Workplace Wellness Policy and Practice Risks

August 14, 2018

A workplace wellness program is supposed to help the company by helping the employees. Sometimes, however, things do not go as planned. If not managed carefully, a workplace wellness program can lead to claims of unfair employment practices, possibly resulting in litigation. It’s important for employers to understand the potential risks.

What information are you collecting, and how is it being used?

Wellness programs often produce health information, which could include weight, blood pressure and disease status. How this information is handled is very important.

Information collected through a workplace wellness program may qualify as protected health information under HIPAA regulations. According to the U.S. Department of Health & Human Services, it depends on how the program is structured. If the program is part of a group health plan, the information created or collected through the program IS protected under HIPAA.

Organizations handling protected health information need to do so with care. If the information is misused, even through a data breach caused by a hacker, the organization could face expensive fines and lawsuits.

Does participation follow federal regulations?

Under ACA and HIPAA regulations, group health plans are not allowed to charge individuals differently based on health factors. However, according to the Department of Labor, wellness programs can qualify for exceptions as long as they meet the necessary criteria.

Participatory wellness programs that are available to all similarly situated employees and do not offer rewards based on health factors are generally compliant with nondiscrimination requirements. For example, if a program is available to everyone, and if the rewards of the program do not depend on successful outcomes or activities, the program is likely compliant.

Health-contingent wellness programs are a little trickier. These programs reward outcomes or activities related to health factors. In order for these programs to be compliant, five criteria must be satisfied:

  • Eligible individuals must have a chance to qualify for the reward at least once a year.
  • The total reward must not exceed 30 percent of the cost of coverage, or 50 percent if the program helps people avoid tobacco.
  • The program is reasonably designed to promote health and prevent disease.
  • All similarly situated individuals can qualify for the full reward.
  • All materials that describe the program terms must disclose the availability of a reasonable alternative standard.

See the HIPAA and the Affordable Care Act Wellness Program Requirements for more details on these criteria and other compliance issues.

Is participation in the wellness program truly optional?

Employees must have the right to decline participation in workplace wellness program exams and questions. However, what constitutes as voluntary participation can be complicated. Incentives for participation may also be seen as penalties and coercion.

The AARP successfully sued over wellness program penalties, and the court ruling has major implications for companies that use wellness programs to determine health insurance costs.

Under the Equal Employment Opportunity Commission (EEOC) rules, companies were able to charge employees significantly more for health insurance if they declined to participate in wellness program questionnaires and exams.

The AARP argued that this unfairly penalized employees who did not want to share their private health information and, as a result, coerced them into sharing this information. The court agreed, and the EEOC rules are being vacated as of January 1, 2019.

Have questions about making sure your workplace wellness program is compliant?  Our Benefit & Advisory Resources team can help. Contact us to learn more.