By Mitch Strohm, THELAW.TV
Employers across the nation are trying to curb the health care costs of their workers, and for some, wellness programs seem to be the answer.
In fact, 86 percent of employers indicated that they currently offer wellness-based incentives, according to a survey by Fidelity Investments and the National Business Group on Health.
"As the cost of providing health care continues to increase, employers recognize one of the key ways to manage their company's costs is to incent their workforce to lead a healthier lifestyle," said Adam Stavisky, senior vice president of Fidelity's Benefits Consulting business in a press release about the survey.
But some companies -- like Michelin North America Inc. and Honeywell International Inc. -- have started using programs that some are considering penalties.
"Wellness programs are clearly the trend of the future," says Lew Malty, president of the National Workrights Institute in New Jersey, a nonprofit employee rights advocacy group.
But, "wellness programs don't have to be punitive," he adds.
Group health plans are prohibited from charging employees different premiums based on their health status, according to The Health Insurance Portability and Accountability Act (HIPPA) of 1996.
However, it allows employers to provide financial incentives for employees who achieve certain health goals or participate in certain health promotion programs.
Those programs are divided into two areas, one area that requires employees to simply participate in a program for rewards and one area that ties financial incentives to the achievement of certain health standards.
For example, your company might offer a credit toward deductibles for simply completing a health-assessment survey, which could be considered a non-punitive program.
Or, your company might only offer a reward if you meet certain health standards for things like blood pressure, glucose, cholesterol and waist size, which might be considered punitive.
Many employee-rights advocates are disgruntled by punitive wellness programs, calling them legal discrimination or pay cuts by a different name.
Under HIPPA, employers are allowed to charge unhealthy employees up to 20 percent more of the cost of the company medical plan, says Malty.
Beginning in 2014, that limit rises to 30 percent.
If the penalty were limited to behavior, it might be defensible, says Malty -- giving up smoking is a behavioral choice.
Yet, in some cases, instead of penalizing the behavior, they penalize the health marker, like cholesterol.
And that's unfair, says Malty, because some people are genetically destined to have high cholesterol, and it's out of their control.
As long as there's a connection between off-duty behavior and health cost, employers can charge the maximum.
Malty points out that if a worker's off-duty behavior, like smoking, costs the company $500 per year, it might be fair to charge that individual $500 more per year for health care but not more -- the employer shouldn't be entitled to make a profit on your unhealthy behavior, he notes.
In addition, employers can legally refuse to hire someone with poor health as long as it's not based on disability or genetics, says Malty.
"Where an employer cannot take action, is when it's discriminating against someone because of a handicap," says John P. Hancock Jr., attorney and shareholder at Butzel Long in Detroit.
For example, it's illegal for an employer to charge those with muscular dystrophy more for health care than everyone else.
That's according to the Americans with Disabilities Act (ADA).
As long as the wellness incentive programs are directed toward voluntary actions on the part of the individual, they are legal, Hancock says.
The ADA does not prohibit employers from implementing wellness programs geared toward good health and disease prevention for those with disabilities, but employers must provide a reasonable alternative accommodation for employees with disabilities so that all have the option of receiving equal benefits.
A matter of interpretation
Depending on where you're coming from and whether you're the employer or the employee, these wellness incentive programs could be considered a reward or a penalty.
"It is semantics," says Hancock.
He points out that there isn't much difference between a company saying, "If you do this you're going to pay less," and, "If you don’t do this you're going to pay more."
Still, he thinks the way it's being phrased right now is, "Here's what we want you to do. If you don't do that, you won't get reduced health care."
In a way, that's forcing, he notes.
"There's a penalty if you don't do it, and the penalty is that your healthcare stays where it is, and you don't have a chance to lower your contribution," explains Hancock.
But employers are legally in the clear as long as the programs are voluntary and meet HIPPA and the ADA.
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