WP&BC Health, Welfare & Benefits Symposium January 28, 2015 Portland, OR 1 WELLNESS PROGRAMS Presented by: Chris Briggs & Kiran Griffith Stoel Rives LLP.

WP&BC Health, Welfare & Benefits SymposiumJanuary 28, 2015 • Portland, OR

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WELLNESS PROGRAMS

Presented by:

Chris Briggs & Kiran Griffith

Stoel Rives LLP

Western Pension & Benefits Conference:Health, Welfare & Benefits Symposium

WEDNESDAY, JANUARY 28, 2015 • PORTLAND, OR


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Today’s DiscussionToday’s Discussion

• Wellness programs and HIPAA• Other federal and state laws• EEOC Cases


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Wellness ProgramsWellness Programs

• Often group health plans, which are highly regulated under federal law

• Fall within exception to federal laws that prohibit discrimination in the workplace

• Rewards for being healthy can be seen as discrimination against employees who are sick, disabled, or addicted


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When Wellness Programs Are When Wellness Programs Are Health PlansHealth Plans• Will be regulated by HIPAA, COBRA,

GINA, and ADA if the program provides or is part of a larger medical plan that provides:– Medical benefits, through reimbursement or

payment to either participant or provider; or– Actual testing or screening


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When Wellness Programs Are When Wellness Programs Are Health Plans Health Plans (cont’d)(cont’d)

• Part of larger plan: Reward is lower plan premium, deductible, or co-payment

• Stand-alone program: Provides blood pressure testing, flu shots, blood tests, professional counseling (EAP), disease management

• The following are not health plans:– Health fairs (if employer does not provide payment for testing)

– Stand-alone walking or biking programs

– Weight Watchers

– Health information sessions

– Gym memberships

– Personal trainers


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Health Plan: HIPAA AppliesHealth Plan: HIPAA Applies

• HIPAA prohibits discrimination based on a health factor:– Health status

– Medical condition or medical history

– Claims experience or receipt of health care

– Genetic information

– Disability

• Exception: If certain conditions are met, wellness program may discriminate on:– Benefits provided to a participant

– Contributions required by a participant


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Three Types of Wellness Three Types of Wellness Programs Under HIPAAPrograms Under HIPAA• Participatory Program• Health-Contingent Program

– Activity-only program– Outcome-based program

The HIPAA conditions that apply vary for each type of wellness program.


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Participatory Programs Participatory Programs

• The program’s reward is not conditioned on the satisfaction of a standard that is related to a health factor (or the program does not provide a reward)

• Examples:– Reimbursement for the cost of a gym membership

– Waiver of cost sharing for pre-natal or well-baby visits

– Reward or reimbursement for participating in smoking- cessation program, regardless of whether one quits

• Only one HIPAA condition: Must be available to all similarly situated individuals, regardless of health status


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Health-Contingent Programs Health-Contingent Programs

• Activity-only program: – Program conditions reward on the completion of an activity

related to health factor, regardless of outcome (e.g., walking, dieting, or participating in exercise programs)

– Activity is one that some may not be able to participate in or complete, or may have difficulty doing due to a health factor

• Outcome-based program: – Program conditions reward on the achievement of a certain

health goal (e.g., not smoking, having normal blood pressure)


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Wellness Programs: Wellness Programs: Five Conditions Under HIPAAFive Conditions Under HIPAA• 5 HIPAA conditions apply

– Opportunity to qualify at least once a year– Limits on the reward– Reasonably designed to promote health or prevent

disease– Uniform availability and reasonable alternative

standard (“RAS”)– Full disclosure of RAS and waiver (if applicable)


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First Condition: Annual First Condition: Annual QualificationQualification• Health-contingent program must allow

participants an opportunity to qualify for the reward at least once a year

• Can allow more frequent qualification


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Second Condition: Limits on the Second Condition: Limits on the RewardReward• Reward cannot exceed 30% of the cost of the

group health plan coverage, including employee and employer contributions. For tobacco-related incentives, 50% of total costs.– Example: Employee pays $200 for self-only

coverage. Employer pays $800. Non-tobacco-related reward cannot exceed $300/month ($3600/year).

– Limit applies to total cost for family coverage.


