By Jeremy Sharp
The new political climate in Washington, D.C., has increased the uncertainty regarding how health care in the United States will evolve in the coming years.
One facet of health care, however, is subject to little uncertainty, regardless of the ultimate fate of health care reform: employer-sponsored wellness programs. Such programs will remain one of the best tools available to employers seeking to reduce overall health care costs.
Industry experts provide varying answers when asked return on investment an employer can expect to realize for dollars spent on wellness programs. The consensus seems to be that in the long-term, an expected return of $2 to $6 for each $1 spent on wellness is reasonable. Even better, it’s likely that the return will increase over time, as many wellness costs are relatively front loaded.
If wellness programs were stocks, most people would add them to their investment portfolios immediately. That being the case, why aren’t employer-sponsored wellness programs both ubiquitous and comprehensive?
One reason is that wellness requires an investment by the employer and faith that the investment will pay off over time. Another reason is that wellness programs must comply with a variety of laws, including the Americans with Disabilities Act (ADA), Genetic Information Nondiscrimination Act (GINA) and Healthcare Insurance Portability and Accountability Act (HIPAA) – not to mention the 2010 health care reform law.
The EEOC recently released final regulations under GINA that were necessary to provide certainty among employers regarding a number of wellness-related issues (although it is important to note that the regulations did not answer all potential questions). Now that the legal landscape has been clarified somewhat, employers who do not yet offer wellness programs would be wise to consider implementing them, and employers with existing programs should evaluate them to ensure compliance with the recent regulations and to analyze how they might improve their return on investment.
GINA Compliance for wellness programs under final regulations
In the final regulations under GINA issued in November 2010, the Equal Employment Opportunity Commission (EEOC) clarified the application of GINA to wellness programs and health risk assessments, settling questions that might have discouraged some employers from implementing wellness programs or utilizing them more fully.
Wellness programs that use health risk assessments are permitted to acquire genetic information, including family medical history, only if three requirements are satisfied:
- The genetic information is disclosed voluntarily (that is, the employer cannot require the provision of genetic information nor penalize employees who do not provide it).
- The employee provides prior knowing, voluntary and written authorization for the disclosure of genetic information (including the types of genetic information to be obtained, the general purposes for which such information will be used, and restrictions regarding disclosure of that information).
- Individually identifiable genetic information is provided only to the individual, the individual’s family, and the licensed health care professionals or board-certified genetic counselors who will provide genetic services.
The final regulations under GINA also clarify that employers may offer financial incentives for completing a health risk assessment, but only if questions regarding genetic information are voluntary and identified to employees. Additionally, answering such questions is not required in order to receive the financial incentive.
Employers also may offer financial incentives for participation in disease management programs (or other programs that promote healthy lifestyles) where the genetic information disclosed indicates that an employee is at increased risk for developing a particular health condition in the future (and such participation-based incentives are also offered to employees who already have been diagnosed with such condition).
One important clarification provided by the final regulations is that employers may offer wellness programs containing financial incentives for individuals who achieve certain health outcomes, such as lowering blood pressure, glucose or cholesterol levels, or losing weight.
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It also is important to note that employer-sponsored wellness programs must comply with the ADA and HIPAA. For example, they must make reasonable accommodations for employees with disabilities, providing reasonable alternative standards where health conditions preclude participation in initial standard.
ADA compliance for wellness programs
The ADA prohibits employment-based discrimination against employees with disabilities. As a result, employers are limited in what they may ask an employee about his/her medical conditions. Any such inquiry, to the extent permitted, must be job related and consistent with business necessity. Further, the ADA permits employers to conduct medical examinations and obtain medical histories so long as they are “voluntary.”
The EEOC has generally taken the position that voluntary wellness programs must comply with ADA (with some exceptions). One important consideration is that an employer must furnish a reasonable accommodation for employees unable to participate in any aspect of the wellness program due to a disability.
HIPAA compliance for wellness programs
HIPAA permits wellness programs with limited individual incentives either for participation or for achievement of certain health outcomes. The U.S. Department of Labor (DOL) has suggested a limit of 10-20 percent of the total cost for employee-only coverage; although, it is worth noting that the 2010 health care reform law would increase this percentage to 30 percent in 2014.
HIPAA requires wellness programs to be reasonably designed so that they promote good health and disease prevention, permit individuals to qualify for any incentive at least once per year and make incentives available to all similarly situated individuals. They must provide reasonable alternative standards or waivers available for those with health factors precluding participation in the initial standard, and proper disclosure of the same.
It is important to note that HIPAA forbids employers from utilizing eight established health factors in determining eligibility or premiums:
- Health status;
- Medical condition;
- Claims experience;
- Receipts of health care;
- Medical history;
- Evidence of insurance;
- Disability; and,
- Genetic information.
A wise investment
The future of employer-sponsored health care remains uncertain, and is not likely to be fully settled for several years. For the present, the only certainty is that health care costs are a volatile line item on every corporate balance sheet.
With this in mind, the most proactive step that employers can undertake to address that volatility is an increased investment in wellness programs. Recent clarifications in the law, coupled with ever-spiraling health care costs and uncertainty regarding health care reform, make wellness a wise investment for 2011.