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Understanding Employee Wellness Programs

Published on June 27, 2015

Employee wellness programs are programs designed to keep people healthy and to avoid preventable illnesses. More and more employers are choosing to implement wellness programs, but not everyone understands what they are, the practical considerations of implementing them, and the risks involved. It is important for employers to become informed about wellness programs to determine if such programs will be a benefit to their businesses and their employees, and to make sure they follow the law when implementing these programs.

What is an Employee Wellness Program?

Employee wellness programs promote employees’ health and well-being. The goal is to help employees make healthier choices. Wellness programs are designed to address “lifestyle diseases” such as inactivity, poor nutrition, tobacco use, and frequent alcohol consumption. These types of “disease” are increasingly prevalent in working age individuals.
Wellness programs can include a variety of services such as newsletters, health risk assessments, health screenings, meetings, education, health fairs, fitness classes, and incentives. A combination of these methods is essential to making these programs successful.

How do Incentives Work?

Incentives are a relatively effective way to increase employee participation in wellness programs. Some studies have found incentives to be the key to successful wellness programs. Legally, it is easier to provide incentives for participation rather than incentives for achieving results. One example of participation is undergoing a health risk assessment. An example of a results-based incentive is including rewards for something like a target body weight or a minimum number of gym workouts per week.
Cash, cash equivalents such as discounted gym memberships, and novelty items are all common incentives. Novelty items can be water bottles, lunch bags, tote bags, pedometers, and more. Monetary incentives over $50 also can be relatively effective at increasing employee participation in wellness programs.
Incentives for health-based or wellness activities must satisfy five criteria:

1. Individuals must have the opportunity to qualify for the reward under the program at least once per year.
2. The program must be reasonably designed to promote health or prevent disease.
3. The amount of the reward available cannot exceed more than 30% of the cost of coverage (or 50% if a tobacco wellness program).
4. The program must permit individuals to achieve the reward through a reasonable alternative standard.
5. The program must provide specific information, including availability of a reasonable alternative standard and plan contact information.

Incentives for participation only, and that are not tied to a health factor and are offered to all similarly situated individuals, do not have to comply with these same stringent requirements but still must satisfy all other applicable laws.

Benefits of Employee Benefit Programs

Employee wellness programs may have benefits to both employees and employers. Some studies suggest that wellness programs help cut health care costs and may reduce hospital visits. These programs also may help increase productivity and decrease the cost of employer-sponsored health care plans. Happier workers work harder. In addition to health benefits, wellness programs can increase employees’ self-esteem, security, and engagement in the workplace. Generally, employees value their employer providing them opportunities to engage in health behaviors and incentives for doing so.

Be Careful…

Employees adopting wellness programs must be careful to comply with all other applicable laws. For example, under the Americans with Disabilities Act (ADA), individuals with disabilities must not be penalized or have an incentive withheld on the basis of their disability. Thus, programs should be designed so that all employees can participate and qualify for the incentive.
Also, the Genetic Information and Nondiscrimination Act (GINA) prohibits employers from collecting genetic information, including family medical history, for underwriting purposes. This means an employer cannot, for example, offer an incentive for completing a health assessment questionnaire that contains questions about family medical history unless answers to those questions are not required to receive the incentive.
Health information collected for wellness programs also needs to comply with HIPAA’s security and privacy rules.
Employers should consider any way a wellness program could be seen to target a protected class, such as setting health objectives that are more difficult for older employees to meet. Such types of programs are not allowed.

What next?

Employers should consider whether employee wellness plans would benefit their organization. To do this, employers should obtain input from employees. Next, employers should work to implement such plans so that they comply with all applicable laws. The benefits of implementing these plans may well result in healthier and harder working employees, and an overall culture of wellness for your business.

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Britenae Pierce is a partner in Ryan, Swanson & Cleveland, PLLC’s Employment Rights, Benefits and Labor Group. She can be reached at 206.654.2289 or [email protected].

This message has been created by the Employment Rights, Benefits & Labor Group at Ryan, Swanson & Cleveland, PLLC to advise of recent developments in the law. Because each situation is different, this information is intended for general information purposes only and is not intended to provide legal advice on any specific facts and circumstances. Ryan, Swanson & Cleveland, PLLC is a full-service law firm located in Seattle, Washington.

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