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Third Condition: Reasonable Third Condition: Reasonable DesignDesign• Reasonably designed to promote health or

prevent disease

• Cannot be:– Subterfuge for discriminating on health factor– Highly suspect in method chosen to promote

health or prevent disease

• Facts and circumstances test


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Fourth Condition: RAS for Fourth Condition: RAS for Activity-Only ProgramsActivity-Only Programs• Must offer an alternative way to obtain the reward for

individuals for whom the program is:– Unreasonably difficult due to a medical condition; or

– Medically inadvisable

• Can require verification from physician if reasonable under the circumstances

• Can determine RAS at time of the request or can just waive alternative and give reward

• RAS (or waiver) must be offered every year


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Fourth Condition: RAS for Fourth Condition: RAS for Outcome-Based ProgramsOutcome-Based Programs• Must offer an alternative way to obtain the reward for all

individuals who do not meet the initial standard, regardless of whether the program is medically inadvisable or unreasonably difficult due to a medical condition

• Cannot require verification from physician that health factor makes it unreasonably difficult or medically inadvisable

• Can also just offer waiver and give the reward• RAS (or waiver) must be offered every year


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Fourth Condition: Where RAS is Fourth Condition: Where RAS is an Educational Programan Educational Program• If RAS is completion of an educational program (to either

type of wellness program):– Plan must find (or help find) the educational program

– Plan must pay for the educational program• Diet program: Plan does not have to pay for food

– Time commitment must be reasonable• One hour a night is not reasonable

– Plan must give reward for completion, even if the program does not achieve the desired result• Smokers receive reward even if they do not quit smoking

• Do not need to give reward if educational program is not completed


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Fourth Condition: Where RAS is Fourth Condition: Where RAS is an Activity-Only Programan Activity-Only Program• If RAS is an activity-only program, a sub-RAS (or

waiver) must be offered to individuals for whom the RAS is medically inadvisable or unreasonably difficult due to a medical condition.– Example: Reward is lower premiums for employees in a

running program (activity-only program)

– RAS: Walking program (activity-only program)

– Walking program must provide RAS (or waiver) for persons for whom walking is medically inadvisable or unreasonably difficult due to a medical condition


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Fourth Condition: RAS for Fourth Condition: RAS for Outcome-Based ProgramsOutcome-Based Programs• Additional rules for RAS for outcome-based program

– Cannot require individual to meet a different level of the same standard without offering additional time to comply that takes into account his/her circumstances

– Example:• Standard is BMI of less than 30 as of a specified date

• RAS cannot require individual to achieve BMI of less than 31 as of the same specified date

• RAS can require a small reduction in BMI over a realistic time period, such as within a year


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Fourth Condition: RAS and Fourth Condition: RAS and PhysiciansPhysicians• Plan may seek medical verification of an individual’s need for

RAS with respect to an activity-only program, but not an outcome-based program

• But, for all programs, if an individual’s personal physician states that a standard is not medically appropriate for the individual, the plan must provide an RAS that accommodates the recommendations of the individual’s physician– Even if the plan’s medical professional suggested a different alternative


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Examples of Reasonable Examples of Reasonable Alternative StandardsAlternative Standards• Reward for acceptable cholesterol

– RAS: Attend cholesterol training session paid for by the plan (participatory program)

• Reward for acceptable BMI– RAS: Walking program (activity-only program)

• Must provide sub-RAS to those for whom walking program is medically inadvisable or unreasonably difficult due to medical condition

• Reward for not using tobacco – RAS: Smoking-cessation program paid for by the plan

(participatory program)


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Fifth Condition: Full Disclosure Fifth Condition: Full Disclosure

• All program/plan materials describing the terms of the wellness program must disclose that it is possible to satisfy the standard with a reasonable alternative or to have the standard waived – This rule does not apply to communication that

merely mentions a wellness program is available without describing its terms• Example: Not required in SBCs


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Fifth Condition: Full Disclosure Fifth Condition: Full Disclosure (cont’d)(cont’d)

• All program/plan materials must also contain:– Contact information for obtaining a

reasonable alternative– Statement that recommendations of an

individual’s personal physician will be accommodated


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Example: Non-Smoking RewardExample: Non-Smoking Reward

• Wellness program: $100/month premium reduction for employees who do not smoke

• RAS in Y1: Plan pays for smoking-cessation program– Employees who smoke get reward upon completing program,

even if they do not quit smoking

• RAS in Y2: Plan pays for smoking-cessation program• At some point, RAS can be changed (e.g., nicotine

patches)


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Payment of RewardPayment of Reward

• Anyone who qualifies for the reward must be paid the full reward upon completion of the reasonable alternative– On January 1st all non-smokers get $300/month

premium reduction– RAS: 3-month smoking-cessation program, ending

March 31st

– Smokers completing program must receive $900 ($300 for January, February, and March)


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Other Laws That Apply to Wellness Other Laws That Apply to Wellness Programs That Are Health PlansPrograms That Are Health Plans

