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TO THE EDITOR: I was interested in the article in the July 16 edition, "Incentive-based Plan Raises Questions." In my role as the practice leader for the Willis Employee Benefits Legal & Research Group, I have been asked by several people whether the plan being promoted by UnitedHealth Group Inc. and BeniComp Group works. Without more experience with wellness plans generally, those discussions, by necessity, will remain theoretical.
Unfortunately, I do not think that the plan design that is being proposed complies with the final Health Insurance Portability and Accountability Act regulations issued last year. The article did discuss that issue, but I wonder if it was critical enough. We have been told that this plan exploits a loophole in those regulations, specifically, Section 2590.732(c)(5)(i)(C). The regulation in question indicates that certain supplemental policies of insurance, as long as they are sold as separate policies, are not subject to HIPAA. Our analysis of that regulation is that the proposal, while it may technically fit the regulatory language, has enough strikes against it that we are advising clients to avoid the plan design and to adopt it only after discussions with their legal counsel.
First, the policy has to be under a separate policy or certificate. While the program might technically be under a separate policy, it is not a stand alone insurance policy. It is packaged together with the underlying group medical plan and they are sold as a single program. While not fatal, perhaps, it certainly has to start raising questions. In addition, if the logic of the designers is followed, we could come up with a plan that circumvents the regulations entirely. An employer could adopt a group medical plan with an extremely large deductible and the "supplemental" plan to fill in the deductible, but that bases its coverage on whatever wellness requirements the employer chooses. The regulations are not all that clear on where that line would be drawn, but you can be sure that the government is not going to interpret the requirements in a way that so blatantly undermines the substance of the rules.
It will be interesting to see what happens now that this plan design is being publicized.
Jay M. Kirschbaum
National Practice Leader Legal & Research Group
Willis North America Inc.
St. Louis, Mo.