Long-awaited final regulations regarding wellness programs under the Health Insurance Portability and Accountability Act (HIPAA) were issued December 13, 2006, by the U.S. Departments of Treasury, Health and Human Services, and Labor. They clarify how employers and plan sponsors can structure wellness programs that comply.

Getting around a basic conflict was the reason behind the final regs: HIPAA's "nondiscrimination requirements" seemed to prohibit the financial incentives that are increasingly popular features of employers' wellness programs. HIPAA mandates that an employee cannot be discriminated against on the basis of a health factor for enrollment or premiums in a healthcare plan. To be a shade simplistic about it, let's say you offer a reward to employees who take a daily walk. But John is in a wheelchair, and Mary's healing from a broken leg. Such an incentive would automatically discriminate against any employee whose health prevented him or her from meeting the program standard of taking a daily walk. The final regs detail how you can keep the reward program in place--thus promoting the health of any employee willing to participate--and still avoid discrimination.

In the situation we just described, one of a number of compliance tools is to provide John and Mary with other ways of becoming eligible for the reward. John could be encouraged to wheel beside some colleagues or exercise in whatever way his personal physician advises. Mary can be given a temporary waiver until she recovers. But there are several other requirements for acceptable programs.

• Limit reward sizes to a cost reimbursement, co-pay waiver, or small cash prize, in no case more than 20 percent of the cost of employee-only coverage.
• Design the program in a way that promotes health or prevents disease.
• Offer all employees the chance to qualify for a reward at least once a year.
• Note in all program communications that alternatives or waivers are available to employees who can't meet the standard because of a health factor. The new regs provide sample language for this disclosure, which need not be specific.

The details are very specific. The regs note, for example, that program design must not only have a reasonable chance of improving health or preventing disease but may be neither too burdensome in terms of time required nor a subterfuge for discrimination based on health. And programs can't feature any "highly suspect" methods (an instruction we find puzzling). But here are some helpful suggestions from the regs about wellness programs that qualify: full or partial reimbursement of fees for fitness centers; a reward for participating in a diagnostic test (such as blood pressure) that doesn't depend on the result; waiver of co-pays for preventive care such as mammograms or prenatal care; reimbursement for stop-smoking programs even if the employee doesn't stop; and a reward for attending periodic health seminars.