A recent study of Iowa employers revealed that 51 percent offered some type of health screening to their employees. Many companies also offer other "wellness" benefits to encourage employees to exercise and adopt healthy lifestyles. The wellness program of a prominent Des Moines employer was recently profiled in the Des Moines Register (link here).
Company wellness programs present many benefits for employers and employees, including increased productivity and lower health costs. Like other benefits, however, there are limitations and restrictions about what can be offered without running afoul of federal and state laws governing health insurance, benefit plans, and discrimination.
First is the Health Insurance Portability and Accountability Act (HIPAA), which prohibits denying an employee eligibility or charging higher premiums to individuals based upon eight health factors, including 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. A summary of the Department of Labor’s Guidelines concerning application of HIPAA to wellness programs is here.
In addition, to the extent a wellness program provides rewards to employees (such as reduced health insurance premiums, deductible waivers, etc.), the plan should be carefully tailored so as to reward participation, and not results. Some of the criteria for evaluating whether a wellness program is bona fide under the HIPAA regulations include the following:
- The cost of the wellness program mustn’t exceed 20% of the cost of coverage under the group health plan. When calculating the 20%, you must include all of the plan’s wellness programs that require individuals to meet a health-related standard.
- The program must be reasonably designed to promote health or prevent disease.
- Individuals must have a chance to qualify for the reward at least once a year.
- The reward must be available to all similarly situated individuals and must provide a reasonable alternative standard for obtaining the reward for individuals for whom it’s unreasonably difficult to satisfy the standard because of a medical condition.
- All group health plan materials that describe the wellness program must disclose the availability of a reasonable alternative standard.
Other laws that may impact wellness programs include the Employee Retirement Income and Security Act (ERISA), which governs employee benefit plans, and the Americans with Disabilities Act (ADA). For example, the ADA prohibits an employer from inquiring about medical conditions unless the inquiry is job related and a business necessity. Any information gathered in connection with a wellness program must be truly voluntary to meet ADA requirements, and must be done in a manner so as to preserve the confidentiality of the information and prevent it from being relied upon to make employment or benefit decisions. Finally, employers are required to offer reasonable accommodation to employees who cannot participate in any aspect of a wellness program because of a disability.
As with many employment decisions, it is wise to consult counsel to ensure your company’s wellness program complies with applicable laws and regulations.