Amid all of the discussion regarding health reform and the uncertainty of its fate pending the outcome of the upcoming presidential election, companies are revisiting the benefits of wellness programs. Until recently, many companies had taken a stolid view of wellness programs, in some instances dismissing such programs as a waste of resources. On the heels of the U.S. Supreme Court upholding the health reform as constitutional, however, wellness programs are worth a second look and could very well be a crucial way to maintain a healthy workforce and combat the rising costs of health coverage.
There are inherent benefits of a well-executed wellness program — namely, engendering a more productive workforce. Specifically, these programs are created to encourage a healthier lifestyle, with the expectation that such behavioral changes will, in turn, create a healthier workforce, resulting in increased employee productivity and lower employer insurance premiums. Because certain preventable health conditions, such as obesity and tobacco-related illnesses, are significantly contributing to the overall decline in worker health and rising expense of health care coverage, companies are responding by providing wellness services such as discounted gym memberships, incentive-based rewards programs, nutritional counseling and health coach services.
Benefits Provided by Health Reform Law The Patient Protection and Affordable Care Act offers benefits to employers that implement wellness programs. Effective January 1, 2014, a provision of the act will expand an employer's ability to reward employees who meet agreed-upon health status goals through participation in wellness programs (i.e., weight loss). The act permits employers to offer employees rewards — in the form of premium discounts, waivers of cost-sharing requirements or benefits that would otherwise not be provided — of up to 30 percent of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals who cannot reasonably meet the standard.
Small employers stand to gain an added benefit through the implementation of a wellness program. The act provides grants for up to five years to small employers that did not provide a wellness program prior to the enactment of the act, employ less than 100 employees who work 25 or more hours per week and establish comprehensive wellness programs. The act defines comprehensive wellness programs using four criteria: (1) health awareness initiatives (including health education, preventative screenings and health risk assessments); (2) efforts to maximize employee engagement (including mechanisms to encourage employee participation); (3) initiatives to change unhealthy behaviors and lifestyle choices (including counseling, seminars, online programs and self-help materials); and (4) supportive environment efforts (including workplace policies to encourage healthy lifestyles, healthy eating, increased physical activities and improved mental health).
Wellness Programs Directly Correlate to the Bottom Line For employers, a healthier workforce means lower health care costs. A recent study allowed companies to quantify their monetary return on investment in wellness programs. In 2010, researchers from Harvard University and Harvard Medical School conducted a critical meta-analysis of the literature on costs and savings associated with wellness programs in various industries (including financial services, manufacturing, universities, utilities, pharmaceutical and consumer products). The findings, published in the Health Affairs journal, revealed that large employers (generally more than 1,000 employees) adopting wellness programs experienced substantial positive returns on their investments within the first few years of implementing the programs. Specifically, the study demonstrated that medical costs decrease by approximately $3.27 for every dollar spent on wellness programs and that absenteeism costs decrease by approximately $2.73 for every dollar spent. On average, the programs produced $358 in savings through reduced health costs per employee per year, while costing the employer $144 per employee per year.
Maximizing Employee Participation Companies must be mindful that there is no one-size-fits-all approach to wellness programs. Like any successful business objective, wellness programs must be crafted with a keen focus toward participants. An effective wellness program must be actively and thoughtfully implemented. Consider the logistics of your workforce: A sedentary workforce is more likely to participate in activities offered during the work day, whereas, by comparison, nonsedentary employees are more likely to take advantage of activities offered outside of the work day.
Research suggests that building incentives into wellness programs helps to raise participation among employees. For example, some wellness programs offer incentives to employees for attaining a weight-loss goal, reducing tobacco use or attending a wellness seminar. Group challenges are particularly popular and include contest-style programs drawing inspiration from television shows like The Biggest Loser. These programs not only contribute to overall employee health, but may also boost employee morale by utilizing core competencies such as team-building exercises and friendly competition. The incentives, which include lotteries and financial commitments, may be implemented through social media to increase employee participation. Often referred to as "social wellness programs," these programs include user applications derived from social media, including Web-based private social networks that employees can use to create profiles, share health goals and fitness interests, and participate in group challenges.
Avoiding Legal Pitfalls
As with any policy implementation, it is critical for a company to consider legal implications when designing a wellness program. Such programs, if not properly administered, may face a myriad of legal challenges under federal anti-discrimination statutes, privacy laws and state statutes pertaining to the regulation of off-duty conduct. One of the biggest challenges is reconciling wellness programs with the requirements of the Americans with Disabilities Act, which prohibits employers from discriminating against a qualified individual with a disability in any aspect of employment, including employee compensation and benefits. Employers must be cognizant that although a disabled individual can perform the essential functions of his or her position, he or she may not be able to maintain certain health criteria required by the wellness program because of his or her disability. For example, a disabled worker may not be able to maintain a set body mass index because of certain health conditions.
Additionally, employers must be mindful of the ADA's confidentiality requirements. Because the ADA limits the disclosure of employee medical information, an employer should retain an independent third-party administrator to collect and analyze medical information obtained in connection with a wellness program to ensure that individual health data is not disclosed to the employer.
Another factor to be considered in implementing a wellness program is the implications of Title VII of the Civil Rights Act. As a practical matter, gender differences should be factored into the goals of the program. For example, because a healthy body mass index for women is higher than it is for men, employees should be held to the medically accepted standards of their respective gender.
It is axiomatic that a healthier workforce will increase overall employee productivity and result in a reduction in health care costs. The most effective wellness programs are those that are designed with the logistics and interests of the participants in mind. Although many employees appreciate the availability and benefits of a company-sponsored wellness program, employers must be mindful of the limitations inherent in these programs and ensure that they are compliant with both state and federal law. With proven benefits and a direct correlation to decreased health costs, wellness programs very well may be a cost-saving measure at second sight.
Click here to view the pdf version.
Tiffani L. McDonough is a labor and employment attorney with Obermayer Rebmann Maxwell & Hippel in Philadelphia. Her national practice includes representing companies, educational institutions and hospitals in employment litigation and counseling on human resources matters, including the creation and implementation of wellness programs. McDonough may be reached at email@example.com.
Reprinted with permission from the August 29, 2012 edition of The Legal Intelligencer © 2012 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 347-227-3382, firstname.lastname@example.org or visit www.almreprints.com #201-08-12-10