• HIPAA privacy and security rules– Must adopt procedures (can piggyback on

procedures used by major medical plan)– Must have business association agreements

with wellness program vendors

• COBRA and USERRA– Separate compliance if wellness program not

part of another compliant health plan


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Federal Tax ConsiderationsFederal Tax Considerations

• Health benefits are usually not taxable (e.g., lower deductible, cost of screening test, cost of flu shot)

• Non-health benefits usually are taxable (e.g., gym membership, Weight Watchers membership, cash, gift cards)


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Considerations Under Health Considerations Under Health Care ReformCare Reform• Applicable large employers avoid a pay-or-play

penalty by offering minimum value, affordable coverage to full-time employees

• Affordability and minimum value are determined assuming that:– All employees will earn a non-smoking incentive– No employee will earn any other type of incentive


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State Law ConsiderationsState Law Considerations

• State laws on employment discrimination

• State laws protecting smokers

• State laws protecting employees “engaging in otherwise lawful activities” while off the job site


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GINA and Wellness ProgramsGINA and Wellness Programs

• Health assessments, often included in wellness programs, ask medical history of family members

• Genetic Information Nondiscrimination Act of 2008 (GINA)

• Title I applies to group health plans, while Title II applies to employers


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GINA and Wellness Programs GINA and Wellness Programs (cont’d)(cont’d)

• Health risk assessment or wellness program that is in or within a group health plan may not request genetic info:– Before enrollment

– For underwriting purposes

• Family medical history questions post-enrollment okay if: – No incentive or reward for completing HRA

– HRA is bifurcated• Reward for completing first HRA that does not ask about family

medical history

• No reward for or requirement to complete second HRA that asks about family medical history; completion is voluntary


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GINA and Wellness Programs GINA and Wellness Programs (cont’d)(cont’d)

• For HRAs and similar inquiries outside a health plan:– Request must be made via a wellness program

– Employee must provide prior, knowing, voluntary, written authorization

– Only employee and licensed medical professional receive individually identifiable information

– Individually identifiable information is available only for purposes of program and not disclosed to employer except in non-specified, aggregate terms


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Americans with Disabilities ActAmericans with Disabilities Act

• Regulates medical inquiries in workplace • Prohibits an employer from inquiring about

the employee’s medical condition unless the inquiries are– Job related; and– Consistent with business necessity


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Americans with Disabilities Act Americans with Disabilities Act (cont’d)(cont’d)

• Does the wellness program include a medical examination?– Health risk assessments usually are medical

examinations under ADA– Questions about behavior probably are not medical

examinations:• How often do you exercise? –Not medical exam

• What time do you eat dinner? –Not medical exam

• Do you take prescription drugs? –Medical exam

• What is your blood pressure? –Medical exam


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Americans with Disabilities ActAmericans with Disabilities Act (cont’d)(cont’d)

• If wellness program requires medical examination, EEOC suggests that program does not violate ADA if:– Employee medical information is kept confidential and separate

from employment records; and

– Plan is “voluntary”• Employer does not require participation

• Employer does not penalize persons who do not participate

• EEOC approves of nominal, non-cash rewards such as t-shirts or caps

• Possibility that program fully compliant with HIPAA is illegal under ADA


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EEOC CasesEEOC Cases

• EEOC v. Orion Energy Systems, Inc.– Wellness program requires:

• Completion of HRA• Range of motion test• Blood work and completion of medical history form

– Issues• Is program voluntary? Complaint alleges employee

fired for not participating


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EEOC Cases EEOC Cases (cont’d)(cont’d)

• EEOC v. Flambeau, Inc.– Wellness program required:

• Completion of biometric testing• Completion of HRA

– Issues• Is program voluntary? Complaint alleges employee had

coverage terminated for failing to complete requirements• Is there a penalty? Employees threatened with disciplinary

action for not participating


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EEOC Cases EEOC Cases (cont’d)(cont’d)

• EEOC v. Honeywell International, Inc.– Wellness program required:

• Biometric testing• Testing of spouse to avoid tobacco penalty

– Issues• Is there a penalty? $500 surcharge for non-participants and

$1,000 tobacco surcharge per employee/spouse• Is there a GINA violation? Spousal testing requirement is an

attempt to obtain genetic information in violation of GINA


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QUESTIONS?QUESTIONS?

Please contact:

Chris Briggs(206) 386-7616

[email protected]

Kiran Griffith(206) 386-7583

[email protected]

WP&BC Health, Welfare & Benefits Symposium January 28, 2015 Portland, OR 1 WELLNESS PROGRAMS Presented by: Chris Briggs & Kiran Griffith Stoel Rives LLP.

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