Wellness Incentive Programs: Navigating the Road Paved With Good Intentions

Contributed by Beverly Alfon

The recent focus on the U.S. Supreme Court’s analysis of the constitutionality of the Patient Protection and Affordable Act (ACA) has again amplified the health care debate – including, the growing trend of employer wellness incentive programs.  If the ACA is upheld, in 2014, the current 20% limit on financial incentives tied to patient health standards will increase to 30% (with the potential that the limit could be increased at the government’s discretion).  In light of sky-rocketing health care costs, and glaring statistics, employers are paying attention.  See, Society for Human Resource Management, “Wellness Initiatives Can Ease the Pain of Rising Benefit Costs,” 4/4/2012. 

A wellness program to promote better health for employees while reducing business costs seems like a no-brainer.  However, despite the increasing popularity of these programs, be aware – a poorly designed program could invite litigation and liability under federal, state and/or local laws.  For example: 

  • Under the ADA (Americans with Disabilities Act), an employer generally cannot ask for medical information from current employees unless the request is “job-related and consistent with business necessity.”  There is an exception to the rule for medical information collected through a voluntary wellness program.  However, the EEOC has issued an opinion letter indicating that while some health risk assessment questions regarding eating habits may be acceptable, questions related to how much alcohol the employee drinks would violate the ADA because they are directed at a specific disability.  
  • Under GINA (Genetic Information Nondiscrimination Act), employers are generally prohibited from “using, acquiring, requiring or disclosing genetic information.”  It prohibits discrimination against individuals based on their “genetic information” — which is defined broadly enough to include family medical history that may be included in a health risk assessment.  GINA has some exceptions for voluntary wellness programs, but there are specific rules on how that information can be obtained from the employee.  Notably, the EEOC has taken the position that a program is not “voluntary” when it penalizes an employee who does not complete a health risk assessment by making him ineligible to receive program incentives.

BOTTOM LINE:  A well-designed wellness incentive program has the potential to significantly benefit employers and their employees.  However, these programs have not been tried and tested under the discrimination laws and regulations.  New legislation will continue to be introduced and new lawsuits will be filed to challenge the legality of these programs.  As the statistics reflect, the number of individuals who are most likely to be negatively affected by wellness programs tied to health factors is significant and growing.  Accordingly, the safest course seems to be to opt for a program that rewards participation, not performance.  

The potential claims and penalties associated with violations of the various discrimination laws could be significant, especially in light of recent amendments that include penalties and taxes.  Whether you are considering a wellness program or already have one in place, be sure to have counsel review it for compliance with all related laws.  Really, do you need more incentive?