the comparable contribution rules for HSAs and Archer MSAs, the excise tax will generally be 35 percent of the amount contributed by the employer to the Archer MSAs or the HSAs of all employees within the applicable calendar year.

For more information got to the IRS Regs

Employee HIPAA Privacy Notice Requirement

HIPAA requires that privacy notices be issued (1) to all employees when they first become covered by the plan, (2) to any employee upon request and (3) to all employees each time the privacy policy is revised. In addition, at least once every three years (beginning three years after the notice is first provided), employees must be informed (in writing) that the notice is available and the procedure for requesting a copy of the notice or group health plans may distribute a new notice every three years. 

Self-Compliance Tool for Part 7 of ERISA: HIPAA and Other Health Care Related Provisions  

Summary of The HIPAA Privacy Rule 

Can your wellness program pass the test?


What types of health promotion or disease prevention programs offered by a group health plan must comply with the Department’s final wellness program regulations and how does a plan determine whether such a program is in compliance with the regulations?


Click here to take the test

Can Health Plan Enrollment be Contingent on Completion of Health Risk Assessment (HRA)?

An Employer can require that its employees complete a HRA or participate in a qualified wellness program as a condition to enroll in the employer’s group health plan.  These employer requirements do not violate HIPAA nondiscrimination provision because enrollment is not conditioned on the employee’s health status or on attaining specific health outcomes.


Programs that comply with HIPAA, such programs are those under which none of the conditions for obtaining a reward is based on an individual satisfying a standard related to a health factor or under which no reward is offered.  These are       

·    A program that encourages preventive care through the wavier of the copayment or deductible requirement under a group health plan

·    A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes

·    A program that reimburses all or part of the costs for membership in a fitness center

·    A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits

·    A program that provides a reward to employees for attending a monthly education seminar

·    a program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking; and

·    a program that provides a reward to employees for attending a monthly health education seminar.


IRS Reg. §54.9802-1(f)(1).


Are you Complying with HIPAA’s Final Wellness Regulations?

The US Dept of Labor has developed a checklist to determine whether a health promotion or disease prevention program is required to comply with the DOL’s final wellness program regulations, and, if so, whether the program is in compliance with the regulations.    

Click here for the Wellness Program Checklist

Click here for DOL’s HIPAA Compliance Guide

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