I have much more to say about this important issue, but for today, let's stick to the basics: Is it legal to tie insurance premiums to actual health outcomes? The answer is yes -- with an asterisk or two (or five). Our old friend HIPAA does allow group plans to discount premiums "in return for adherence to programs of health promotion and disease prevention." The Affordable Care Act of 2010 goes further, allowing employers to tie incentives to a specific health factor.
HIPAA lays out five basic requirements, which I've paraphrased below:
- The total amount of all rewards or penalties must not exceed 20% of the total cost of coverage for employees who participate in the wellness program. (In 2014, this amount will increase to 30%.)
- The wellness program must be "reasonably designed to promote health and wellness."
- Participants must be able to qualify for the incentive at least once per year.
- There must be an alternative for those who can't qualify due to a medical condition.
- The alternative must be communicated clearly to program participants.