(a) A health-contingent wellness program that requires an individual to attain or maintain a specific health outcome in order to obtain a reward is an outcome-based wellness program.
(b) An outcome-based wellness program does not violate this subchapter so long as the requirements of this section are met.
  (1) Size of reward. The reward for the outcome-based wellness program, coupled with the reward for other health-contingent wellness programs with respect to the plan, must not exceed in total value 30 percent of the cost of employee-only or member-only coverage under the plan; or 50 percent of the cost of employee-only or member-only coverage under the plan, to the extent that the additional 20 percent is in connection with a program designed to prevent or reduce tobacco use. However, if, in addition to employees or members, any class of dependents--such as spouses or spouses and dependent children--may participate in the outcome-based wellness program, the reward must not exceed 30 percent of the cost of the coverage in which an employee or member and any dependents are enrolled; or 50 percent of the cost of the coverage in which an employee or member and any dependents are enrolled, to the extent that the additional 20 percent is in connection with a program designed to prevent or reduce tobacco use.
    (A) For purposes of this section, the cost of coverage is determined based on the total amount of employer and employee contributions toward the cost of coverage, or member contributions toward the cost of coverage, for the benefit package under which the employee or member is, or the employee or member and any dependents are, receiving coverage.
    (B) A reward can be in the form of a discount or rebate of a premium or contribution; a waiver of all or part of a cost-sharing mechanism such as deductibles, copayments, or coinsurance; the absence of a surcharge; or the value of a benefit that would otherwise not be provided under the plan.
  (2) Reasonable design. The outcome-based wellness program must be reasonably designed to promote health or prevent disease. An outcome-based wellness program satisfies this standard if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals and it is not overly burdensome, is not a subterfuge for discriminating based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease. This determination is based on all the relevant facts and circumstances. To ensure that an outcome-based wellness program is reasonably designed to improve health and does not act as a subterfuge for underwriting or reducing benefits based on a health factor, a reasonable alternative standard to qualify for the reward must be provided to any individual who does not meet the initial standard based on a measurement, test, or screening that is related to a health factor, as explained in paragraph (4) of this subsection.
  (3) Frequency of opportunity to qualify. The outcome-based wellness program must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.
  (4) Uniform availability and reasonable alternative standards. The full reward under the outcome-based wellness program must be available to all similarly situated individuals.
    (A) Under this paragraph, a reward under an outcome-based wellness program is not available to all similarly situated individuals for a period unless the program allows a reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward for any individual who does not meet the initial standard based on the measurement, test, or screening, as described in this paragraph.
    (B) To the extent that a reasonable alternative standard under an outcome-based wellness program is an activity-only wellness program, it must comply with the requirements of §21.4707 of this title in the same manner as if it were an initial program standard. To the extent that a reasonable alternative standard under an outcome-based wellness program is another outcome-based wellness program, it must comply with the requirements of this section, subject to the following requirements:
      (i) The reasonable alternative standard cannot be a requirement to meet a different level of the same standard without additional time to comply that takes into account the individual's circumstances.
      (ii) An individual must be given the opportunity to comply with the recommendations of the individual's personal physician as a second reasonable alternative standard to meeting the reasonable alternative standard defined by the plan or issuer, but only if the physician joins in the request. The individual can make a request to involve a personal physician's recommendations at any time, and the personal physician can adjust the physician's recommendations at any time, consistent with medical appropriateness.
    (C) It is not reasonable to seek verification under an outcome-based wellness program, such as a statement from an individual's personal physician, that a health factor makes it unreasonably difficult for the individual to satisfy, or medically inadvisable for the individual to attempt to satisfy, the otherwise applicable standard as a condition of providing a reasonable alternative to the initial standard. However, if a plan or issuer provides an alternative standard to the otherwise applicable measurement, test, or screening that involves an activity that is related to a health factor, then the requirements of §21.4707 of this title for activity-only wellness programs apply to that component of the wellness program, and the plan or issuer may, if reasonable under the circumstances, seek verification that it is unreasonably difficult due to a medical condition for an individual to perform or complete the activity or it is medically inadvisable to attempt to perform or complete the activity.
  (5) Notice of availability of reasonable alternative standard. The plan or issuer must disclose in all plan materials describing the terms of an outcome-based wellness program, and in any disclosure that an individual did not satisfy an initial outcome-based standard, the availability of a reasonable alternative standard to qualify for the reward and, if applicable, the possibility of waiver of the otherwise applicable standard, including contact information for obtaining a reasonable alternative standard and a statement that recommendations of an individual's personal physician will be accommodated. If plan materials merely mention that such a program is available, without describing its terms, this disclosure is not required.

Source Note: The provisions of this §21.4708 adopted to be effective July 22, 2015, 40 TexReg 4693