The popularity of employer workplace wellness programs is rapidly growing with more than 5,600 vendors generating $8 billion annually. Yet the idea of employee wellness isn't new and dates back to the 1880's when companies like National Cash Register provided gyms and parks for workers along with daily exercise breaks.
Hershey Foods built a recreation complex with an employee swimming pool in the 1930's. Big corporations like Texas Instruments, Xerox, and Rockwell, all established employee fitness programs in the 1950's and ‘60s.
Too many rules
However, as federal laws went into effect, including the Americans with Disabilities Act (ADA) in 1990, HIPAA in 2006, the Genetic Information Nondiscrimination Act (GINA) in 2009, and the Affordable Care Act (ACA) in 2010, employer wellness programs had to navigate through a sea of regulations, which may not have provided compliance with each other or state laws. For example, compliance with the ACA does not guarantee compliance with the ADA or GINA.
In fact, the Equal Employment Opportunity Commission (EEOC) filed several complaints against company wellness programs in 2014. The first lawsuit was against Orion Energy Systems, who terminated an employee that opted not to participate in a health risk assessment (HRA). The EEOC claimed the company’s program violated the ADA because it was not voluntary. A decision on the case is still pending.
The same year, the EEOC also filed lawsuits against Flambeau, Inc. and Honeywell.
The Flambeau case involved an employee that was unable to participate in the company’s required HRA resulting in the cancelation of his health insurance. A federal district judge granted the company’s motion to dismiss the EEOC’s ADA claim in December 2015, but the EEOC filed an appeal with the U.S. Court of Appeals for the Seventh Circuit.
In the the Honeywell case, employees and spouses (if enrolled in a family plan) had been required to have biometric testing. Those opting not to participate faced a list of potential financial penalties. The EEOC states Honeywell’s program isn’t voluntary because an employee can lose up to $4,000 via surcharges for not participating. However, a judge ruled in Honeywell’s favor.
In addition to federal laws, there are many states that have laws related to workplace wellness programs. A recent study led by Jennifer Pomeranz, clinical assistant professor at the College of Global Public Health at New York University, found that 32 states and the District of Columbia had such laws in 2014, 17 states had laws for public employers, and 16 states had laws for private employers.
Also, four states provide tax incentives for private employers with workplace wellness programs -Georgia, Indiana, Maine, and Massachusetts. Colorado prohibits the use of penalties to induce employee participation, and 16 states permit positive rewards for private employers.
However, now that the EEOC has issued its final rules, it’s not clear how this will play out. “That’s a big question,” Pomeranz said. “Usually, when state law conflicts with federal law, it is preempted.”
As far as whether the new rules will encourage or discourage new state legislation around workplace wellness programs. 'it depends on the breadth of the preemption provision," according to Pomeranz.
Mixed reactions to new rules
The EEOC final rules, which go into effect January 2017, aim to mitigate confusion surrounding federal laws for employers implementing wellness programs. The rules provide guidance about how these programs can comply with ADA and GINA while being consistent with wellness provisions under HIPAA amended by the ACA, as reported by Healthcare Dive.
One of the key issues the new rules address is that of incentives for participation in wellness programs that collect data protected under the ADA or GINA that include financial, in-kind and “de minimus” or relatively trivial incentives. Programs may now offer incentives of up to 30% of the total cost of self-only coverage, which is also the same amount allowed for a spouse’s participation.
No incentives are permitted in exchange for health information of an employee’s children or an employee’s genetic information (family medical history, genetic tests) or their spouse’s or children. The rules now apply to all workplace wellness programs, not just those through an employer’s group health insurance plan.
Wellness programs that offer incentives must be “reasonably designed to promote health or prevent disease” and “voluntary” is defined as: "not requiring participation, health coverage is not denied or limited for nonparticipation, and employees are not retaliated against, coerced, intimidated or threatened," according to a recent bulletin written by Robin Shea, partner at Constangy, Brooks, Smith & Prophete, LLP.
