Get a Legal Check-Up Before Lauching a Wellness Program
Monday, November 21, 2011
It’s not just employees who need to make sure they’re ready to embark on a wellness journey; employers need a check-up, too – a legal one.
Several laws and regulations govern wellness plans, the most important of which is the Health insurance Portability and Accountability Act (HIPAA). HIPAA is a broad-reaching statute that touches employee health, privacy and benefits. Most notably when it comes to wellness, HIPAA deals with whether employees are discriminated against by the employer.
With wellness programs, employers generally cannot charge different rates to their workers based on health conditions. But it does allow employers to award premium discounts or other incentives to employees who participate in health promotion programs or achieve certain health goals. So HIPAA’s requirements all depend on the type of wellness program an employer offers.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTWellness programs: two imporant differences
Wellness programs fall into two broad categories: participation-based and standard-based. Both types may focus on raising health awareness, educating employees and/or encouraging lifestyle and behavior change. And both may even offer incentives.
Participation-based programs
Participation-based programs may reward employees for simply participating in activities. For example, an employee may participate in a health screening or a tobacco cessation program, but may not be required to have a “normal” health screening result (i.e. 120/80 blood pressure) or quit smoking. Standards-based programs, on the other hand, aim to help employees meet behavior-changing milestones by providing incentives only if health goals are achieved. An example of a standards-based program is one that requires employees to show whether they smoke, either by completing an affidavit or having a tobacco screening with a negative result.
Standards-based programs
If an employer offers a standards-based program, they’re subject to additional HIPAA requirements, including:
- Incentive rewards must not exceed 20% of the cost of employee-only coverage under the plan (for example, if the total cost of employee coverage is $6,000 a year, the incentive must not exceed $1,200 per year). Rewards can include premium credits, deductible/copay reductions, health savings account contributions or even gift cards.
- The program design must promote health or prevent disease.
- Employees must have the opportunity to qualify for the incentive reward at least once per year.
- The program must be available to all similarly situated employees. This means that if an employee comes to you and says there is a medical reason why he/she cannot meet the standard health goals because it would be “unreasonably difficult,” you must provide a reasonable alternative or waiver for any employee who presents this situation.
- The wellness program must provide written materials describing the availability of an alternative standard.
In addition, employers offering standards-based programs must communicate and disclose to employees all terms and conditions of the wellness program by offering a summary plan description and plan design summary that state the purpose of the program, plan design and activities, incentive requirements, incentive reward, program criteria and rules of eligibility, appeals process and how plan changes are handled. By law, employers must give employees thirty days notice of any changes, unless plan change is needed to comply with new or existing legislation governing “Nondiscriminiation and Wellness Programs”(29 CFR Part 2590).
Your prescription for success? Proceed with caution when developing wellness programs. And be sure to seek advice from benefit advisors or wellness consultants experienced in designing and executing successful – and compliant – plans.
Amy Gallagher has over 19 years of healthcare industry experience. As Vice President at Cornerstone Group, she advises large employers on long-term cost-containment strategies, consumer-driven solutions and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, is a member of local organizations like the Rhode Island Business Group on Health, HRM-RI, SHRM, WELCOA, and the Rhode Island Business Healthcare Advisory Council, and participates in the Lieutenant Governor’s Health Benefits Exchange work group of the Health Care Reform Commission.
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