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Effective Wellness Programs are a Win-Win!

By May 28, 2015July 23rd, 2018Human Resources

by Laura Pokrzywa

Wellness programs are a proven method for employers to promote the health and well-being of their employees. When done right, these programs can increase employee productivity and morale while reducing health care costs for both employer and employee.

The American Journalwellness - scale doctor of Health Promotion analyzed 56 published studies on work site wellness plans and found that employers with wellness programs see on average a 27 percent reduction in sick leave absenteeism, a 26 percent reduction in health care costs and a 32 percent reduction in workers’ compensation and disability claims. All totaled, the return on investment was an average of $5.81 for every dollar the employers spent on wellness!

With returns like that, these programs are worth a second look. But be prepared to navigate through complex interactions with the Health Insurance Portability and Accountability Act (HIPAA), provisions of the Affordable Care Act (ACA), the Americans with Disabilities Act (ADA), and the Genetic Information Nondiscrimination Act (GINA).

EEOC proposed guidance: To help employers ensure that their plans are in compliance with these laws, the Equal Employment Opportunity Commission (EEOC), who has authority to enforce the ADA and GINA, recently released proposed rules on wellness programs. Here is a quick overview of how the EEOC describes a compliant wellness plan:

  1. It must be reasonably designed to promote health or prevent disease
  2. It must be voluntary
  3. Incentives are okay, but they must be limited
  4. Medical information obtained must be kept confidential
  5. Reasonable accommodations must be offered as needed

The ADA and Wellness Programs: Many wellness programs require medical exams, ask disability-related questions, or inquire about family health history, all of which could violate the ADA and/or GINA. As we have seen, the EEOC’s proposed rules make allowances for employers with voluntary programs.

Whether or not a wellness plan is truly voluntary is currently the focus of EEOC scrutiny. wellness - measure tapeEven though an employee willingly submits to the program requirements, the EEOC might not consider the employer’s plan to be voluntary. The key is the level of rewards offered or the loss of incentives imposed by the employer.

According to the EEOC’s proposed rule, a plan will be voluntary and therefore not violate the ADA if the employer offers incentives of up to no more than 30 percent of the cost of employee-only coverage to employees who participate in a wellness program and/or for achieving health outcomes. The EEOC does not permit a 30 percent incentive for family coverage cost if a family member participates. And, unlike HIPAA regulations, the EEOC’s proposed rules do not allow an increase to 50 percent for smoking cessation. It’s worth noting here that these proposed regulations only apply to wellness programs that include disability-related inquiries or “medical examinations.” Employers are allowed to have a program that simply asks if the employee is a smoker or nonsmoker, without requiring testing. If biometric screening is done to check for tobacco use, then the 30 percent rule will apply.

The EEOC also states that the following rules must be applied in order for a wellness plan to be voluntary under the ADA:

  1. The employer may not require the employee to participate
  2. The employer may not deny access to health coverage or particular benefit packages within a group health plan or generally limit coverage under its health plan for non-participation; and
  3. The employer may not take any other adverse action or retaliate against, interfere with, coerce, intimidate or threaten employees.

The EEOC’s proposed rules also reinforce an employer’s responsibility to offer reasonable accommodations for employees with disabilities. In this case, that means working with disabled employees to find a way for them to participate in wellness programs and earn the same incentives as employees without disabilities.

HIPAA and Wellness Programs: Wellness programs are typically offered through employer-provided health plans, however, some employers prefer to run their own plans. If you have a program run by your health plan, or are considering one, all Protected Health Information (PHI) must be handled according to HIPAA regulations and you must ensure that your program does not violate HIPAA’s nondiscrimination rules.

wellness - weightsUnder HIPAA’s rules, wellness programs are divided into two general categories: participatory programs and health-contingent programs. The latter category includes both activity-only (rewarding employees for participating with no regard to results) and outcome-based programs (rewarding employees for accomplishing or sustaining certain health goals).

For more information regarding HIPAA nondiscrimination requirements and your wellness program, visit the Department of Labor’s Frequently Asked Questions page.

