Wellness and Compliance: What Employers Need to Know

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Corporate wellness is as much an issue of health as it is a matter of law. Specifically, the government regulates wellness programs through the Health Insurance Portability and Accountability Act (HIPAA), Americans with Disabilities Act(ADA), and the Internal Revenue Code’s taxation of employer-paid benefits.  

This means that the wellness a company wants for its workers is, by extension, a reflection of how well that company complies with federal laws. For example: Under HIPAA, an employer cannot charge higher premiums to sick employees. 

A group health plan can, however, use medical plan discounts as a wellness program reward in some circumstances, like encouraging workers to quit smoking. In other cases, a wellness program can be a group health plan if it provides medical benefits.

Take, for instance, the ADA’s law that limits employer-sponsored wellness programs. While the ADA offers an exemption for “voluntary wellness programs,” it fails to explain what constitutes a “voluntary” program.

Compliance with the Law

Essential, too, is what an employer does to support and promote part of its wellness program. According to the Internal Revenue Service (IRS), all wellness programs are not non-taxable to employees. If a reward is a valid medical expense under Code Section 213(d), an employee may not have to pay tax on the value of the reward.

No company should try to interpret that law without the help of a lawyer. I say that in spite of the fact that I have a law degree, since my general knowledge of the law does not mean I am knowledgeable about any specific area of health or tax law. What I do know is this: We need advocates.

We need, according to Fenton Law Group, lawyers who can speak to the nuances of the law. We need companies and lawyers to work together, so employer-sponsored wellness programs can succeed. Each part of each program falls under a different law, though most programs have similar goals, including education, fitness, disease management, nutrition and weight loss, inoculations, and the use of wearable devices.

Employers may choose to make these programs voluntary, or they can assign a reward and penalty to each of these things. The incentives can vary from minor prizes to major reductions in health insurance premiums. In other cases, a wellness program may require an employee to lower his or her cholesterol in exchange for a discount on the cost of insurance.

Whatever the rewards or penalties may be, small changes can—and often do—change the way an employer designs and administers a wellness program. Under HIPAA, requiring employees to meet certain health criteria may be a form of discrimination. Hence, the opportunity for employees to ask for a“reasonable alternative” to satisfy a particular requirement.

On the other hand, the Equal Employment Opportunity Commission (EEOC) says that if a reward or penalty is too high, a wellness program is not voluntary. Given the criticism of the EEOC, in addition to a court order mandating that the Commission review and revise its regulations, employers will soon know whether they have to make more changes to their wellness programs.

(Update: The EEOC now says it has removed its former regulations that allowed employers to offer incentives to employees for their participation in wellness programs.)

The overarching theme of this subject is one of perception versus reality. What may seem simple, based on what a wellness program says, may be—and likely is—more complex than most employers imagine.

Between different rules from different agencies, as well as different interpretations of the same laws, compliance is an issue each employer should have a lawyer read and analyze. That analysis is critical to how a wellness program develops. That analysis is crucial to the health of any wellness program an employer pursues.

That analysis applies to how employers and employees can—and must—collaborate in good faith. Before they can collaborate, they must communicate with one another. They must voice their interests, register their concerns, and record their disagreements. Where they disagree—if they disagree—it is better for them to say why they oppose this or that provision, rather than having the other side answer (incorrectly) the question for them. Above all, both sides should be clear about their goals.

Final Thoughts

If we learn nothing else from this discussion, let us remember that clarity is an asset: that wellness is a catchall for health, morale, productivity, compliance, cooperation, negotiation, and communication; that complexity is an issue to address, not avoid, so a wellness program can meet or exceed the expectations of employers and employees; that legal expertise matters—a lot—when trying to interpret and follow the rules of multiple federal agencies.

In a word, it is necessary to read and understand the words about wellness programs.

With understanding comes a greater appreciation for the ways in which wellness and compliance may diverge. To have both intersect—to have a wellness program that employees accept and the law approves—is an exercise in patience, professionalism, and precision. It is an exercise worthy of corporate wellness and healthy living.