Incentives, Disincentives and the Law: Legally Compliant Wellness

Program and Health Benefits

Marcia L. Augsburger, Esq.

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FOCUS ON THE JOY OF HEALTHCARE

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Why me?

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We Must Change Behaviors Now

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PATIENT PROTECTION AND AFFORDABLE CARE ACT

1. Provides that Medicare will cover annual wellness visitand 100% of the cost for most preventative services;

2. Provides for many grants and incentives to promote wellness and prevention;

3. Establishes a national diabetes prevention program;

4. Provides for incentives and programs to educate physicians on preventative medicine;

5. Requires CDC to study and evaluate best employer-based wellness practices and provide an educational campaign and technical assistance to promote the benefits of worksite health promotion; and

6. Requires nutrition labeling of standard menu items at chain restaurants.

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You can help drive the change!

INCENTIVIZE

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What is at issue?

HIPAA

ERISA

Internal Revenue Code

ADA

State Law

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To be conservative, Thou Shalt . . .

Maintain the Confidentiality

of Employee Health Information

Make it Clear That

Participation is Voluntary

Never Discriminate in

Administering the Wellness

Program and In Rewarding

Participants

Consider the Tax

Consequences of Rewarding

Participants

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Confidentiality under HIPAA: Need Exception or Authorization

Exception for “treatment, payment and health care operations” does not apply.

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HIPAA Nondiscrimination Rules and ERISA: Application is your choice.

1. Do the incentives affect the plan’s benefits or costs?

2. Are incentives or benefits contingent on employee satisfying a standard related to a health factor, i.e., are you requiring a certain outcome?

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Incentivizing

Damned if you do; damned if you don’t?

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Are the Incentives Really Penalties?

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Ok?

Voluntary cholesterol testing without any required result

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Ok?

Maintaining recommended BMI

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“Benign Discrimination”

10% reduction in employee premium contributions for participants with diabetes who complete HbA1c tests at least twice annually.

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Smoking cessation program requiring an individual to quit smoking

Ok?

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Completion of a Health Risk Assessment as a condition of enrollment in your health plan

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Ok, If . . .

Employee answers are fed into a computer that identifies risk factors and health plan/TPA sends educational information to the employee’s home address.

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Genetic Information Nondiscrimination Act

Questions on HRAs are prohibited if the answers will be used for

“underwriting purposes,” which includes offering employees

discounts on their monthly premium contributions or lowering deductibles

for taking HRAs.

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If benefits are contingent on

reaching a goal or standard, program must be a “bona fide” wellness

program.

How To Require Results

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Reward limited to 30% of total cost of participant’s benefit

package

Total cost of benefit package = employer and employee contributions, including

employee-plus dependents if family members participate

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Wellness program benefits and rewards must be available to all similarly situated individuals.

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Not overly burdensome No “subterfuge”

Program must be reasonably designed to promote goodhealth or prevent disease

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Plan must disclose availability of reasonable alternative standards in all plan materials describing the program

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Eligible employees must have opportunity to qualify at least once per year.

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Are Wellness Rewards Taxable to Employees?

Non-taxable:

Cost of an HRA

In-house use of fitness facility

At work health seminars or classes

Vouchers for an on-site cafeteria, likely small gift cards or restaurant vouchers, etc.

Smoking cessation or weight loss programs based on a physician’s recommendation

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Taxable:

Taxable: Cash

Large fitness equipment (treadmill or bicycle)

Vitamins or supplements without a physician diagnosis and recommendation

Fitness memberships without a physician’s diagnosis and recommendation

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What about companies who refuse to hire smokers or fire them?

Über Incentives

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The following states have laws protecting individuals who use tobacco products from employment discrimination:

* Arizona and Virginia - applicable to public employees only.

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Can employers dictate what happens in the privacy of their employees’ homes?

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The ADA Trumps

The ADA prohibits disability-related inquiries

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Smoking and Overeating: A Disability?

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Smoking and Overeating: A Disability?

Does the individual have a mental or physical impairment that substantially limits a major life

activity?

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Nine States Protect Individuals Who Use Any “Lawful Products”

Minnesota

Nevada

New York

North Carolina

Tennessee

Wisconsin

Illinois

Missouri

Montana

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Three States Protect Lawful Conduct

Colorado (current employees only)

North Dakota

and . . .

Three states protect lawful conduct.

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California.

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Off-Duty Conduct

Courts have held that an employer may restrict moonlighting that is “detrimental to the mission and functions of the employer.” City of San Diego v. Roe, 543 U.S. 77 (2004).

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Legal Challenges

Invasion of privacy and discrimination based on disability, race, gender, and national origin.

Summary

Wellness programs pay dividends in terms of cost savings and contributing to the wellbeing of our workforces and communities.

Brokers should get in the game and help drive change.

The legal concerns are not an obstacle.

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