Avoid Risks with Planning Your Wellness Programs | DCR Workforce Blog

Avoid Risks with Planning Your Wellness Programs

“By giving up smoking, drinking and loving, you don’t actually live longer; it just seems longer.”

Whenever this is quoted to people, I find that they all laugh – and treat it as a cute joke. Not one ever takes it literally. After all, who does not have health at the top of their list of New Year resolutions? When companies assume that employees will be pleased to have access to wellness programs and gym facilities, they do it with a zealous commitment to its goals. Who can argue with encouraging healthy behaviors while also driving down costs? Actually, many critics do. They state that wellness programs only benefit those who already live healthy, active lifestyles; financial incentives to get healthier are in reality financial penalties for workers who resist participation or who aren’t as fit. They are also concerned that workplace wellness programs that involve health screenings and the disclosure of potentially sensitive employee information violate employee privacy.

At issue – can employers introduce incentives and penalties in an effort to motivate employees to adopt healthier lifestyles? The answer is actually ‘No’! Improperly designed wellness programs can violate the tenets of the Americans with Disabilities Act (ADA) and draw the ire of the Equal Employment Opportunity Commission (EEOC).

The Affordable Care Act requires that participation in a corporate wellness program to be voluntary, but the law provides no guidance on how to achieve that. This raises the issue of what is meant by voluntary. Critics suggest that the financial incentives and/or the penalties that are linked with participation make the program mandatory. The EEOC has qualified this definition by stating that, to be considered voluntary, a wellness program should neither require participation nor penalize employees for non-participation; though it does not specify if the incentive schemes also render it as involuntary.

The actions recently taken by the EEOC, by filing cases against some employers, affirm this guidance further.

  • The first lawsuit was filed by the EEOC when an employer, Orion Energy Systems in Wisconsin, introduced an involuntary wellness program. A non-participating employee was required to pay the entire premium for her employee health benefits and fired soon after. The company also imposed heavy penalties for not participating in its medical examinations or not answering its disability-related questions.
  • Another employer, Flambeau Inc., threatened to cancel the insurance (or charge full premium) of employees who refused medical testing and assessment. The employer failed to notice that the medical assessment included disability-related inquiries. In addition, the medical examinations were not restricted to job-related functions tied to business necessity.

The EEOC has proposed some rules based on its expectations of wellness program:

  • Offer a chance of improving an employee’s health or preventing disease
  • Not be overly burdensome , or an attempt to shift health costs on to the employee
  • Not be a covert attempt to violate the tenets of the ADA (when medical data is collected from employees, there should be an offer of follow up programs tailored to offer solutions to the conditions identified in the data collected)
  • Not employ suspect methods or use unreasonably intrusive procedures to promote wellness

The EEOC is not the only government agency governing wellness programs. These programs are also governed by the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA), both of which expect the program to be made available to all similarly situated individuals at a workplace. There are areas where the EEOC’s guidance clashes with these two laws, making it necessary for employers to tread a fine line in order to stay compliant with their contradictory expectations.

  • The EEOC sets a cap on the incentives offered to the employee. Cash rewards for completing recommendations resulting from a health risk assessment cannot exceed 30% of the total cost of coverage (for the employer and employee together) under the group health plan provided by the employer.
  • The EEOC’s guidance does not extend to situations where the wellness program covers the dependent(s) of an employee. HIPAA/ACA extends the incentive limit to 50% in such cases.
  • The EEOC requires that the notice to employees about the wellness program use employee-friendly language, but does not regulate its format, frequency or method of delivery.
  • EEOC’s guidance reinforces the privacy and confidentiality requirements of ADA in regard to an employee’s medical information, but employers need to be aware that ADA’s confidentiality rules may clash with HIPAA privacy rules.

As of now, the rules from the EEOC are only proposed, but employers would still need to modify their wellness programs to eliminate the mandatory and punitive nature of their programs.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.