WHY WELLNESS PROGRAMS

1
WHY WELLNESS PROGRAMS?

• ? 40 of employees will have 3 or more health
  risks.
• ? These individuals account for the majority of
  health plan costs for an employer.
• ? These individuals have more absent days from
  work and are more likely to receive disability
  benefits.
• ? Much of chronic disease is preventable.

2
WHAT IS A SUCCESSFUL WELLNESS PROGRAM?

• Success can be defined
• ? Did the program improve the health of the
  individual?
• ? Did the program reduce claims or otherwise
  provide a benefit to the employer?
• - less medical, disability and life claims
• - less workers comp claims
• - more productive employees
• - less absent time

3
EMPLOYER WELLNESS EFFORTS

• ? Health Fair
• - Education
• - Screening exams
• ? Fitness facility or membership
• ? Nurse hot line
• ? Weight reduction programs
• - Reimbursement of Weight Watchers membership
• - Biggest Loser programs
• ? Smoking cessation programs
• - Classes
• - Patches, medications
• While these programs are valuable, they generally
  dont deliver a measurable impact on employee
  benefit costs of the employer.

4
COMPREHENSIVE WELLNESS PROGRAM DESIGN

• ? Wellness programs have come a long way.
• ? Todays comprehensive wellness programs
  typically include many components
• - Health Risk Assessments
• - Health Screening
• - Disease and life-style counseling
• - Wellness program incentives

5
HEALTH RISK ASSESSMENTS

• ? Individual completes detailed form and answers
  specific questions
• - general health
• - diagnosed diseases
• - family history
• - lifestyle habits
• ? Score derived from questionnaire used to
  identify high risk for chronic conditions.
• ? High risk individuals targeted for follow-up.

6
HEALTH SCREENING

• ? Bio-metric testing
• ? Lab analysis of key indicators of individuals
  health status
• - cholesterol
• - glucose
• - lipid levels
• ? Blood pressure

7
DISEASE AND LIFE STYLE COUNSELING

• ? Varies greatly from program to program
• ? Can include
• - onsite counseling and education following
  health screening
• - disease management specific to the individual
• - weight loss management
• - smoking cessation management

8
WELLNESS PROGRAM INCENTIVES

• ? Stimulate better participation
• ? Financial incentives must be carefully designed
• ? Americans With Disabilities Act (ADA)
  concerns
• ? HIPAA non-discrimination violations and HIPAA
  privacy issues
• ? State law issues
• ? Internal Revenue Code (IRS) issues
• Note Employers often overlook IRC implications
  for membership fee reimbursement
• (e.g. Weight Watchers, YMCA, gym membership) or
  prize money and fail to report
• taxable income for employees. One time 25 or lt
  generally considered di minimis
• non-taxable income. Dont forget to consult a
  tax advisor when designing a Wellness
• Program.

9
ADA PROGRAM DESIGN IMPLICATIONS

• ? Generally applies to employers with 15 or more
  employees.
• - 20 or more calendar weeks
• - in current or preceeding calendar year
• ? ADA prohibits employers from denying qualified
  individuals with disabilities an equal
  opportunity to
• - participate in or
• - receive benefits under programs or activities
  sponsored or conducted by an employer.

10
ADA PROTECTIONS

• ? Protects applicants and employees from
• - medical examinations and
• - inquiries that are not related to their
  ability to perform the essential functions of
  the job and not consistent with business
  necessity.
• ? ADA does not prohibit wellness programs that
  are geared at
• - promoting good health and
• - disease prevention.

11
EEOC GUIDANCE

• ? Medical examinations or inquiries are allowed
  as part of a voluntary wellness program.
• ? Medical records acquired must be kept
• - confidential and
• - separate from personnel records.
• ? Screening process and health risk assessments
  typically considered medical exam under ADA.
• Wellness Programs that require participation in
  a wellness program in order to take part in a
  group health plan or penalizes employees who do
  not participate are likely not considered
  voluntary.

