Benefits and Compensation, HR Management & Compliance

A Faulty Wellness Program Can Make Your Pocketbook Sick

Your wellness program is going well, with happier and healthier employees. But then, an employee sues the company alleging that the wellness program violates his rights. So your employees are healthier, but your company’s pocketbook is not in the best of condition, as it puts out money for legal fees. Do not let this happen to you!

Many legal issues can arise when running a wellness program. Nondiscrimination, access to facilities and privacy are key considerations. So you need to make sure all necessary legal requirements that apply to a wellness program are addressed.

Among the most important federal laws affecting wellness programs are the Health Insurance Portability and Accountability Act of 1996 (HIPAA) nondiscrimination and wellness program rules (as well as its privacy rules), the Americans With Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code.

The health care reform law also has major implications for wellness programs. As explained in Wellness Programs: Employer Strategies and ROI, 2nd Edition, the reform law amended HIPAA’s wellness program rules by raising the permissible incentive amount from 20 percent to 30 percent of the cost of coverage. It also grandfathered existing wellness programs that are meeting “all applicable regulations” and directs federal agencies to create a 10-state “wellness program demonstration project” by 2014. In addition, the agency’s Centers for Disease Control and Prevention are to provide technical assistance for wellness programs of employers of all sizes.

It’s great that the reform law supports wellness, but employers still need to ensure that the wellness program complies with all applicable federal laws. Here are some tips to consider when creating a wellness program:

  • Get legal counsel involved throughout the whole process — identify risk or issues with all possible approaches.
  • Keep all wellness program documents, whether via e-mail, hard copy or other means.
  • Make sure all of the current wellness initiatives are reviewed by an individual or a group of people to ensure the greatest likelihood that compliance issues from the interaction between programs will be identified.
  • Take advantage of opportunities for relevant legal information, such as a wellness program checklist from DOL.