Q. We have clients who have a wellness program that provides as an incentive a premium holiday in December of the plan year. HIPAA rules say a person must be given the opportunity to qualify at least once a year and the reward has to be provided to all similarly situated individuals. Do employees hired very late in the year have to be given same opportunity to earn the same incentive? Can it be different activities or even different incentive? Could they roll over to the next year?
A. Yes, employees hired very late in the year must be afforded the same opportunity to earn the same incentive, but Plans need not provide a special or different qualification standard to late hires so they can receive the full reward. This plan design might result in many late hires failing to qualify for the premium holiday in their first year, but this is a permissible plan design.
Wellness programs that require participants to satisfy a standard related to a health factor in order to obtain a reward must provide individuals an opportunity to qualify for the reward at least once per year and make the full reward available to all similarly-situated individuals. Late hires that meet all the reward requirements must be eligible to receive the full reward because “hire date” is not a bona fide employment-based classification that would permit different treatment.
However, this does not mean providing a different reasonable alternative standard (RAS) for late hires simply because they are hired late. In activity-only programs, an RAS (or waiver of applicable standard) must be offered to any individual for whom it is unreasonably difficult to satisfy the otherwise applicable standard due to a medical condition, or for whom it is medically inadvisable to attempt to satisfy the otherwise applicable standard. A late hire date is not a medical condition requiring the offering of an RAS. With outcome-based programs, an RAS must be offered to an individual who does not meet the initial standard based on the measurement, test or screening, but this means offering the same alternative standard to late hires as it would any other participant in the program.