12
EEOC PENALTY NOT DEFINED

• ? Little guidance from EEOC on incentive limits.
• ? Generally, Wellness Programs looking at final
  HIPAA non-discrimination rules
• - 20 of annual cost
• - outcome based programs.
• Caution Incentive or penalty amount greater
  than 20 will likely be viewed as discriminatory
  under the ADA.

13
HIPAA PROGRAM DESIGN IMPLICATIONS

• ? Final HIPAA Nondiscrimination Regulations
  issued December 13, 2006 (71 Fed Reg. 75014).
• ? Group health plans, including wellness programs
  must comply by the first day of the plan year
  beginning on or after July 1, 2007.
• ? Replaces the interim discrimination rules and
  finalizes the proposed wellness program rules,
  both of which came out in 2001.
• U.S. Department of Labor, FAQs About The HIPAA
  Nondiscrimination
• Requirements. http//www.dol.gov/ebsa/faqs/faq_hi
  paa_N

14
HIPAA NONDISCRIMINATION

• ? General Rule. HIPAA prohibits group health
  plans or their insurers from denying an
  individual eligibility for benefits or charging
  him or her for a higher premium than someone
  similarly situated based on certain health
  factors.
• ? Health factor means
• - Health status
• - Medical condition (physical or mental)
• - Claims experience
• - Receipt of health care
• - Medical history
• - Genetic information or
• - Disability
• ? There is an exception to the general rule
  prohibiting discrimination based on health factor
  if the reward, such as a premium discount or
  waiver of a cost-sharing requirement, is based
  solely on participation in a program of health
  promotion or disease prevention.

15
EXEMPTION FOR QUALIFYING WELLNESS PROGRAMS

• ? Final rules clarify the criteria for meeting
  the wellness program exemption.
• ? No longer use term bona fide to describe
  exempt wellness programs.
• ? Treats all programs of health promotion or
  disease prevention as wellness programs.
• ? More details on the reasonably designed to
  promote good health requirement.
• ? Describes the wellness programs that do not
  have to meet the additional requirement because
  they are not directed at a specific health
  factor.
• If wellness program provides a reward (e.g.
  premium discount) and is based solely on
• participation in a program, such as doing a
  health screening exam, the program is not
• subject to the additional requirements. If
  wellness program provides a reward based on
• the individuals ability to meet a certain
  standard related to a health factor, such as a
• cholesterol count under 220, the program must
  satisfy the additional wellness program
• requirements of HIPAA.

16
PARTICIPATION-BASED WELLNESS PROGRAMS

• ? Participation based wellness programs are not
  subject to the additional wellness program
  requirements, if participation is made available
  to all similarly situated persons.
• ? Rewards must be based solely on the
  individuals participation in program activities.
• ? The design of these programs typically include
  premium discounts by
• - Encouraging active lifestyles through exercise
  activities.
• - Encouraging preventive care, such as physical
  exams and disease management of existing
  high-risk conditions.
• - Participation in programs and classes that
  promote health, such as smoking cessation
  classes and prenatal childbirth classes.
• Note Oklahoma law specifically prohibits an
  employer from discharging an individual, or
  otherwise disadvantaging any individual, with
  respect to compensation, terms, conditions, or
  privileges of employment because the individual
  is a nonsmoker or smokes or uses tobacco products
  during nonworking hours (see 14 O.S. 500).
  Thus, under Oklahoma law, it would be unlawful to
  provide smoker surcharge or non-smoker
  discount. A smoking cessation program would
  likely be acceptable, as long as participation is
  without regard to whether the employee is a
  nonsmoker or smoker and regardless of whether the
  employee quits smoking.

17
WELLNESS PROGRAMS SUBJECT TO ADDITIONAL
REQUIREMENTS

• ? If reward is based on an individuals ability
  to meet a standard related to a health factor,
  wellness program must meet five (5) additional
  standards
• 1. 20 percent (20) reward limitation
• 2. Promote health or prevent disease
• 3. Qualify for reward at least once a year
• 4. Available to all similarly situated
  individuals and
• 5. Disclosure in all plan materials the
  availability of a reasonable alternative
  standard if it is unreasonably difficult due to
  medical condition for an individual to meet the
  requirements under the program (or if it is
  medically inadvisable for the individual to
  attempt to meet the program requirements).

