Good-Intentioned Wellness Programs Need Rules Too
Jul 8, 2010
A drier topic never draws a bigger crowd than a workshop on legal compliance regarding employment benefits. While Human Resource professionals aren’t required to be legal experts, their dedication to their companies drives them to seek understanding on the level at which they can protect and serve to the best of their ability.
The latest ‘must attend’ seminar is on legal considerations for corporate wellness programs. Ideally, an employment law attorney attempts to explain the list of requirements set forth by ERISA, HIPAA, ADA, ADEA, and GINA, as well as other applicable federal and state laws, to help the HR Manager ensure that their wellness program at work is not discriminatory.
Most participants initially wonder, ‘How can a good-intentioned wellness program be discriminatory?’ The goals of most programs, after all, are improved quality of life and financial savings. The reality in our diverse workforce is that all benefits, even those designed with employee welfare at heart, need rules too.
Most company wellness programs nobly aim to prevent the worsening or onset of disease through the promotion of healthy living. Typical programs include access to screening services, flu shots, and lunchtime wellness seminars, as well as other tools, such as a Health Risk Assessment (HRA) and a personal health coach to help employees lose weight or quit smoking. In theory, participation in these types of activities lead to healthy behavior change, resulting in improved individual health and savings for the company.
In recent months, there is more pressure for more companies to implement a wellness strategy that proves to reduce costs associated with poor health, such as absenteeism, low productivity, and increasing health insurance premiums. The greater need for higher employee participation and firm measures to calculate return on investment may necessitate a more aggressive approach, which in practice, increases the potential for legal risk.
Regulations that protect employees from discrimination are important. Although the language may be novel, the rules that apply to wellness programs will enhance the good work currently being done. As health practitioners, we want as many people as possible to get in the race. Rules provide checks and balances for companies under the gun to win the race and prevent weeding out individuals who are not strong enough or fast enough to finish according to an imposed standard.
Developing a wellness culture that improves health and yields savings will take time, money and education. Companies should not ban the elevator and give premium discounts to employees on the cabbage-soup diet to get quick results, but rather, take a thoughtful approach in providing a range of tools that enable participation from any employee willing to make changes for the better.
Employers ought to be encouraged that the law is on the side of both employees and employers who are committed to successful wellness programs. The following are some laws to pay attention to and best practices for implementing an effective wellness program.
Rules to Review
Once you have outlined the goals of your company wellness program, assess your approach through a legal framework. Consult with knowledgeable experts and involve your legal counsel; some of the requirements under these laws may warrant a discretionary decision based on interpretation.
ERISA – Learn more about the Employee Retirement Income Security Act of 1974 (ERISA) to determine if your wellness program qualifies as a “plan” subject to its requirements. Employers may be required to maintain a written plan document, file annual returns and distribute a Summary Plan Document to participants.
HIPAA - The Health Insurance Portability and Accountability Act (HIPAA) nondiscrimination provisions of ERISA generally prohibit group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductible, copayment or other cost sharing requirements based on a health factor. However, there is an exception that allows plans to offer wellness programs. If a wellness program provides a reward based on participation in a wellness program, it does not violate the HIPAA nondiscrimination provisions. Wellness programs that offer a reward based on satisfying a health factor, i.e. a standards-based program, must meet five requirements.
ADA – The Americans with Disability Act (ADA) does not prohibit employers from implementing a wellness program geared at promoting good health and preventing disease. The ADA does prohibit covered employers from denying qualified individuals with disabilities an equal opportunity to participate in, or receive benefits under, programs or activities conducted by those employers. Among other rules, wellness programs must be voluntary and the employer must provide reasonable accommodations for employees with disabilities to participate. Medical records must be confidential and separate from personnel records.
ADEA – The Age Discrimination in Employment Act (ADEA) seeks to protect older workers; wellness programs cannot be used to discriminate against employees who are 40 years of age or older. Older workers may challenge their employers’ standards-based wellness program on the basis of disparate impact.
GINA – The Genetic Information Nondiscrimination Act of 2008 (GINA), includes two titles. Title I amends portions of ERISA and addresses the use of genetic information in health insurance. Title II prohibits the use of genetic information in employment. Under GINA, genetic information, such as family medical history, cannot be collected through a wellness program or HRA unless specific requirements are met. The rules have an impact on when an HRA can be administered and the type of incentive offered. Under GINA, other issues, such as voluntary participation, written consent, and sharing of data are outlined.
