Are employers who eliminate junk food from the break room, offer classes on how to quit smoking, and dispense free flu shots doing enough to combat rising insurance premiums and increasing employee medical claims?  Maybe not, according to a 2012 American Heart Association report, which reflects that if current obesity trends continue, obesity-related healthcare costs could reach over $861 billion by 2030.  Health care costs neared 2.6 trillion in 2010 and the average annual insurance premiums for employer-sponsored coverage were a staggering $5,429 for single coverage and $15,073 for family coverage in 2011, according to a recent Kaiser Family Foundation study.

These rising healthcare costs have many employers exploring “wellness programs,” which are work-sponsored programs that assist and support employees in establishing healthier lifestyles.  Although they vary from company to company, wellness programs can include weight loss counseling, physical fitness contests, cholesterol and blood pressure screenings, advice on nutrition and healthful eating, subsidized fitness programs and discounts on gym memberships; some even provide incentive-based rewards to employees who participate.  Many also include health-risk assessments, which usually take the form of a questionnaire and are designed to identify health risks and “at risk” individuals and provide suggestions on preventive treatments and other health management tools.

A number of companies credit these programs with decreasing rates of illness and injuries, reducing tardiness and absenteeism, increasing productivity, lowering health care costs and insurance claims, and even enhancing morale and camaraderie among employees.  According to the CDC, 56 published studies report that workplace health initiatives have helped employers save up to 25 percent on overall healthcare costs, absenteeism, workers’ compensation, and disability claims.

It is no surprise, therefore, that the new Patient Protection and Affordability Care Act (PPACA) encourages employers to provide wellness programs.  The Act even provides grants for employers who implement and promote wellness programs.  But, in order to take advantage of these benefits, business owners need to make sure their wellness programs do not put them at legal risk.

The following tips may help your company implement a wellness program without violating federal employment laws:

1. Make the program voluntary to avoid running afoul of the Americans with Disabilities Act (ADA).
The ADA prohibits discrimination against individuals with disabilities and specifically precludes employers from asking questions about an employee’s medical condition or disability.  As a result, employers should make health-risk assessments voluntary and keep medical information confidential and separate from an employee’s personnel file.  According to the Equal Employment Opportunity Commission (EEOC), a program is considered voluntary so long as the employer does not require employee participation and does not penalize employees who choose not to participate.

2. Have your employees execute authorizations in order to comply with Genetic Information Nondiscrimination Act (GINA).
Another area of risk for employers offering wellness programs is GINA, which prohibits discrimination based on an employee’s genetics and specifically precludes employers from requesting, requiring, or purchasing genetic information about their employees or their employees’ family members.  Health risk assessment questionnaires, however, often include questions about medical history and family medical history because these questions can be helpful in identifying at-risk individuals and in providing preventive treatment ideas.  In order to prevent your health risk assessment from violating GINA, employees must volunteer the information and execute a written authorization reflecting his or her knowing and voluntary participation in the program.  There must also be strict privacy protections in place to ensure that employers neither disseminate nor use any genetic information obtained by virtue of the wellness program.

3. Don’t make rewards contingent on satisfying certain health metrics.
In addition, employers should also be mindful of the Health Insurance Portability and Accountability Act (HIPPA), which prohibits group health plans from discriminating or using health factors to determine eligibility for insurance enrollment or to determine insurance premiums.  HIPPA also prohibits discrimination within a wellness program itself.  An employer would be at risk of violating HIPPA by offering, for example, a financial reward to employees who achieve a certain “body mass index” (BMI).  This sort of requirement may not be achievable by all employees due to medical conditions or disabilities.  On the other hand, a wellness program will comply with HIPPA so long as rewards are not contingent on employees satisfying a specific goal or standard.  And employers will not violate HIPPA by offering financial incentives–like lower insurance deductibles or co-payments for employees who participate in the wellness or disease prevention programs–so long as the reward is not based on a specific health outcome and all employees have the opportunity to participate if they so choose.

While wellness programs can pay off for both employers and employees, business owners need to carefully craft their initiatives.  Consulting an expert who understands evolving federal laws can help employers avoid potential discrimination and legal challenges.
This article is for information only and is not legal advice. Emily Cates is a litigation partner in Lewis and Roca’s Phoenix office. Caryn Tijsseling is a litigation partner in Lewis and Roca’s Reno office.