18
EXAMPLE 1ANNUAL CHOLESTEROL TEST

• Facts. The ABC Co. offers a group health program
  and a wellness program.
• The wellness program offers financial incentives
  in the way of premium
• discounts to all employees who have an annual
  cholesterol test.
• Conclusion. This is a participation-based
  wellness program because the
• reward is based on the activity (e.g. getting a
  cholesterol test) and not
• conditioned on the outcome of a cholesterol test
  and is available to all similarly
• situated employees. Thus, the additional HIPAA
  wellness program rules do not
• apply.
• Note Requiring an employee to take a
  cholesterol test in order to become
• covered or providing gt 20 discount/surcharge for
  getting a cholesterol test
• would likely run afoul of the Americans with
  Disabilities Act (ADA) as no longer
• deemed a voluntary wellness program.

19
EXAMPLE 2VOLUNTARY RISK ASSESSMENT

• Facts. The ABC Co. offers a group health program
  and a wellness program.
• The wellness program offers financial incentives
  in the way of premium
• discounts to all employees who take a health
  risk assessment.
• Conclusion. This is a participation-based
  wellness program because the
• reward is based on the activity (e.g., taking the
  assessment test) and not
• conditioned on the outcome of the tests and is
  available to all similarly situated
• employees. Thus, the additional HIPAA wellness
  program rules do not apply.
• Note Requiring an employee to take a health
  risk assessment in order to
• become covered or providing gt 20
  discount/surcharge for taking a health risk
• assessment would likely run afoul of the
  Americans With Disabilities Act
• (ADA) as no longer deemed a voluntary wellness
  program.

20
EXAMPLE 3CHOLESTEROL TEST lt 200

• Facts. The LMN Co. offers a wellness program
  with its group health plan.
• Under the wellness program terms, a premium
  discount of 20 of the cost of
• employee-only coverage is provided annually to
  any participant who takes a
• cholesterol test and achieves a count of less
  than 200.
• Conclusion. This program is not a wellness
  program because it fails to satisfy
• the requirement of being available to all
  similarly situated individuals. Some
• participants may be unable to achieve the
  standard, and no reasonable
• alternative standard is offered. Thus, the
  premium discount violates the HIPAA
• nondiscrimination provisions because it may
  require an individual to pay a
• higher premium based on a health factor of the
  individual than is required of a
• similarly situated individual under the Plan.

21
EXAMPLE 4CHOLESTEROL lt 200 WITH ALTERNATIVE

• Facts. The facts are the same as in Example 2,
  except that the plan will
• make available reasonable alternative standard
  for participants who cannot
• achieve the 200 score due to medical conditions,
  or for whom it would
• medically inadvisable to attempt to achieve the
  cholesterol count. All plan
• materials describing program terms include the
  following statement.
• If it is unreasonably difficult due to a medical
  condition for you to achieve a
• cholesterol count under 200, or if it is
  medically inadvisable for you to attempt
• to achieve a count under 200, call us at the
  number below and we will work for
• you to develop another way to get the discount.
• Alice is unable to achieve a cholesterol count
  under 200. The Plan
• accommodates Alice by making the discount
  available to her if she complies
• with a low-cholesterol diet.

22
EXAMPLE 4contd

• Conclusion. This is a wellness program because
  it satisfies the five (5)
• additional HIPAA wellness program requirements
• It complies with the limits on rewards (20 or lt)
  under the program
• It is reasonably designed to promote health or
  prevent disease
• Individuals eligible for the program are given
  the opportunity to qualify for the reward at
  least once a year
• The renewal under the program is available to all
  similarly situated individuals because it
  accommodates individuals for who it is
  unreasonably difficult due to a medical condition
  to achieve the targeted count (or for who it is
  medically inadvisable to attempt to achieve the
  targeted count) by providing a reasonable
  alternative standard and
• The plan discloses in all materials describing
  the terms of the program the availability of a
  reasonable alternative standard. Thus, the
  premium discount does not violate the HIPAA
  nondiscrimination provisions.

