An employee with lung cancer can
cost a company thousands of dollars,
increasing each employee’s insurance premiums. The U.S. Center for
Disease Control reports that more than 75
percent of health care dollars are spent on
chronic diseases such as diabetes and cardiovascular diseases. While some conditions cannot be prevented, employers are
working to implement wellness programs
to improve overall employee health and
increase productivity.
Studies show that every dollar spent on
wellness programs saves three dollars in
health care costs, says Patricia Diulus-Myers, partner in the Pittsburgh office of
Jackson Lewis LLP. Investing in wellness
programs reduces short-term sick leave and
increases productivity. More employers than
ever are sponsoring such programs for their
companies because of their proven return
on investment, says Diulus-Myers. These
programs are beneficial but must be implemented carefully to avoid legal problems.
Smart Business spoke with Diulus-Myers about wellness programs, potential
pitfalls and the guidelines employers can
use to avoid violation.
What common pitfalls do employers experience when trying to introduce wellness programs?
As with any new idea, there are people
who do not view wellness programs as beneficial or necessary. These people do not
believe employers should use wellness programs to inject themselves into employees’
personal lives. Wellness programs touch on
very personal aspects of an individual’s life,
such as family medical history, habits and
lifestyle choices. It is important for employers to look at the big picture and determine
where to draw the line to avoid intrusion
into their employees’ private lives.
The Americans with Disabilities Act was
designed to avoid biases against employees with disabilities, which can arise with
paternalistic policies. Employers need to
be aware of violating this law when implementing wellness programs. This act prohibits making inquiries into employees’
medical history without showing that it is job-related and consistent with business
necessity, the very type of information that
wellness programs tend to elicit and monitor for the best results. Therefore, foregoing medical questions and focusing on
behavior is advised so as not to be considered unlawful.
A wellness program can give rise to termination discrimination. Employees may
point to the program upon termination and
claim that they were let go unlawfully
because the company simply was looking to
find healthier employees. The claims likely
would attack the reason for termination as
being a pretext for the real reason of weeding out perceived ‘unhealthy’ employees.
How do employers implement wellness programs without violating the law?
As long as the employer does not require
participation and does not penalize employees who do not participate, wellness programs can pass legal muster. The Equal
Employment Opportunity Commission
(EEOC) specifies that such programs are
acceptable if participation is voluntary, if
the information obtained is maintained in
a confidential manner and is not used to
discriminate.
The EEOC cautions that providing a monetary incentive to successfully participate in
the program may render it involuntary. Also,
where an employer decreases its share of
health insurance premiums and increases
the employee’s share if one does not participate or does not meet the criteria of the
program, the program may not be voluntary.
To avoid state discrimination claims
based on lifestyles, employers can set up
bona fide wellness programs under ERISA.
If the program qualifies under ERISA, state
law discrimination claims generally will be
pre-empted.
Can employers provide incentives in wellness programs and avoid group health coverage discrimination?
As long as the nondiscrimination regulations provided by the Health Insurance
Portability and Accountability Act (HIPAA)
under ERISA, the Department of Labor and
the IRS to design bona fide wellness programs are followed, there should be no violation. That is true even if the group health
plan establishes discounts or rebates or
modifies co-payments in return for adherence to bona fide wellness programs.
HIPAA guidelines state that the total
reward for participation must be limited, and
they cite 10 percent to 20 percent of employee total coverage cost. Also, such programs
must be designed to promote good health;
the reward must be available to all similarly
situated individuals; and the availability of a
reasonable alternative must be disclosed for
individuals unable to comply because of an
outstanding medical condition.
How can employers create wellness programs that are not viewed as an attempt to
control an employee’s personal life?
Employers should communicate their
intent. Educational programs should be utilized through open forums so employees
feel comfortable asking questions. Advance
notice also is important so employees can
prepare for changes.
PATRICIA DIULUS-MYERS is a partner in the Pittsburgh office
of Jackson Lewis LLP. Reach her at [email protected]
or (412) 232-0180.
