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Be careful: For legal reasons, ACA-prompted wellness programs must be structured carefully

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Kathie Caminiti has advice for employers on how to design a wellness program that complies with federal workplace laws.
Kathie Caminiti has advice for employers on how to design a wellness program that complies with federal workplace laws. - (Fisher & Phillips)

The Affordable Care Act encourages employers to launch workplace wellness programs with financial incentives, including discounts on health insurance premiums. That way, they can reward workers who take steps such as losing weight and quitting smoking to improve their health.

Large employers have the resources to deal with the potential legal issues raised by wellness programs that reward employees for hitting certain health targets. But smaller employers may find it more challenging to comply with federal laws requiring them to protect confidential employee health information and avoid discriminating against workers who can’t achieve the wellness program’s health goals.    

Kathie Caminiti, a partner at the Murray Hill office of the national employment law firm Fisher & Phillips, has advice for employers on how to design a wellness program that complies with federal workplace laws.  

She said employers are clearly eager to enter the wellness arena — both to lower their health care spending and to develop a more productive and engaged workforce.
 
Employers “are excited about the prospect of improving the overall health of their workforce,” Caminiti said. “Employee illness is a staggering cost in terms of absenteeism, health insurance costs and loss of productivity.”

As a result, U.S. employers will spend an average of $594 per employee on wellness-based incentives this year, according to a survey by Fidelity Investments and the National Business Group on Health. That’s up 15 percent from the average of $521 reported for 2013, and more than double the average of $260 reported five years ago.

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But she said employers need to put a plan in place that protects the privacy of employee health information and gives everyone an opportunity to participate in incentive programs.

Safeguarding employee privacy is job one: “The issue is, who has access to the information?”
   
For example, obesity is a recognized disability under New Jersey law, “so even a wellness program whose goal is to reduce weight raises issues when someone from the human resources group or the office manager is asking for things such as the weight” of individual employees.  

The employees need to know “who is going to have that information and how it’s going to be protected and safeguarded.”

The individual who deals with employee health information, who might work in the company’s human resources department or work for an outside wellness vendor, has to follow procedures that prevent the information from spreading to managers and colleagues. The idea “is to establish a brick wall between the wellness program coordinator and the employer,” she said.
 
“Very often, your HR staff has access to a fair amount of confidential information, some of it being health related,” Caminiti said. She added that this information may have surfaced because workers brought the information to the attention of HR, perhaps when requesting an accommodation to help them perform their jobs.

“It is important to make sure that the right people or a limited group of people have access to that information,” she said.  

Wellness programs can either be “activity based” — everyone who walks 30 minutes, three times a week gets a gift card — or “outcomes based” — the employees get lower health insurance premiums if they lose weight or quit smoking.

Caminiti said the ACA requires that both types of wellness programs offer a “reasonable alternative standard” for those who can’t engage in a particular activity or can’t achieve the health outcome required to get the reward: “So if someone can’t walk 30 minutes, three times a week, what is a reasonable alternative for somebody who is starting out?” Maybe the alternative would be some less-strenuous exercise, or the employee agrees to have several sessions with a health coach. Caminiti said the alternative standard needs to be determined and disclosed up front, so everyone knows what they have to do.
 
Likewise, employers may want to get workers to quit smoking by offering a discount on their health insurance premiums.

“But maybe an employee can’t stop smoking,” Caminiti said. “So the alternative could be a smoking cessation program under the guidance of a medical doctor who is going to work with the employee who really wants to quit but has not been able to.”

Caminiti said: “The major takeaway on wellness programs is there has to be a plan, it needs to be in writing and the alternative standards should be carefully considered. There are great benefits, but there are also some land mines that come up in these programs that employers should be aware of.”

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Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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