23
EXAMPLE 5SMOKING SURCHARGE

• Facts. XYZ Co. offers a group health plan and
  wellness program. During open
• enrollment, XYZ Co.s group health plan provides
  a form for participants to
• certify that they have not used tobacco in the
  preceding 12 months.
• Participants who do not provide certification are
  assessed a surcharge of 20
• of the cost of employee only coverage.
• It is unreasonably difficult for Smokey to stop
  smoking due to nicotine addiction
• (a medical condition). The Plan surcharges
  Smokey 20.
• Conclusion. This is not a wellness program
  because it fails to satisfy the requirement of
• being available to all similarly situated
  individuals. Some participants may be unable to
• stop smoking due to nicotine addiction, and no
  reasonable alternative standard is offered.
• Thus, the premium surcharge violates HIPAA
  nondiscrimination provisions because it
• requires an individual to pay a higher premium
  based on a health factor. In addition,
• this would violate Oklahoma law which prohibits
  a smoking surcharge (40 O.S. 500).

24
EXAMPLE 6SMOKING SURCHARGE WITH ALTERNATIVE

• Facts. XYZ Co. offers a group health plan and
  wellness program. During open
• enrollment, XYZ Co.s group health plan provides
  a form for participants to certify that
• they have not used tobacco in the preceding 12
  months. Participants who do not provide
• certification are assessed a surcharge of 20 of
  the cost of employee only coverage.
• Plan materials describing the terms of the
  wellness program include the following
• statement.
• If it is unreasonably difficult due to a medical
  condition for you to meet the requirements
• under this program (or if it is medically
  inadvisable for you to attempt to meet the
  program
• requirements), we will make available a
  reasonable alternative standard for you to avoid
• this surcharge.
• It is unreasonably difficult for Smokey to stop
  smoking due to nicotine addition (a medical
• condition). The plan accommodates Smokey by
  requiring him to participate in a smoking
• cessation program to avoid the surcharge. Smokey
  can avoid the surcharge as long as
• he participates in the smoking cessation program,
  regardless of whether he quits
• smoking.

25
EXAMPLE 6contd

• Conclusion. The premium surcharge is permissible
  as a wellness program because it
• satisfies the five (5) additional HIPAA wellness
  program requirements
• It complies with the limits on rewards (20 or lt)
  under the program
• It is reasonably designed to promote health or
  prevent disease
• Individuals eligible for the program are given
  the opportunity to qualify for the reward at
  lease once a year
• The reward under the program is available to all
  similarly situated individuals because it
  accommodates individuals for whom it is
  unreasonably difficult due to a medical condition
  (nicotine addiction) to stop smoking (or for who
  it is medically inadvisable to attempt to stop
  smoking) by providing a reasonable alternative
  standard (such as a discount in return for
  attending education classes or for trying a
  nicotine patch) and
• The plan discloses in all materials describing
  the terms of the program the availability of a
  reasonable alternative standard.
• Note However, Oklahoma law would likely
  prohibit a smoker surcharge even if HIPAA
• wellness program rules would allow, as a
  nonsmoker would have to participate in a
• smoking cessation program to avoid a surcharge
  (40 O.S. 500).

26
NEW HIPAA PRIVACY REQUIREMENTS

• ? New law prohibits genetic bias and limits
  genetic data collection use.
• ? GINA - The Genetic Information
  Nondiscrimination Act (Pub.L. 110-233) signed May
  21, 2008.
• ? Prohibits group-based discrimination and
  limits plans ability to require genetic testing
  or use genetic information for underwriting.
• ? Applies to private ERISA plans as well as
  state and local governments group health plans.
• ? Takes effect for plan years beginning May 21,
  2009.

27
INTERACTION WITH OTHER LAWS

• ? Compliance with the HIPAA wellness program
  regulations is not a
• determinative of compliance with any other
  provision of HIPAA or any other State or Federal
  law, such as with the Americans with Disabilities
  Act or state anti-smoking laws.
• OKCAHU/Wellness Programs (11-08)