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HIPAA Protections and Wellness Programs
Health and welfare plans include health, dental, vision, wellness, life, short and long term disability, and other non-retirement benefits. These plans are subject to a variety of regulatory requirements under both the Code and ERISA which can include nondiscrimination requirements, continuation coverage obligations (COBRA), privacy requirements (HIPAA), and numerous reporting and disclosure requirements. Many of these benefits can be provided to employees without including the value of the benefits in their income, plus employees often pay their share of benefit premiums on a pretax basis through a cafeteria plan. A careful analysis of each benefit provided by an employer must be conducted to understand its tax, compliance, and administrative requirements. This section describes some of most significant regulatory provisions that apply to group health plans.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) applies to group health plans sponsored by public and private employers. HIPAA protects employees by prohibiting discrimination on the basis of a health status related factor, limiting pre-existing condition exclusions (which are being further phased-out by PPACA), and requiring employers to provide employees special enrollment into their plan when an employee loses his or her current coverage, acquires a new dependent, or becomes eligible for premium assistance under Medicaid or a State children’s health plan. The HIPAA nondiscrimination rules limit how far an employer may go to reward or penalize an employee’s health behaviors under a wellness program. Yet another aspect of HIPAA protects the privacy of an employee’s protected health information, which an employer may receive through administration of its group health plan. In complying with all of these rules, employers have different HIPAA disclosure obligations to make employees aware of their rights and protections.