DOL Offers Compliance Checklist for Wellness Programs

Are Healthy Employees Productive Employees?

Last week I posted about a new survey on the lack of commitment by employees to health and wellness programs sponsored by their employers. For those of you who were not deterred by that news, here’s a[nother] helpful (and free) online tool from the Department of Labor (DOL).

In February, the DOL issued its Field Assistance Bulletin 2008-02, which is designed to help employers who are attempting to establish a Wellness Program while remaining compliant with HIPPA regulations.

The Wellness Program Analysis can be found here.

Do You Need the Checklist?

In short, the answer is “yes” if you are an employer with any kind of health-promotion or disease prevention programs. Also known as “Wellness Programs,” these health-focused initiatives became popular early in the decade. Certainly you’ve heard of these programs, even if your workplace hasn’t yet adopted one.

Wellness programs come in every shape and size. Some of the more benign programs promote cholesterol screenings or even advocate flue shots for employees. Others promote an all-around “healthy lifestyle” by giving employees financial rewards for regular attendance at a fitness club. And, as you may have read in some of my previous posts, smoking is also a very popular target of wellness programs.

So why the need for a government-agency-sponsored “checklist?” As with just about everything in the law, we lawyers just can’t hardly stand to let anything be simple. Employers that utilize “wellness programs,” as defined by law, must follow certain practices to avoid violating the anti-discrimination provision of the Health Insurance Portability & Accountability Act (HIPAA). (Be honest, did you even know there was such a thing as an anti-discrimination provision in the HIPAA statute? If you said “no,” you wouldn’t be alone.)

Wellness programs that are subject to the HIPAA regulations must meet either a “benign discrimination” exception or offer a reasonable “alternative standard” in order to be in compliance with the law. Which exception will depend on whether your program is considered a “standard-based” or “participation-based” program.

Standard-Based vs. Participation-Based Programs

Standard-based programs require participating employees to meet the stated objective in order to receive the offered reward. So, for an employee to successfully complete a cholesterol-reduction program, his cholesterol must actually be reduced.

Participation-based programs offer a reward to employees based on their participation, as opposed to their success. The reward cannot be conditioned on achievement of a specific health-related outcome. So, for a smoking-cessation program, employees can receive the reward so long as they complete the program. Whether or not the employee actually quits the habit does not effect their eligibility for the reward.

Discrimination In a Standard-Based Wellness Program

To comply with HIPAA, a standard-based program must satisfy five requirements:

1. The reward offered under the program must be limited to 20% of the applicable cost of coverage.

2. The program must be reasonably designed to promote health or prevent disease.

3. Individuals must be eligible to qualify to participate in the program at least once per year.

4. The reward must be available to all similarly-situated individuals.

5. The wellness program must have a reasonable alternative standard and disclose the alternative standard in all program materials that describe the program.

And what exactly is the “reasonable alternative standard” identified in the fifth prong?

For standard-based wellness programs to avoid a HIPAA violation, it must offer an “alternative standard.” This means that an employee must be offered a reasonable alternative to the stated objective and still be able to achieve the reward. In the cholesterol-screening example, the objective is the attainment of a certain cholesterol target. An alternative standard would be nutrition counseling sessions. The standard must be made available to those for whom it is (1) unreasonably difficult due to a medication condition; or (2) medically inadvisable to satisfy the otherwise applicable standard.

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