Wellness programs at work are fast becoming the norm with employers juggling the ever-increasing costs of employee health care. These are not fluffy, feel good, “get a manicure and a smoothie next Friday” sorts of programs. The programs are intense demanding results like, “quit smoking or you pay the costs of health insurance”.
Application of heavy-handed strategies to reduce health care costs concerns employers. They risk employee lawsuits alleging discrimination. Lawsuits may be on the horizon but the outcomes may be surprisingly in favor of the employers. Obamacare amended in part the 2006 non-discrimination provisions of The Health Insurance Portability and Accountability Act (HIPAA), thereby providing leverage for employers to impose upon employees the adaptation of healthier lifestyle changes.
In 2006 Congress added §9802 nondiscrimination and wellness provisions (the 2006 Regulations) to HIPAA. These provisions generally prohibit group health plans and health insurance issuers from discriminating against individual participants and beneficiaries in eligibility, benefits, or premiums based on a “Health Factor”; although, allowing an exception for premium discounts, rebates, or modification to cost sharing in exchange for adherence to a health promotion disease prevention program.
The Affordable Care Act of 2010 (ACA) amends HIPAA’s nondiscrimination provisions Under ACA employers’ group health plans and insurance issuers may discriminate against individuals and beneficiaries based on a “Health Factor” and provide a reward up to 30% of the cost of coverage or as much as 50% of the cost of coverage for a smoking factor. Moreover, compliance with federal regulations is an affirmative defense to a HIPAA discrimination claim.
Health Factor discrimination is defensible because the employees have the option to participate in the wellness program or not. Health Factor rewards are given in return for employee adherence to a wellness program that is reasonably designed to promote health and prevent disease. Wellness programs are divided into two main categories, participatory wellness programs and health contingent wellness programs. Participatory wellness programs either do not provide a reward or do not include any conditions for obtaining a reward based on satisfaction of a health factor; compared to a health contingent wellness programs which require an individual to satisfy a standard related to a health factor to obtain the award.
A participatory wellness program on its face complies with the HIPAA nondiscrimination provisions without having to satisfy any additional standards if program participation is available to all similarly situated participants regardless of health status. In contrast, a health contingent program must satisfy five statutory requirements to overcome the HIPAA nondiscrimination provisions. ACA mandates…
1. Eligible individuals must have an opportunity to qualify for the reward once per year.
2. The reward must not exceed 30% of the cost of employee only coverage or 50% to the extent the program concerns smoking reduction or prevention.
3. The reward must be available to all similarly situated and provide a reasonable alternative standard or waiver.
4. The program must be reasonably designed to promote health and prevent disease.
5. Plan materials must disclose the terms of the health contingent program.
ACA allows a mechanism to shift the high cost of lifestyle disease from the employer and issuer to the individual forcing individual responsibility. Wellness programs have been around for nearly 20 years but little comprehensive data exist on program effectiveness. Published literature and the RAND Health Report on Work on Workplace Wellness Programs 2013 corroborate findings on positive effects on health risk and health behavior and suggest a reduction in healthcare costs will materialize with employee participation. This is an opportunity employers may want to take advantage of, but must yield to caution before action. ACA provides an affirmative defense to a HIPAA nondiscrimination claim but that defense may have no effect on other laws, for example ERISA, ADA, and other state or federal laws.
Decisions concerning employee health benefits and workplace wellness programs are difficult. Contact Healthier Futures of Rhynard Law for more information.
This post is not legal advice and does not create an attorney client relationship.
1. Federal Register/vol. 78 No. 106/Monday, June 3, 2013/Rules and regulations.
2. RAND Health, Workplace Wellness Programs Study, Final Report, (2013).
Helen Rhynard Esq., M.S., RDN, L.D.