Introduction to General Wellness Programs by Rogan Morton Law
Wellness programs are all the rage and could be the future of many employers’ benefit programs. This is especially true given the skyrocketing costs of health care and prescription drugs, the uncertainly created due to health care reform (PPACA), and reported unhealthy behavior trends among adults in the United States.
I receive calls every week asking what are wellness programs and what should an employer be concerned about when developing, implementing, and designing such programs. For further information, please visit my website at Rogan Morton Law.
What are Wellness Programs?
Let’s start at the beginning. Wellness programs come in various shapes/sizes and sometimes are not even called “wellness programs.” You may be sponsoring one at this very minute and not even know it. For instance, wellness programs vary depending on who is covered by the program, what benefits are offered, whether the program is voluntary or mandatory, how the program is structured against the employer’s other programs, and whether there is an objective measurement required for the program criteria.
Wellness programs may be designed to address issues that have already taken place (such as employee assistance programs, disease management, etc.) or may focus on avoiding the onset of certain health issues (such as prevention programs). Like other benefit programs, wellness programs may also be administered in-house or outsourced and they may be self-insured or offered through a carrier.
A typical wellness program may cover only employees, employees/spouses (or domestic partners), or other family members. Benefits may range from providing limited benefits to more extensive benefits. For instance:
|Offering informational brochures, periodic educational sessions, seminars, workshops.||Offering a Base Program, and then adding additional benefits such as preventive care, screenings, health risk assessments, exercise plans, and similar-type benefits.
||Offering Base Program and Mid-Level Program benefits as well as some type of health-related communications integrated into the program with assessments, employer contributions, lower premiums/co-pays/waiver of deductibles for medical coverage, and other rewards/incentives to raise participants’ awareness, and encourage favorable health behaviors.|
Gone are the days where wellness programs are limited to information and brochures. Wellness programs now go further to encourage positive health behaviors and lifestyles by covering additional items, such as: flu shots, physical examinations, screenings, nutrition counseling, wellness education, targeted communications, rewards/incentives, and similar-type benefits.
What Are the Concerns in Implementing and Designing Wellness Programs?
A complete list of potential problems associated with wellness programs is beyond the scope of this introduction; however, as with so many things in the employment and benefit fields, it is not always “what” you do, but also “how” you do it.
Depending on the type of wellness program and the benefits offered, the program could be subject to ERISA requirements. For instance, a wellness program subject to ERISA would be required to provide a summary plan description , report to the IRS and DOL on the Form 5500, complying with certain fiduciary rules, implement claims procedures as well as meet other ERISA requirements.
Also, programs offering certain benefits, especially Mid-Level Programs and Extensive/Integrated Programs, could raise numerous legal compliance issues including the taxation of the benefits provided as well as rewards/incentives, the treatment of domestic partners, PPACA, HIPAA, COBRA, GINA, ADA, ADEA, NLRA, FMLA, Title VII, FLSA (to name a few), and wellness programs may also involve state law compliance issues (such as recreational use, lawful off-duty conduct policies, privacy statutes, workers compensation, state benefit continuation and notice requirements).
Given the tremendous flexibility in design and numerous options available to employers providing wellness programs, employers should be aware that implementing or modifying a wellness program could bring unexpected compliance issues and potential risks. This means that employers should keep an eye out for new developments in this area, understand how their programs is impacted by the various statutes, address compliance issues and potential risks, and understand how these programs will be viewed by the various federal and state government agencies charged with regulating such programs.
The Agencies Do Not “Make It Easy”
Unfortunately, employers should also be aware that certain agencies have yet to provide significant guidance to assist employers in navigating compliance for their wellness programs in the current environment. One example is the ADA which generally allows employers to conduct voluntary medical examinations and activities (including obtaining information from voluntary medical histories) as part of an employee wellness program as long as any medical information acquired as part of the program is kept confidential and separate from personnel records. EEOC guidance to date states that a wellness program is “voluntary” as long as the employer neither requires participation nor penalizes employees who do not participate.
However, the EEOC has not taken a position on whether, and to what extent, the ADA permits an employer to offer financial incentives for employees to participate in wellness programs that include disability related inquiries (such as questions about current health status asked as part of a health risk assessment) or medical examinations (such as blood pressure and cholesterol screening to determine whether an employee has achieved certain health outcomes).
There is reason for concern and further guidance given that the EEOC stated in 2009 that providing a monetary incentive may cause an otherwise voluntary program to become “involuntary” and that requiring a health risk assessment to obtain health insurance would violate the ADA. However, as recent as June 2011, the EEOC issued an information letter detailing GINA and wellness requirements and only stated that it continues to examine the ADA implications of such arrangements.
In the End…
There is no reason to shy away from wellness programs and employers can no longer ignore the benefits associated with offering wellness benefits. However, employers should keep in mind that certain types of wellness programs may inadvertently impact other benefit programs and create significant and unexpected compliance concerns. This means that employers should attempt to structure their wellness programs in a way to reduce risks and obtain the best return on investment given their particular employee base.
This is Part 1 in a series of articles summarizing various compliance issues associated with wellness programs. Future articles will focus on HIPAA, GINA, ADA, and state legal requirements impacting wellness programs.