Wellness: Everyone Wins—Including the Lawyers

For example, the Health Insurance Portability and Accountability Act (HIPAA), the National Labor Relations Act (NLRA), the Internal Revenue Code, and the Genetic Information Nondisclosure Act (GINA) all have requirements that bear on wellness programs.

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA’s nondiscrimination provisions generally prohibit a group health plan or group health insurance issuer from

• denying an individual eligibility for benefits based on a health factor and or
• charging an individual a higher premium than a similarly situated individual based on a health factor.

Health factors include:

• health status
• medical condition (including both physical and mental illnesses)
• claims experience
• receipt of health care
• medical history
• genetic information
• evidence of insurability (including conditions arising out of acts of domestic violence), and
• disability

An exception provides that plans may vary benefits (including cost-sharing mechanisms) and premiums or contributions based on whether an individual has met the standards of a wellness program that complies with certain standards.

In particular, the amount of the reward must not exceed 20% of the cost of employee-only coverage under the plan. (If employees and any class of dependents are eligible to participate, the reward must not exceed 20% of the cost of coverage in which an employee and any dependents are enrolled.)

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In addition, alternatives must be provided in some circumstances. The following sample language can be used to satisfy this requirement:

“If it is unreasonably difficult due to a medical condition for you to achieve the standards for the reward under this program, call us at [insert telephone number] and we will work with you to develop another way to qualify for the reward.”

National Labor Relations Act

Employers who have negotiated a collective bargaining agreement with a union are required by the National Labor Relations Act to bargain over "wages, hours, and other terms and conditions of employment."

Therefore, a union may claim that a wellness program is a term or condition of employment that mandates bargaining. Employers should also check the governing collective bargaining agreement to see if a wellness program falls under a subject they have agreed to negotiate. For example, a bargaining agreement may mandate negotiation over the amount of employee-paid insurance premiums, but not health insurance or other employee insurance benefits.

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Internal Revenue Code

Depending on the incentives and benefits included in an employer’s wellness program, there may be tax consequences for the employer and the employee.

For example, some employee incentives may constitute taxable income for employees. Generally, the value of an incentive is includible in the employee’s gross income (e.g., gift cards, memberships to off-site exercise facilities). However, there are some exceptions, including:

• Free or subsidized access to a gym or athletic center that is operated by the employer and located on the employer’s premises
• Discount on employee contribution required to participate in employer-sponsored health plan
• Contributions to an employee’s flexible spending account

In addition, a discount to an employee’s healthcare insurance offered as an incentive to employees who participate in a wellness program would probably not be considered taxable income for employees.

Employers are well advised to obtain guidance from a tax professional as tax laws are complex and regulations can change frequently.

Americans with Disabilities Act (ADA)

 The ADA requires employers to offer a reasonable accommodation to an employee with a known disability, and it prohibits employers from making medical inquiries or requiring medical examinations (unless job-related and consistent with business necessity). It is also unlawful under the ADA to take any adverse employment action based on an individual’s actual or perceived disability.

The Equal Employment Opportunity Commission (EEOC) has offered employers some guidance on the ADA’s restrictions on medical inquiries and examinations.

Under the guidelines, an employer may conduct medical examinations and activities that are part of a voluntary wellness and health screening program. Therefore, offering employees the opportunity to voluntarily participate in health screening programs for high blood pressure and cholesterol monitoring is not likely to violate the ADA, as long as there is no penalty (economic or otherwise) for not participating.

Important: Employers must treat any information acquired as a confidential medical record.

In tomorrow’s Advisor, wellness programs and GINA, plus an introduction to a popular wellness guide that will help your program achieve high, best practice ROIs.