What Employers Can and Cannot Do in a Wellness Plan
A healthy lifestyle is what we all aspire to, right? If the answer was a resounding “YES” employers wouldn’t need to consistently increase their wellness plan participation levels with incentives, often referred to as carrots or sticks. By the time a wellness strategy is ultimately introduced to employees, the format and incentives are pretty simple to understand. For those of us in the employee benefits business, it’s often anything but simple. The administration of employee benefits is rarely easy. Wellness plans are no exception.
First, an employer needs to determine what kind of wellness plan they want to sponsor. Will the plan be based on physical wellness only, or will it include mental and spiritual wellness and/or financial wellness as well? Once defined, the continuum of employer sponsored wellness programming generally looks something like one of the following three models:
Passive Wellness: This type of wellness plan makes it easy for people to make good choices. They include programming such as flu shot clinics, disease management programs, tobacco cessation support, on-site fitness center or low membership cost options, and “just for fun” competitions like walk/run challenges and weight loss or maintenance challenges.
Participation Based Wellness: This type of wellness plan rewards employees based on an activity. Participation and results are measured and some return on investment (ROI) can be calculated. Sample programming includes discounted health insurance premiums if employees do an activity such as completing a health risk assessment, attending a health education class, running or walking a 5k or being/becoming tobacco free.
Outcomes Based Wellness: This type of programming is also called Achievement- or Results-based wellness. Some examples of programming include asking employees to maintain a BMI or losing 10 percent of their body weight, maintaining and/or improving metabolic markers such as glucose, cholesterol and blood pressure, and being tobacco free or completing a tobacco cessation class.
Compliance and confusion increases when migrating from a more Passive Wellness Plan to more Participation or Outcomes based programming. Wellness plans have been subject to HIPAA and Affordable Care Act (ACA) rules for several years. Last year the Equal Employment Opportunity Commission (EEOC) added further complexity with two sets of final regulations focused on wellness incentives. One set was issued under the Americans with Disabilities Act (ADA), and the other set under the Genetic Information Nondiscrimination Act (GINA). Wellness plans are now some of the most highly-regulated aspects of an employer’s benefit program.
The following is a general overview of what can and cannot be done in your wellness program:
- Provide a notice to employees about what information will be collected as part of the wellness program, who will review it, how it will be used, and how it will be kept confidential.
- Obtain written authorization from spouses before the employer offers an incentive to collect spouses’ health status information in a health risk assessment.
- Limit the incentive to 30 percent of the total cost of self-only coverage for the least expensive health plan offered (not the cost of coverage in which the employee is enrolled). However, you CAN charge your tobacco users up to 50 percent.
- Assign a reasonable value to “in-kind” wellness incentives (e.g., prizes, time off) given to the employees.
- Require an employee to participate.
- Limit group plan options or exclude an employee’s enrollment into a group plan if they decline to participate in the wellness plan.
- Take advantage of the 50 percent tobacco user incentive allowance if you test employees for tobacco use. The ACA/HIPAA rules allow the 30 percent incentive limit to be increased to 50 percent for incentives related to tobacco use, but the ADA rules do not allow the increase if the plan sponsor requires the disclosure of disability-related information, medical exams, or nicotine tests.
- Provide incentives in exchange for health information on an employee’s children.
To protect the “wellness” of your wellness plan, it’s a very good idea to talk with a trusted benefits advisor. An experienced consultant can guide you as you define your wellness initiatives, structure your programming, and aid you in how the ACA/HIPAA, ADA and GINA rules could or will apply to your chosen wellness plan.
Jennifer Petterson, RHU, is the Practice Leader for Advantage Benefits Group’s Traverse City office. She has been an employee benefits consultant for the past 31 years, holding senior level positions on both the carrier and consulting side of the employee benefits business.