Reducing junk food in the break room vending machines, offering smoking cessation classes and free flu shots aren’t enough to combat rising insurance premiums and increasing employee medical claims. According to the Centers for Disease Control and Prevention, obesity-related health issues cost $147 billion in 2008. Total health care costs reached $2.2 trillion in 2007, a 14 percent increase from 2000. And in 2010, average annual premiums for employer-sponsored coverage were $5,049 for single coverage and $13,770 for family coverage.
Rising costs have many employers turning to wellness programs. The goal is to control illnesses, conditions and unhealthy behaviors through preventive measures and healthier choices and keep them from becoming more serious and expensive. Wellness programs can potentially provide more savings through decreased rates of illness and injuries and improved employee relations and morale. Employee wellness programs can take many forms including health risk assessments, educational programs for managing health, onsite fitness facilities, and subsidized fitness programs. Many programs provide incentive-based rewards to employees who participate in such programs. Wellness programs are encouraged under the new Patient Protection and Affordability Care Act (PPACA). Among other things, PPACA creates a number of significant reforms to the health insurance market. They include changes that limit the ability of group health plans or health insurance issuers to set premiums or determine eligibility for coverage based on certain criteria such as health status. The PPACA also contains several provisions relating to wellness programs, including grants for employer-based wellness programs. In order to take advantage of these benefits, business owners need to make sure their wellness programs don’t put them at legal risk.
Health risk assessments are commonly used in wellness programs to identify at-risk individuals and provide for preventive treatment and management of potential health issues. While the information can lead to fewer doctors’ visits and reduced costs, the assessments can subject employers to a number of legal risks. There are three main areas of risk: the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), and the Health Insurance Portability and Accountability Act (HIPPA).
The ADA prohibits discrimination against individuals with disabilities and contains specific limitations on pre- and post-employment questions to an employee’s medical condition or disability. Potential ADA violations could arise if a wellness program includes health risk assessments, medical screenings or questions about family medical history. This concern is so great that the Equal Employment Opportunity Commission has weighed in on the ADA’s potential impact on wellness programs. The EEOC says employers may make disability-related inquiries or conduct medical examinations as part of wellness programs if the programs are voluntary. A program is considered voluntary if the employer does not require participation and does not penalize employees who choose not to participate. Any medical information obtained by the employer as part of a wellness program must be kept confidential and separate from an employee’s personnel file. Under these circumstances, a wellness program will not likely run the risk of discriminating against employees.
Another concern for employers using wellness programs is the Genetic Information Nondiscrimination Act. It prohibits discrimination based on genetic information obtained by health insurers and employers. GINA specifically prohibits an employer from requesting, requiring or purchasing genetic information of an employee or a family member of the employee. Under GINA, genetic information includes family medical history. A concern arises where the wellness program uses health risk assessments or any kind of collection of medical information about the employee or the employee’s family history. Any wellness program offered by an employer that requires such information must be voluntary and include written authorization from the employee. The program must also have strict privacy protections in place to insure the information is not disseminated or used by the employer in any way.
Another area of concern for employees is the Health Insurance Portability and Accountability Act. It prohibits group health plans from using health factors as a basis for discrimination with regard to eligibility to enroll or to determine premiums. HIPPA requires that there can be no discrimination within the wellness program itself based on health factors. A wellness program will not likely violate HIPPA so long as the program does not contain a reward based on an individual satisfying a standard related to the wellness program. One example would be offering a financial reward to employees based on obtaining a specific BMI. Such a requirement may not be achievable by all employees due to medical conditions or disabilities. Most employers will not violate HIPPA for offering financial incentives like lower insurance deductibles or co-payments for employees who participate in wellness or disease prevention programs as long as the reward is not based on the health outcome and all employees have the opportunity to participate.
Wellness programs can help lower health care costs, insurance claims and absenteeism. A workplace program at Duke University showed a positive return on investment in helping employees control blood pressure ($1.21 to $1.00) and cholesterol ($3.39 to $1.00). An employee who gives up smoking one pack of cigarettes a day can save about $2000 a year and possibly pay a lower insurance premium. According to the CDC, a systematic review of 56 published studies revealed workplace health programs can lead to 25 percent savings on each of the following: absenteeism, health care costs, and workers’ compensation and disability management claims costs.
While wellness programs can pay off for both employers and employees, business owners need to carefully craft their initiatives. Consulting an expert who understands evolving federal laws can help employers avoid potential discrimination and legal challenges.
(This article is for information only and is not legal advice.)
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