Having a healthy workforce benefits your workers and your business. In short, workers have a better life and the company gains productivity. The Affordable Care Act carefully delineates what you can do with wellness programs if you want to write off the costs of sponsoring these programs while avoiding legal hassles.
Here's what you need to know.
- Programs that reimburse all or part of the cost of membership at a fitness center (regardless of how often an employee uses the facility)
- Diagnostic testing programs that reward for participation without regard to outcome
- Programs that reward attendance at a monthly no-cost education seminars
What you need to know
- Those eligible for the program must be given the opportunity to qualify for the reward at least once per year.
- The total reward offered cannot exceed the applicable percentage (usually 30%, or 50% for tobacco cessation programs) of the total cost of employee-only coverage under the plan. This takes into account both employer and employee contributions towards the cost of coverage for the benefit package under which the employee and/or any dependents are receiving coverage.
- The programs must be reasonably designed to promote health or prevent disease (rather than being punitive).
- The programs must offer uniform availability and reasonable alternative standards so all eligible employees have an opportunity to qualify for the reward. Activity-only wellness programs must offer a reasonable alternative to accommodate any individual for whom it is either unreasonably difficult or inadvisable, due to a medical condition, to attempt to satisfy the applicable standard. Outcome-based wellness programs must provide a reasonable alternative standard to all individuals who do not initially meet the targeted standard, to ensure that the program is reasonably designed to improve health, as opposed to being a subterfuge for underwriting or reducing benefits based on health status.
- A disclosure of a reasonable alternative standard to qualify for the reward must be placed in all plan materials, along with the possibility of a waiver of the standard, if applicable. This must include contact information for obtaining the alternative and a statement that recommendations of an individual's personal physician will be accommodated. For outcome-based wellness programs, the notice must be included in any disclosure that an individual did not satisfy an initial outcome-based standard.
- You may be sued by an employee or other person offered a wellness program if it turns out that yours is discriminatory.
- The IRS can impose an excise tax of $100 per day of noncompliance for each affected individual.
- The U.S. Department of Labor can bring a civil action against you to enforce the rules.
- The EEOC has yet to say what wellness programs violate the Americans with Disabilities Act, so a potential minefield awaits.