ON TARGET: COMPLIANCE ISSUES FOR WELLNESS PROGRAMS

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1 ON TARGET: COMPLIANCE ISSUES FOR WELLNESS PROGRAMS Elizabeth E. Vollmar, JD Willis Human Capital Practice National Legal & Research Group June 11, 2012 This material and any accompanying remarks are provided for informational purposes only and nothing contained in either should be taken as a legal opinion or as legal advice Copyright 2012 All rights reserved

2 COMPLIANCE ISSUES Several federal laws may affect wellness program operations HIPAA Nondiscrimination standards prohibit varying health plan eligibility or premiums based on health factors Privacy standards limit the information that an employer can receive, use and disclose in connection with a health plan ADA (as amended by ADAAA) Prohibits discrimination in the provision of benefits on the basis of a qualified individual s disability Also generally prohibits requiring employees to undergo medical examinations or to respond to medical inquiries GINA No collection, use or disclosure of genetic information in connection with employment, for underwriting or before enrollment Other laws 1

3 POPULAR WELLNESS PROGRAMS Two basic types, with two basic types of rewards Participation: Must complete a form, visit a doctor, attend a class, etc. in order to receive reward Achievement: Must have certain indicators of good health (e.g., cholesterol level, blood pressure, etc.) to receive reward Health plan rewards: Variation in health plan contributions or benefits based on meeting wellness program standards Other: Reward unrelated to health plan (e.g., gift cards, vacation days, etc.) Not covering wellness programs with these types of rewards Compliance issues vary depending on the type of program and type of reward 2

4 SMOKER SURCHARGE/ NON-SMOKER DISCOUNT Very popular wellness program Smokers pay higher contributions for health coverage or nonsmokers pay lower contributions Because this varies health plan premiums based on a health condition, HIPAA nondiscrimination rules generally would prohibit Rules have an exception for certain variations based on health status criteria (including smoking), subject to several limitations Reward/surcharge cannot exceed 20% of individual COBRA cost Design must have a reasonable chance of promoting health or preventing disease and cannot be overly burdensome or a subterfuge for discrimination Qualification for reward must be allowed at least once per year Reward must be available to all similarly situated employees, which requires offering reasonable alternative standard for those for whom it is medically inadvisable or unreasonably difficult to quit smoking Can require a physician s statement of qualification for alternative standard Notice that individual accommodations are available must be provided 3

5 APPLYING THE RULES Applying HIPAA nondiscrimination criteria If COBRA premium (102% of actual cost) for individual coverage is $306 per month, smoking surcharge/discount cannot exceed $60 Quitting smoking has a reasonable chance of promoting health or preventing disease The plan must allow at least one chance per year to qualify If someone quits in the middle of the year, plan is not required to immediately change contribution An alternative to actually quitting must be offered and disclosed Permissible alternative to not smoking: If nicotine-addicted, participant can attend smoking cessation program Rules provide a sample disclosure 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 requirements of this program), we will make available a reasonable alternative standard for you to avoid this surcharge 4

6 APPLYING THE ADA Smoking surcharge/discount under the ADA ADA prohibits discrimination on the basis of disability and requires reasonable accommodation Smoking has not been found to be a disability for ADA purposes ADA also generally prohibits requiring employees to undergo medical examinations or to respond to medical inquiries If wellness program relies on employee statements regarding smoking, unlikely to raise ADA issues Inquiry about smoking probably is not a medical inquiry for ADA purposes If wellness program requires a blood test to verify statements on tobacco use, it probably will be considered a medical examination 5

7 ADA CONCERNS ABOUT MEDICAL EXAMS ADA limits employers ability to require medical exams Employers generally may not require employees to undergo medical examinations Exceptions If job-related and consistent with business necessity If part of a wellness program that is voluntary (employer neither requires participation nor penalizes employees who do not participate) How much of an incentive/surcharge can apply without penalizing employees who do not participate? If an employer denied health coverage to anyone refusing blood test or testing positive, EEOC probably would say ADA was violated In any event, HIPAA nondiscrimination rules would prevent denial of health coverage based on smoking 6

8 APPLYING GINA GINA prohibits collecting genetic information Collecting includes requesting, requiring, purchasing, searching on the Internet, etc. Genetic information includes health conditions of family members (e.g., family health history) Not yet clear whether smoking is a health condition for purposes of GINA If it is, asking about it may be considered collection of genetic information and violate GINA 7

9 APPLYING HIPAA PRIVACY RULES Smoking status probably is protected health information (PHI) If so, HIPAA protections apply Two strategies for compliance Limited exception to HIPAA requirements applies to employer s receipt and use of enrollment information If smoking status is based on employee statement, probably can treat it as enrollment information Even less clear whether results of a blood test are enrollment information May minimize difficulties by contracting for testing services through insurer or TPA and having only the smoker/non-smoker conclusion reported to employer Particularly true for insured plan 8

10 HEALTH RISK ASSESSMENTS Another popular wellness program Individuals who complete a health risk assessment (HRA) pay lower health coverage contributions, regardless of health status Participation program raises limited HIPAA nondiscrimination issues does not vary contributions based on health status Conditions for health status-based programs do not apply Need only make the same reward available for all similarly situated participants Medical inquiries raise significant ADA issues HRA inquiries are permitted if part of a wellness program that is voluntary EEOC definition of voluntary: Employer neither requires participation nor penalizes employees who do not participate No clarity on whether any incentive is permitted Recent court case applies a different standard Information can be required and used in order to carry out the terms of a bona fide employee benefit plan collection need not be voluntary BUT request for and collection of information raises questions about purpose of collecting the information Best practice: Insulate employer from receipt of responses 9

11 GINA AND HRAs Wellness programs should not collect genetic information GINA prohibits collecting genetic information Includes requesting, requiring, purchasing, Internet searching, etc. Also includes requesting health information in a way likely to result in disclosure of genetic information Genetic information includes health conditions of family members (e.g., family health history) HRAs and other wellness program materials should not ask for family health or other genetic information Because HRAs request health information, need to avoid doing so in a way likely to result in disclosing genetic information Both Title I and Title II have provisions preventing liability for collection of genetic information that is incidentally disclosed To qualify for protection if incidental disclosure is made, use disclaimer warning against provision of genetic information 10

12 SAMPLE GINA DISCLAIMER FOR HRAs In answering these questions, do not include any genetic information. The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers and other entities covered by GINA from requesting or requiring genetic information of an individual or family member of the individual, except as specifically allowed by this law. To comply with this law, we are asking that you not provide any genetic information when responding to this request. Genetic information as defined by GINA, includes an individual s family medical history, the results of an individual s or family member s genetic tests, the fact that an individual or an individual s family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual s family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services. Please do not include any family medical history or any information related to genetic testing, genetic services, genetic counseling or genetic diseases for which an individual may be at risk. 11

13 HRAs AND HIPAA PRIVACY RULES HIPAA protections apply to HRA responses (they include PHI) Limited exceptions to PHI ban allow employer to receive and use internally (or share with insurer or TPA) enrollment information The fact that an individual has or has not completed an assessment probably is enrollment information Information requested by health risk assessment probably does not qualify as enrollment information Having a third party collect the assessments probably will not protect the employer from HIPAA privacy issues UNLESS the third party is either the insurer providing coverage or a business associate of the insurer 12

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15 Questions? Elizabeth E. Vollmar, JD Vice President & Principal Employee Benefits Attorney Willis Human Capital Practice National Legal & Research Group This material and any accompanying remarks are provided for informational purposes only and nothing contained in either should be taken as a legal opinion or as legal advice. Copyright 2012 Willis 14