Wellness Program - voluntary?

[Guest njdancer]

A company has a 2-tiered medical plan. The first (and best) offers 100% coverage in-network, and 80% out-of-network. The second tier offers 50% coverage for both in- and out-of- network. (Adding in the usual and customary rule means tier 2 participants may pay far beyond their 50% after satisfying the deductible). The two coverage plans (tier 1 and 2) are offered to all employees; compensation is not a factor. Deductibles are $0/$0 (tier 1) and $1000/unlimited (tier 2). The difference in premium between the two is not that much (20-25%).

The company also has a wellness plan. The wellness plan requires an annual physical, and, based upon age/gender, colonoscopy and mammogram. The wellness plan is advertized as voluntary, and participation will lower the employee's contribution/premium (per the company's benefits leaflet).

In reality, employees who decline the wellness program are not permitted to enroll in tier 1 coverage, and are only given the option of tier 2 coverage. Thus their 'monetary rewards' if applied not to their premium but to their out-of-pocket, will probably exceed ERISA's 20% rule.

The plan document is silent with regard to the reason behind the different plans, and clearly lays out the coverage for each tier, while the wellness plan states the employee will receive "enhanced medical benefits at a lower cost" upon election. Enhanced medical benefits in this case mean the difference between 50% and 100% coverage....major surgery anyone?

Clearly the company wants to steer employees to the wellness plan, which, while clearly identified as 'voluntary', is the only route to accessing the better coverage.

Is this compliant with ERISA law? Can an employee elect tier one and decline the wellness program? Can a wellness plan with such requirements be tied to medical coverage? I have been researching this all week and would appreciate any responses from anyone with experience in this area. Thanks.

For the record, almost all employees elect the Wellness Program for obvious reasons.

[Guest Alonzo Church III]

The following is from a set of Q&As on wellness programs from the DoL:

How do the wellness program rules apply to a group program that offers a reward to individuals who participate in voluntary testing for early detection of health problems? The plan does not use the test results to determine whether an individual receives a reward or the amount of an individual’s reward.

The plan’s program does not base any reward on the outcome of the testing. Thus, it is allowed under the HIPAA nondiscrimination provisions without being subject to the five requirements for wellness programs that do require satisfaction of a standard related to a health factor.

http://www.dol.gov/ebsa/faqs/faq_hipaa_ND.html

In other words, the 20% rule does not apply here, according to the agency that enforces these rules.

[Guest njdancer]

Thanks Alonzo for pointing that out. I did indeed mis-read it.