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Health Insurance Portability and Accountability Act: West Virginia Employment Law Letter -- Don't let your employee wellness programs interfere with your company's good health
     


Larry J. Rector
Steptoe & Johnson PLLC

Vol. 13, No. 9
March 2008

EMPLOYEE HEALTH

Don't let your employee wellness programs interfere with your company's good health

As health insurance premiums rise exponentially, many employers now provide incentives to employees who participate in wellness programs. The idea, of course, is that healthier employees mean lower health insurance premiums. Wellness programs range from following disease-management protocols and smoking-cessation programs to programs designed to increase exercise and improve diet. The incentives employers offer to entice employees to participate can include reduced employee contributions for health care benefits, lower deductibles, and other rewards or prizes. Some employers go so far as to penalize employees who don't participate in the programs.

Good news, bad news

The good news is the programs work, particularly when there are incentives to participate. Healthier employees mean lower health insurance premiums. Healthier employees miss less work.

The bad news is there are legal risks for employers implementing wellness programs when participation is linked to a financial interest or is mandatory. The risks are manageable and shouldn't dissuade you from implementing a program. Before implementing any employee wellness program, however, you must ensure it complies with the Health Insurance Portability and Accountability Act (HIPAA) and the Americans with Disabilities Act (ADA).

HIPAA regulates access and use of health information. With the exception of the Equal Employment Opportunity Commission (EEOC), the federal agencies charged with enforcing HIPAA recently adopted regulations governing employee wellness programs. They apply only when the program links the receipt of a benefit to the measurement of an employee's health condition, such as weight, blood sugar, or blood pressure. (Hint: If you aren't interested in additional HIPAA burdens, then implement a program ― such as reimbursement for health club membership ― without measuring the impact of the membership on the employee's health.)

Complying with HIPAA

Programs that link receipt of an incentive to measurement of an employee's health condition must meet five requirements to comply with HIPAA:

  1. The benefit offered must not exceed 20 percent of the cost of individual or family health care coverage. That prevents nonparticipants from bearing a disproportionately large portion of health insurance costs.
  2. The program must be reasonably designed to promote health. This requirement is easily met.
  3. Employees must be eligible to join the program once per year.
  4. The program must be available to similarly situated employees. Under HIPAA regulations, "similarly situated" means classifications of employees commonly found in the workplace, such as employees at a specific office, full-time employees, or bargaining unit members. Similarly situated employees who can't participate in the program because it is unduly burdensome or at the recommendation of their health care provider (you can ask for verification of the recommendation) must be offered an alternative means of eligibility for the incentive.
  5. The documents describing the program must notify employees that alternative means to meet the health standards exist. The documents need not be detailed. It's sufficient to state that alternative means to meet the program's health standards may be available along with a phone number for interested employees to call to receive additional information.
HIPAA doesn't prohibit mandatory programs or penalties for failure to participate. Mandatory programs, however, do pose a risk under the ADA. With limited exceptions, the ADA allows employers to gather and use an employee's health information only to determine whether she can perform the essential functions of her job with or without a reasonable accommodation. Although a voluntary medical examination to participate in an employee wellness program wouldn't violate the ADA, a mandatory examination might. The EEOC's refusal to join in regulations of employee wellness programs means compliance with or participation in one of the programs doesn't excuse compliance with the ADA or other discrimination laws, such as Title VII.

In addition to risking a discrimination lawsuit, mandatory programs pose a risk for invasion-of-privacy claims. Employees have a reasonable expectation that their medical information will be treated privately and confidentially. Use of an employee's medical information for a mandatory wellness initiative could violate that expectation. Finally, you should also consider the impact on employee morale, retention, and whether you can actually enforce a mandatory program with built-in penalties.

All in all, voluntary employee wellness programs designed to improve the health of your company and the health of your employees are a win-win. Mandatory programs, particularly when linked to a financial incentive, are riskier and must be implemented with caution.
Copyright 2008 M. Lee Smith Publishers LLC

WEST VIRGINIA EMPLOYMENT LAW LETTER should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only. Anyone needing specific legal advice should consult an attorney. The State Bar of West Virginia does not certify specialists in the law, and we do not claim certification in any listed area. For further information about the content of any article in this newsletter, please contact any of the editors.

M Lee Smith Publishers