Title 1: www.dol.gov/ebsa/newsroom/fsGINA.html
Title II: www.eeoc.gov/laws/types/genetic.cfm
Tax Implications – Some incentives, whether provided directly by the employer or by a third-party vendor on the employer’s behalf, have tax consequences. Incentives provided as part of a health benefit plan, such as reimbursement for a smoking cessation program, can be excluded from employees’ taxable income. Cash or cash equivalent payments to employees, no matter how small, are treated as fully taxable wages.
For more information, contact your local office of the IRS.
Screening regulations – Health awareness screenings, such as cholesterol and glucose, are valuable components of employee wellness programs. The most common blood tests are conducted either via a finger prick or venipuncture method. Each method has advantages and each practice is also regulated by various groups, including federal and state agencies, with regard to safety practices, staff training and relationship of the ordering physician to the patient. To conduct simple health awareness tests, vendors must have a CLIA Certificate of Waiver.
In all cases, it is important to check the laws of your state. Most state insurance codes incorporate the HIPAA nondiscrimination provisions. Fully insured group health plans might have to comply with a state law prohibiting charging high premiums. Numerous states have laws protecting employees from discrimination based on off-duty activities; several states protect tobacco usage, for example. Finally, a few states have requirements for health awareness screenings that are stricter than federal law.
Many employers are implementing wellness programs that are highly utilized and well-received, within the context of laws that protect their employees from discrimination based on health information or health factors.
Modifying your program might be as simple as removing the family medical history question from your HRA. Even if you remove the question to comply with GINA, you can still educate employees on the importance of talking with their doctor about the occurrence of heart disease and cancer in their family and how it impacts their risk. A good wellness program should motivate employees to take preventative measures customized to their personal wellbeing.
In addition to reviewing the rules above, some general good practices include:
- Be as clear as possible about why you want a wellness program and what you hope to achieve. Understand the commitment level in terms of people, time and money.
- Establish an employee wellness committee representative of all levels of the organization to help shape the activities of your program and promote your wellness mission.
- Gradually implement your program and seek employee feedback from participants and non-participants to gauge perception of the program.
- Use a third party to run your program. Select qualified partners that maintain applicable federal and state licenses, have sufficient liability insurance coverage, and provide professional staff to deliver screenings and counseling to employees.
- Set up a firewall so that employee medical information is not shared with the employer. Aggregate data, if available is helpful in measuring progress, and shaping future initiatives. It is important to sign a contract with your wellness program vendor that includes a Business Associates Agreement covering HIPAA.
- Do not make benefits or premium incentives contingent upon completing a HRA that asks for genetic information, such as family history question. Alternatively, you can offer an incentive if you remove the question.
- Most research shows that incentives do increase participation, but remember that incentives don't always have to be tangible. Consider your workforce and what motivates people; there is not likely a one-size fits all reward.
Attendees at one recent workshop on this topic provided feedback that the significance and timing of these issues are relevant. While the regulatory language at times can be difficult to follow, real life examples help to guide us on the practical implementation of the rules. We can anticipate more clarity on the subject as we navigate through our day-to-day experiences.
In the meantime, we appreciate that HR professionals and our colleagues remain committed to wellness, yet are willing to slow down a bit to ensure employees and their organizations are well-served and protected.
About the Author
This article was written by Emily Noll, LifeWork Strategies, Inc (LWS). Emily Noll serves as the Director of Worksite Wellness at LWS, a behavioral health and wellness company of Adventist HealthCare. Emily began working with LWS as an Account Manager five years ago.
Emily utilizes her human resources and counseling background to work with employers of many types and sizes to customize Employee Assistance Programs, Training and Wellness Programs to their diverse needs. Emily guides a talented team of health professionals to deliver on-site health screenings, seminars, and flu shots. Emily serves as Editor of the LWS weekly Health Tip email and is responsible for the communications and marketing strategy of LWS. Prior to joining LWS, Emily worked for the American Institutes for Research as a researcher and Compensation Analyst.
Emily graduated from Johns Hopkins University in 2003 with a Masters of Science in Organizational Counseling. She completed a clinical counseling internship with Affiliated Community Counselors, where she later served as Board President for two years. She also completed an internship with the Alliance for Workplace Excellence and served on the Alliance’s Independent Review Panel for three years, rating local businesses for the Workplace Excellence and Wellness Trailblazer Awards. Emily resides in Montgomery County with her family.