Many employers are considering implementing workplace wellness or health management programs. Wellness programs are often viewed as an important component of benefits offered to employees, because they provide workers and their families access to tools to increase health, with the hope of ultimately decreasing employee absenteeism and lowering the cost of benefits. Studies have documented that employers with worksite wellness programs see a reduction in sick leave absenteeism, a reduction in health costs, and a decrease in workers' compensation and disability claims.
Employer wellness programs take many forms. Some employers provide direct incentives, such as discounted health club memberships, walking clubs, pedometers or healthy snack options. Other employers structure their programs around the group health plan and link financial incentives to meeting certain health goals such as cholesterol levels, BMI levels or blood pressure rates.
Direct incentives certainly promote the "feel good" office mentality. Many employees appreciate having health snack options in the vending machines and the opportunity to walk with friends during a lunch break.
Financial incentives are rewarding, but require more analysis by employers prior to implementation. These types of programs can be offered as part of the group health plan or as a separate employer program. Either way, such wellness programs will be subject to federal, state and local nondiscrimination and privacy laws, such as the Health Insurance Portability and Accountability Act, the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act, Title VII of the Civil Rights Act and the Age Discrimination in Employment Act. All these statutes, along with state and local laws, should be reviewed during the implementation of wellness program penalty and reward provisions.
Interestingly, the Affordable Care Act provides support for employers implementing wellness programs. Health care reform permits employers to tie employee health plan costs to "health status factors" like weight or tobacco use. Under the Affordable Care Act, an employer could, for example, reduce premium charges if an employee stops smoking or gets his body within a certain BMI range. To implement standards that directly tie costs to reaching a specific health goal, however, health care reform requires the employee to be offered a waiver or a "reasonable alternative standard" to earn the incentive if satisfying the established health standard is either unreasonably difficult due to a medical condition or medically inadvisable.
The Affordable Care Act allows result-based goals to be tied to health plan financial incentives by expanding the exception to group health plan discrimination standards under HIPAA. HIPAA generally prohibits group health plans from charging employees different premiums based on a health status factor. If a health plan meets certain requirements, however, HIPAA permits the plan sponsor to offer financial incentives. Specifically, programs tying financial incentives to results are permitted under HIPAA if:
- The reward for the program does not exceed 20% of the cost (combined employer and employee payment) of employee-only coverage under the plan;
- The program is “reasonably designed to promote health or prevent disease”;
- The program gives employees the opportunity to qualify for the reward at least one time per year;
- The reward is available to all employees, and a “reasonable alternative standard” is available to any individual for whom it is unreasonably difficult to meet the standard due to a medical condition, or for whom attempt to meet the standard is “medically inadvisable”; and,
- The plan discloses the reasonable alternative standard in all written materials describing the program.
The Affordable Care Act confirms these HIPAA standards but raises the employee reward amount beginning in 2014, when rewards may be up to 30 percent of the cost of coverage (currently at 20 percent), and the reward limit may be increased to 50 percent of the cost of coverage.
Wellness programs are a useful tool to employers for saving costs and increasing employee health. These programs are welcome by employees, and have been seen to provide positive return-on-investment to employers. Before implementing any such program, however, employers should consider the program in light of health care reform requirements, HIPAA and anti-discrimination laws.
