The person who coined the saying that “no good deed goes unpunished” must have had wellness programs in mind. Companies that want to encourage employees to maintain good health can adopt wellness programs. However, unless these programs conform to government requirements, companies can be exposed to government penalties or employee lawsuits. So what do you do?
Many employers have long supported wellness programs. In the old days (pre-Affordable Care Act, or ACA), rules regarding wellness programs were less cumbersome than they are now. ACA introduced incentives for employers to encourage good health, and government regulations followed.
The incentives, or disincentives, allowed under ACA include discounts or rebates of premiums paid by employees toward employer-provided health coverage. The maximum permissible reward or penalty under a health-contingent wellness program offered in connection with a group health plan is 30% of the total annual premiums for individual-only coverage. For example, if the total annual cost of coverage paid by both the employer and employee for self-only coverage is $5,000, the maximum incentive for an employee under a wellness plan is $1,500. The maximum permissible reward or penalty is 50% of the premiums for individual coverage premiums for wellness programs designed to prevent or reduce tobacco use.
The DOL says wellness programs must meet all of the following conditions:
- Programs must be reasonably designed to promote health or prevent disease. To be considered reasonably designed to promote health or prevent disease, a program must offer a different, reasonable means of qualifying for the reward to any individual who does not meet the standard based on the measurement, test or screening. Programs must have a reasonable chance of improving health or preventing disease and not be overly burdensome for individuals.
- Programs must be reasonably designed to be available to all similarly situated individuals. Reasonable alternative means of qualifying for the reward have to be offered to individuals whose medical conditions make it unreasonably difficult, or for whom it is medically inadvisable, to meet the specified health-related standard.
- Individuals must be given notice of the opportunity to qualify for the same reward through other means.
Final rules on incentives for nondiscriminatory wellness programs can be found here.
Last month the Equal Employment Opportunity Commission (EEOC) released proposed regulations defining the term “voluntary” with respect to disability-related questions and medical exams. This clarification is necessary because such inquiries and exams could arguably run afoul of the Americans with Disabilities Act (ADA), which generally prevents employers from asking disability-related questions or requiring employees to undergo medical tests; the ADA has an exception if questions and exams are “voluntary.”
So the requirements above cannot violate the ADA and won’t if they meet these additional requirements (assuming the proposed rules are adopted):
- A wellness program that collects information on a health risk assessment to provide feedback to employees about their health risks, or that uses aggregate information from health risk assessments to design programs aimed at particular medical conditions is reasonably designed. A program that collects information without providing feedback to employees or without using the information to design specific health programs is not.
- Employers also may not interfere with the ADA rights of employees who do not want to participate in wellness programs, and may not coerce, intimidate, or threaten employees to get them to participate or achieve certain health outcomes.
- Medical information obtained as part of a wellness program must be kept confidential. Disclosure cannot violate the ADA or the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule.
- Employers must provide reasonable accommodations to enable those with disabilities to participate in a wellness program.
Note: Public comments can be made through June 19, 2015. Find details about submitting comments here (see “addresses and supplemental information”).
Should you use wellness programs?
Very small employers likely won’t want to contend with the hassle of offering wellness programs, despite their supporting the concept of improved employee health. Small employers may find other, less formal, ways to encourage wellness (e.g., healthy snacks in the coffee break room, company softball teams). However, larger companies will have to weigh the benefits of wellness programs against the hassle of offering them.