The ACA and Wellness Programs: Employees sometimes need to be educated regarding how to make healthy choices. But, more often than not, motivation is the issue. That’s why financial incentives are a go-to for many employers. Under current provisions of the ACA, the maximum permissible reward under a health-contingent wellness program is 30 percent of the cost of health coverage, and as much as 50 percent for programs designed to prevent or reduce tobacco use. For more information on the ACA’s provisions, see the Department of Labor’s fact sheet on Wellness Programs.

According to Michael P. O’Donnell, Editor in Chief of the American Journal of Health Promotion, in an article he wrote for the Jan/Feb 2014 edition of the Journal, employers supported the provisions in the ACA because “they provide a mechanism to (1) engage large portions of employees in programs to improve their health, (2) finance comprehensive health promotion programs including the incentives in a way that is cost neutral to employers, and (3) reduce the extent to which employees who are doing everything they can to practice healthy lifestyles are forced to subsidize the health plan premiums of employees who are not even willing to participate in a program to try to improve their health.”

Beyond incentives: Though the use of financial incentives in wellness programs has increased substantially among large employers (from 36 percent in 2009 to 80 percent in 2012), O’Donnell cautions employers to think beyond the monetary rewards. He says that wellness programs are most successful in engaging employees, improving health, reducing medical costs, and enhancing productivity when they concentrate in four basic areas:

1. Increase employee awareness of the link between lifestyle and health outcomes.
2. Motivate employees to improve their health by carefully communicating the program, utilizing a combination of incentives, involving senior management, personalizing programs, ensuring confidentiality and conducting health assessments.
3. Build employee’s skills through goal setting, tailoring programs to match the employee’s abilities, motivation and health status.
4. Create opportunities for employees to practice good health habits.

Beyond the formal program: Aside from offering a formal wellness program, employers can take simple steps that go a long way toward promoting employee healthwellness and well-being. Consider these low- to no-cost initiatives most employers could implement:

  • Encourage employees to use their vacation time: Time off helps employees relax and de-stress. Make sure you are not making it unnecessarily difficult for an employee to use earned time off.
  • Offer an extra day (or half day) off just for wellness checks: Whatever your paid time off policy, consider adding one day for the employee to use just for his/her annual wellness check at the PCP. Not only is it a nice benefit, but it tells the employees that you are serious about their health.
  • Offer paid sick time: Employees who are sick should stay at home so they can rest and to keep their germs away from coworkers. Unfortunately, many refuse to miss work if it means a loss of pay.
  • Don’t require a note from the doctor for brief illnesses: This policy actually drives up health care costs by forcing employees to see a doctor when rest and over-the-counter medications would have been enough.
  • Provide sanitizers for work areas: Make hand sanitizers and sanitizing wipes available so employees can wipe down doorknobs, counters and common work areas throughout the day. This is especially appreciated during cold and flu season.
  • Encourage exercise: Hand out pedometers and set a daily goal of “clicks” for each Excercise_Peddler_-_Foot(1)department or team. Consider offering movie tickets or an extra day off for the team’s that hit their goal or have the most clicks each month. If you have the opportunity, organize lunchtime walks. Consider offering stand-up desks or under-the-desk pedal exercisers.
  • Subsidize gym memberships: Some employers offer higher subsidies based on the number of times each month that the employee makes use of the gym.
  • Make healthy snack choices available: Ask your vending machine operator to include fresh fruit in the machines and consider discounting the cost of those options. Keep a basket of fresh fruit in the employee break room. Make decaffeinated coffee or tea available, in addition to regular coffee.
  • Offer a cooking class: Contact the community college or local cooking school to arrange for a chef or dietician to come in and demonstrate healthy cooking. This can be done seasonally. Or send employees a schedule of nearby classes and offer free or discounted participation.
  • Offer on-site flu shots or reimburse employees who get them on their own.
  • Offer smoking cessation classes: The American Cancer Society and the American Lung Association both offer free classes. For more information, visit the American Lung Association’s Workplace Wellness page.

If you would like more information about wellness programs, check with your insurance carrier or click here to access a helpful guide from the U.S. Chamber of Commerce. If you have other HR questions, send us an email at

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