Wellness programs cannot discriminate based on health

Washington -- Programs that reward employees for exercising or not smoking sound logical. But they could violate the Health Insurance Portability and Accountability Act if employers do not offer alternatives for workers unable to participate because of health factors, according to the U.S. Dept. of Labor.

HIPAA requires health plans to charge the same price for insurance regardless of preexisting conditions or health factors. It exempts supplemental benefits such as wellness programs. The extra benefits must be provided under a separate policy and fill gaps in primary coverage.

The Labor Dept. discovered that some insurance companies were issuing supplemental policies with lower deductibles for individuals who had healthy lifestyles, such as nonsmokers or people with normal blood pressure, said Sharon Cohen, an attorney and health care benefits expert for Watson Wyatt, an Arlington, Va., consulting firm. It didn't identify the health plans.

The department issued a December Field Assistance Bulletin that set several new conditions these policies must meet. The most significant: Policies cannot differentiate among individuals in eligibility, benefits or premiums based on any health factor.

To comply with the bulletin, employers and insurers must offer reasonable alternatives for individuals who cannot qualify for a wellness incentive because of a health condition, Cohen said. For example, supplemental policies that give extra benefits to nonsmokers must offer alternatives, such as a smoking cessation class.

The bulletin does not have the force of law but signals the Labor Dept.'s position, Cohen said. "This is what they are giving to agents in the field to enforce directives on health plans."

Violators face monetary penalties, and a harmed individual could take a separate action under federal pension law, she added.

Decision won't deter plans

The bulletin will not discourage employers from offering wellness programs, predicted David Demers, director of strategic planning and product development for Marathon Health. The Burlington, Vt., firm provides on-site health management services to companies.

Employers are discovering that healthy lifestyle choices lower health care claims, he said. Wellness plans, such as preliminary screening for high blood pressure, are popular with employees, he added. Those types of plans are not affected by the bulletin, he said.

Plans that are impacted, such as those that reward employees for changing their behavior, aren't so popular, he said. "If someone finds out they have high blood pressure, they are motivated because they are concerned about their health, not to get money," he said.

National Business Group on Health President Helen Darling agreed that employers will continue to offer wellness programs. "Virtually all large and small employers should know there is no prohibition against what they do, as long as they provide alternatives to those who medically aren't able to meet it."

Employers are starting to realize that the best way to trim health costs is by keeping workers well, while employees as health care consumers realize they should improve their health, said Brian Baum, president of U.S. Preventive Medicine, a Dallas firm providing wellness programs to employers. "Those two forces are coming together at a unique point in time, giving us the opportunity to be more proactive than reactive."

A 2007 survey by the Prudential Insurance Co. of America found that 32% of businesses believe it was "highly important" to offer wellness and healthy lifestyle programs as a way to control health care costs. Sixty-four percent stated that such programs would be very important for cost reasons in five years.

Lawmakers introduced legislation last year to encourage wellness plans. The Senate's Healthy Workforce Act of 2007 would give businesses a 50% tax credit for the costs of providing employees with a wellness program. Rep. Tom Udall (D, Ariz.) introduced a companion bill in the House. Udall hopes to hold hearings and advance the bill this year, said his spokeswoman Marissa Padilla. The American Medical Association supports the legislation.