You can hardly turn on the TV or pick up a newspaper these days without hearing or reading something about the health care reform debate. No matter the political party or industry, nearly everyone seems to agree that the current system is broken, with tens of millions of Americans uninsured and health care costs skyrocketing.
But while politicians battle over the details of a national health care policy, employers have been taking matters into their own hands with alternative health care programs. There are a variety of programs that can be used to encourage employee wellness, but it’s important to make sure the one you choose complies with applicable law.
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Growth in employee wellness programs
The ever-increasing cost of employer-provided health care has spurred companies across the country to implement a range of alternative health and wellness programs. A national survey conducted by Harris Interactive in 2008 revealed that 91% of employers “believed they could reduce their health care costs by influencing employees to adopt healthier lifestyles.” Anecdotal evidence shows that the benefits of wellness programs extend beyond lower health care costs to include increased productivity and morale.
Tobacco use and obesity are the two most frequently targeted risk factors. Despite the prevalence of these unhealthy lifesyle choices, there are ways to address them. One employer charges employees who use tobacco $25 per month in insurance premiums and plans to charge additional monthly premiums to employees who choose not to participate in its wellness program. Another employer entices its workers to lead a healthy lifestyle by providing on-site fitness centers, cash payments to complete Internet-based health assessments, a smoke-free rebate, and a program geared toward addressing childhood obesity. A third company has a medical clinic and a pharmacy at its headquarters. In some states, employers have stopped hiring tobacco users altogether, a somewhat controversial policy that would be illegal in some states. Other programs include:
- no-tobacco policies on (and sometimes off) work premises;
- cash incentives;
- reimbursement for gym memberships;
- free health coaching;
- insurance premium discounts to employees who meet health standards and surcharges to employees who do not;
- free health screenings, such as blood checks, spinal analysis, and depression screening;
- organized physical fitness activities, such as walking or running clubs and mind and body classes;
- lifestyle-change counseling (e.g., to assist in stress management or help end substance abuse);
- prevention and safety strategies, such as ergonomic education; and
- disease management strategies for issues such as asthma and hypertension.
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Legal landscape
Although wellness programs are a great step toward keeping your workforce healthy and productive, you don’t have free rein in how you incentivize healthy behaviors. As a general rule of thumb, you can safely encourage participation in wellness programs. However, if you want to reward actual health results, you must follow certain rules carefully.
The federal Health Insurance Portability and Accountability Act (HIPAA) restricts discrimination in health benefits based on “health factors,” including health status, medical condition, and medical history. Stemming from this nondiscrimination requirement are very specific rules regarding the wellness incentives employers can offer employees. Generally, you can implement programs that reimburse workers for participating in health services, including reimbursement for gym memberships, diagnostic tests, or smoking cessation programs. Employers can also reward employees for attending certain health classes or participating in fitness activities. These types of benefits — in which employees are rewarded for their participation and not achievement of actual fitness results — can be implemented with minimal legal risk.
Another strategy is to reward actual health results (e.g., rewarding nonsmokers with a premium discount or giving a reward to employees whose cholesterol is below a certain level). Programs like these are trickier to implement. HIPAA regulations lay out five criteria that any rewards program must meet:
- the premium differential must not be more than 20% of the total cost of employee health care coverage;
- the program must be reasonably designed to promote health and prevent disease;
- eligible individuals must be given a chance to qualify at least once a year;
- the program must be available to all similarly situated individuals and must offer an alternative to workers for whom it is medically unadvisable or unreasonably difficult to meet the requirements because of a medical condition; and
- all plan materials must disclose the option of an alternative means to satisfy the program requirements.
In addition to HIPAA, employers must navigate the Americans with Disabilities Act (ADA) by providing reasonable accommodations for disabled employees and ensuring that any wellness program requirements don’t run afoul of the Act. For example, the Equal Employment Opportunity Commission (EEOC) recently issued an informal opinion letter stating that an employer would violate the ADA by requiring employees to participate in a health risk assessment to be eligible for health insurance. It remains unclear whether providing employees with financial incentives to participate in a health risk assessment, such as a reduction in premiums, would run afoul of the ADA.
You should be sure that any health risk assessment or questionnaire is compliant with the Genetic Information Nondiscrimination Act (GINA). The U.S. Department of Labor (DOL) just adopted regulations that limit the circumstances in which employees may be required to divulge family medical history in connection with health risk assessments, which are commonly used in connection with wellness incentive programs.
In addition, it’s important that wellness programs don’t violate the Age Discrimination in Employment Act (ADEA) by creating a disparate impact on older workers. Finally, employers should ensure that wellness programs, like any benefit program, are operated in accordance with federal tax laws and comply with state law requirements. For example, Maine prohibits discrimination in employment decisions based on an employee’s decision to smoke off work premises.
State-by-state comparison of 50 employment laws in all 50 states, including tobacco use
The future
Some of the current debate about health care reform revolves around allowing employers to encourage their employees to engage in healthy behavior. In fact, one of President Barack Obama’s eight principles for health care reform is to “invest in prevention and wellness.” The legislative landscape surrounding employee health programs is sure to be changing and will hopefully support employer efforts to make your workforces healthier and more productive.
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Bottom line
All employers should consider wellness incentive programs. By encouraging employees to be healthy, you may be successful in improving attendance and productivity while reducing health care costs at the same time. As with any new program, however, it must be designed to comply with applicable laws, including the alphabet soup of HIPAA, the ADA, the ADEA, and GINA.