The new rules, “clarified the interaction between ACA and ADA/GINA," Anna Slomovic, lead researcher at George Washington University’s Cybersecurity, Policy & Research Institute, told Healthcare Dive via email.
"Before the rules came out, the EEOC’s position that “voluntary” meant no positive or negative incentives was in conflict with the ACA," Slomovic added. "Now that conflict has been resolved through an official rulemaking process.”
Yet, the definition of “voluntary” is what the final rules have “substantially” changed, Karen Pollitz, a senior fellow at the Kaiser Family Foundation, told Healthcare Dive.
“The prior definition had said that voluntary means the individuals can’t be required to participate and can’t be penalized if they don’t," Pollitz said. "Under the new rule, “voluntary” is changed to permit incentives of financial, or in-kind, up to the value of 30% of the cost of the healthcare plan if the employer offers one, or if the employer doesn’t, up to 30% of a benchmark healthcare plan in the marketplace.”
Since KFF’s 2015 employer survey showed that the average “self-only” cost of an employer-sponsored health plan is more than $6,000 a year, “now ‘voluntary’ is amended to permit penalties up to thousands of dollars if applied to a worker and their spouse for not participating and not divulging their health information to a wellness program,” Pollitz explained.
This has also raised concerns among patient advocate groups. Judith Lichtman, senior advisor at the National Partnership for Women and Families, told the Wall Street Journal. “What we are really concerned about is what on its face appears like a voluntary program really ends up being coercive.”
According to a 2015 Fidelity/National Business Group on Health survey of 121 employers, more employers are offering financial incentives via wellness programs – up to 79% of employers. The amount being spent per employee increased to an average of $693, up from $594 in 2014.
Incentives ranged from cash, gift cards, reduced health care premiums or contributions to health savings accounts. The most popular incentive last year was biometric screenings, offered by 70% of employers.
Yet, the survey also showed that only 47% of employees earned their full wellness incentive last year.
Do workplace wellness programs really save employers money?
Studies to date have not provided a definitive link between promoting health and providing cost savings to employers. The employer wellness program market, however, continues to grow. Many companies defend financial incentives as key to encouraging employees to participate in wellness programs, which are believed to save money in the long run.
However, a 2013 report by RAND Corporation found that wellness programs had only a minimal effect in helping employees become healthier and in reducing costs. For example, it found that participants lost an average of only one pound a year over three years.
Participants had healthcare costs of about $2.38 less a month versus non-participants, which was considered not statistically significant. Also, the programs did not detect disease warning signs or prevent emergencies.
“The studies that we’ve seen show that, yes, employers are saving money because they can essentially shift the cost of health benefits to their employees for not participating,” Pollitz said. "There are not yet studies that show the cost savings results from promoting health or preventing disease.”
Data privacy and security concerns
This is where the new rules left things a bit murky. Employers now have the green light to obtain employees health information voluntarily through health risk assessments (HRAs), medical exams, and via fitness trackers and other devices, as long as employers keep incentives or penalties less than 30% of an employee’s individual health coverage or of an outside wellness program.
Pollitz noted the proposed rule had requested comments on several suggested changes to safeguard privacy, but “the final rule declined to accept those.”
This concern extends to the possibility that wellness programs may be designed to share employee information with other partners that market healthcare services, devices, or interventions and “then permit them to assess your information or send them your identifying information having matched your particular health condition to that vendor’s interest,” Pollitz added.
“Employers don’t have to disclose to employees where their data is going – under the final rules," Pollitz said. "They don’t even necessarily have to disclose to employees what information they have about you.”
Wellness programs “have the potential to bring into the workplace issues completely unrelated to the ability to do a job," Slomovic told Healthcare Dive via email. "This information can be used to shape individual behavior outside work – what people eat, how they spend their time, what medications they take – and this is none of the employer’s business.”
One solution is “to have health insurance not linked to employment," Slomovic suggested. "This would remove the employer’s incentives to interfere with aspects of employee life that have no bearing on the ability to do the job. I don’t think it’s about to happen anytime soon, though.”