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Pushing Wellness ... But How Far?

When wellness-plan participation is achieved through a positive "carrot" instead of a penalty in the form of a "stick," the company will be well on its way towards satisfying the varied (and at times contradictory) legal standards.

Saturday, May 1, 2010
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Despite the widely-accepted benefits and admirable objectives of wellness programs, human resource professionals are still forced to navigate the rough legal and regulatory seas between Scylla and Charybdis in order to safely deliver a wellness program to their organizations that is both effective and legally compliant.

It is easy to stray into the clutches of one of these legal monsters while trying to avoid the other -- a task that is not made any easier by the siren song of wellness-program-design theory that sometimes overlooks the messy legal issues in this area.

How should an HR executive chart a successful course?

First, it is important to seek legal counsel (far before implementation) who is well versed in both the labor law and employee-benefits rules that govern this area. Your counsel should have a good working knowledge of:

* Health Insurance Portability Protection Act nondiscrimination rules (where you can find the requirements regarding the size of a financial incentive for a wellness program and other requirements such as reasonable alternatives, etc.);

* HIPAA privacy rules;

* Genetic Information Nondiscrimination Act Title I constraints on health-risk assessments;

* GINA Title II wellness-program requirements;

* Americans with Disabilities Act medical testing and "voluntariness" issues;

* Applicable state law constraints;

* Patient Protection and Affordable Care Act rules applicable to wellness programs; and

* Expected legislation and regulatory guidance and clarifications.

Nothing else will replace this vital counsel, but the principles in the remainder of this article will help establish the framework of a wellness program that your counsel can help fine tune and test for compliance.

It is important that HR leaders incorporate three key principles into their wellness programs. These principles will not solve every related legal problem or eliminate the need to work with legal counsel, but they will help set the wellness program on a safe course. These principles are:

* Positive,

* Private and

* Voluntary.

Positive

Wellness-program-design theory sometimes advocates "sticks" instead of "carrots" in order to drive up program participation. However, some of the legal monsters in this area are particularly concerned with whether a wellness program imposes a penalty on participants. 

As a result, it is a safer course to design your program so that it positively rewards desired behavior or outcomes. Putting a positive perspective on a wellness program can be as simple as providing a non-smoker discount for the cost of medical coverage instead of penalizing smokers by charging them more for medical coverage. 

The financial outcome is the same -- but when it is achieved through a positive "carrot" instead of a penalty in the form of a "stick," the company will be well on its way towards satisfying the varied (and at times contradictory) legal standards in the wellness area.

Private

The best way to ensure that an employee's participation in the wellness program remains private is to engage an outside party (or parties) to run it. While an employer needs to know whether certain individuals are entitled to a discount on the cost of their medical program due to wellness plan participation (in order to make the appropriate payroll modifications), employers should not see the results of biometric screenings, whether an employee utilized a reasonable alternative or which healthy (or unhealthy) behaviors lead to the eventual sum of credits that they are entitled to.

It has always been important to keep medical records out of an employee's personnel file and the requirements of HIPAA and GINA re-emphasize that employers should not have any access to medical or behavioral records or data associated with their wellness programs.

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Voluntary

One of the toughest issues associated with wellness programs is whether an employee's participation in the program is voluntary.

While structuring your wellness program to be positive and private helps with this concern, it is equally important (if not more so) to be able to ensure that participation in the wellness program is voluntary. The HIPAA wellness rules (as modified by the healthcare-reform bill) help establish a bright-line financial measure of whether a wellness plan is voluntary but, unfortunately, not all of the associated regulatory agencies are yet on board with the HIPAA wellness rules.

Because the U.S. Equal Employment Opportunity Commission (which has authority over parts of GINA and the ADA) has not yet determined when a wellness program is voluntary, employers should be very careful to structure their program so that benefits are not withheld if an employee refuses to participate in the program. 

To the extent that benefits may be withheld, it will be important to establish in some other fashion that this component of the program still satisfies the voluntariness requirement of Title II of GINA and the ADA.

These three principles won't solve every legal problem with a proposed wellness program. They will, however, help HR executives steer their programs in a compliant direction and help identify wellness-program design elements that require more detailed legal analysis.

While it may not be possible to totally escape even a glancing encounter with the legal monsters in this area, careful planning, design and legal analysis should help identify and quantify the compliance risks associated with proposed wellness programs.

Andy R. Anderson is a partner in Morgan Lewis's Employee Benefits and Executive Compensation Practice. Based in Chicago, Anderson has handled a variety of employee-benefits matters, including government self-correction programs, cafeteria plans, health and welfare plans, VEBAs and benefit plans for tax-exempt organizations and churches. He has worked with numerous Fortune 500 companies and frequently counsels clients on regulatory compliance issues dealing with the Internal Revenue Code, ERISA, COBRA, HIPAA, mental-health parity and healthcare reform. He received a J.D. from the University of Illinois College of Law in 1984 and a B.A., summa cum laude, from MacMurray College in 1981. He is admitted to practice in Illinois.

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