Wellness programs seem like a simple, appealing way to reduce skyrocketing healthcare costs. But be aware that some programs can run afoul of federal and state laws.
Wellness programs encourage employees to adopt or maintain healthy lifestyles—or at least take the first steps toward learning about healthy alternatives. Choosing healthier alternatives to reduce cholesterol levels, for example, may reduce an employee’s chances of suffering from heart disease.
Less disease means you can lower your plan utilization, thus lowering the cost of health benefits, and in turn, increasing profits. There are additional benefits as well, such as increased productivity, fewer workers’ compensation claims, better attendance, and improved morale.
However, wellness programs must be carefully crafted. For example, a wellness program that offers financial incentives to employees who walk a certain number of miles per week may discriminate against employees whose disabilities preclude them from reaching the target number.
Be sure to have your legal counsel review your wellness program before it is presented to employees.
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Key Legal Issues
There are several federal and state laws that affect the design of a wellness program.
For example, the Americans with Disabilities Act (ADA) requires you to offer a reasonable accommodation to an employee with a known disability, and it prohibits you from making medical inquiries or requiring medical examinations (unless job-related and consistent with business necessity). It’s also unlawful under the ADA to take any adverse employment action based on an individual’s actual or perceived disability.
The Equal Employment Opportunity Commission (EEOC) offers some guidance with regard to the ADA’s restrictions on medical inquiries and examinations. Under the guidelines, you may conduct medical examinations and activities that are part of a voluntary wellness and health screening program. Therefore, offering employees the opportunity to voluntarily participate in health screening programs for high blood pressure and cholesterol monitoring are not likely to violate the ADA, as long as there is no penalty (economic or otherwise) for not participating. You must treat any information acquired as a confidential medical record.
The Health Insurance Portability and Accountability Act (HIPAA) makes it illegal for group health plans to base eligibility on the following health-related factors: health status, medical condition (including physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of domestic violence), or disability.
Therefore, under HIPAA’s provisions, a group health plan can’t require an individual to pay a greater premium on the basis of any “health status-related factor.”
However, adopting a wellness program that offers incentives for behavior, rather than health status, would likely be in compliance with the law. Group health insurance plans are permitted to provide discounts on premiums, or to adjust co-payments or deductibles for employees who participate in a “bona fide wellness program.”
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Employers that have negotiated a collective bargaining agreement with a union are required by the National Labor Relations Act to bargain over “wages, hours, and other terms and conditions of employment.” Therefore, a union could claim that a wellness program is a term or condition of employment that mandates bargaining.
You should also check the governing collective bargaining agreement to see if a wellness program falls under a subject they have agreed to negotiate. For example, a bargaining agreement may mandate negotiation over the amount of employee-paid insurance premiums, but not health insurance or other employee insurance benefits.
There are also state laws protecting the off-duty conduct of employees. Some laws are limited to smoking, the use of tobacco products, or the use of “lawful products,” but others, such as California’s, have broader coverage that includes any lawful activity occurring away from the employer’s premises during nonworking hours.
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