WORKPLACE WELLNESS WORKPLACE ... - Blank Rome LLP

WORKPLACE WELLNESS 

Presented By: 

Mark Blondman, Blank Rome 

Mary H. Clark, Cammack LaRhette 

Barry L. Klein, Blank Rome 

Erin M. O’Connor, Cammack LaRhette 

Kari Knight Stevens, Blank Rome

What We Mean When We Say “Wellness” 

“Wellness is a multidimensional state of being describing the existence of positive 

health in an individual as exemplified by quality of life and a sense of wellbeing.” 

–Charles B. Corbin from Arizona State University 

“Wellness” characteristics 

• A proactive, preventive, and holistic approach to health and well‐being 

• Closely linked to your lifestyle and the choices you make 

• Emphasizes integration and balance between physical, occupational, 

spiritual, financial, social and emotional health 

• Individual behaviors and attitudes toward personal activities such as 

exercise and healthy h eating 

• A process of reaching optimum levels of health and productivity 

• Impacts employer through lower health plan costs, absenteeism and 

presenteeism

Workplace Wellness 

Workplace/Worksite wellness refers to a health‐focused employee benefit that 

involves educational, financial, organizational, and environmental activities 

designed to help maintain good health and support long‐term health improvement. 

Programs vary greatly but generally include all or the combination of the following: 

risk identification tools, health management programs (including utilization and 

chronic condition management), behavior modification programs, value based 

benefit plan design, educational programs, and changes to the work environment. 

Characteristics include: 

• Reflects a commitment to healthy living 

• Culture of prevention 

• Promotes sustainable behavior change 

• Programs encourage and reward employees for making healthier choices 

– Aspect of personal responsibility 

• Aligns an employer’s interests with those of its employees to drive down 

lifestyle‐related health care and productivity costs.

Workplace Wellness Offerings 

• Health risk appraisals (HRAs) 

• Biometric screenings 

• Onsite or near‐site health center 

• Access to online, personalized health 

tracking tools 

• Health fairs 

• Programs to help with: 

– Tobacco cessation 

– Weight management (e.g. WeightWatchers) 

– Nutrition counseling 

– Mental Health/ Stress management 

– Exercise and fitness 

• Educational sessions or communications to 

improve health literacy 

• Walking programs 

• Contests/team challenges 

• Flu Shots 

• Financial Management 

• Disease Management 

• Online, telephonic, and mail‐based coaching 

• On‐site exercise classes or facilities / Gym 

membership discounts 

• Environment: 

– Remove environmental inconsistencies, such 

as unhealthy foods at meetings, in vending 

machines, or in the cafeteria. 

– Workspace ergonomic concerns 

– Tobacco‐free campus 

– Encouragement of work/life family balance 

• Childcare support

Workplace Wellness Legal Landscape 

• ERISA 

• GINA 

• HIPAA Nondiscrimination 

• HIPAA Privacy and Security 

• ADA 

• Health Care Reform 

• Title VII 

• Internal Revenue Code 

• ADEA 

• State Laws

The Business Case: Cost Containment 

Worksite wellness not only contributes to employee satisfaction. There is a strong 

financial/business case to be made for sponsoring a program. 

Healthcare Landscape: 

• The cost of healthcare is steadily increasing. 

It is outpacing growth in the economy, gross 

domestic production (GDP), inflation, and 

wages. 

• Today‘s existing Healthcare system cannot 

be sustained 

o As a nation, we cannot sustain the cost 

increases in our entitlement programs 

(Medicai, Medicare, Social Security, 

etc). 

• Sometime between 2030 and 

2040, mandatory spending will 

exceed government revenues 

o By 2019, health spending is expected 

to reach $4.5 trillion or 19% of GDP 

o Commercially insured plans provided 

through private employers cannot 

continue to absorb the increases 

hospitals seek in order to offset the 

losses from government payers on 

their balance sheets. 

This would only serve to deteriorate the health 

of the American population 

http://www.bizjournals.com/nashville/stories/2010/06/07/daily16.html 

/ h ll / / / / /d l h l 

Journal of Health Affairs

The Business Case: Cost Containment 

• Organizations are spending more on health care, but they’re 

receiving less for their money 

– Employers are spending an estimated $13,000 per 

employee per year in total direct and indirect 

(productivity‐ related) health costs. 

• Employees’ out‐of‐pocket expenses are increasing faster than 

their income levels 

There is a high risk that when faced with high 

healthcare costs, individuals will delay 

medical care—resulting in disastrous health 

situations, even more costly care, and 

further loss of productivity. 

OPTUM HEALTH: White Paper: Best Practices for Creating Successful 

Wellness Programs

The Business Case: Federal Government Action 

• Patient Protection and Affordable Care Act (“Health Care Reform”) 

– Goals: Universal Coverage and Cost Containment 

– Phase One ‐ currently in effect 

• Adult Dependent Coverage 

• Patient Protections 

• Eliminates annual and lifetime coverage Limits 

• Eliminates Pre‐Existing Condition Limitations 

• Nondiscrimination Requirements 

• “Grandfathered Plan” vs. “Non‐Grandfathered Plan” Requirements 

– Phase Two ‐ 2014 

• Establishment of Health Insurance Exchanges 

• Employers face penalties for failure fil to provide “minimum i essential 

coverage” 

• Despite Health Care Reform, Employer Cost Concerns Remain

The Business Case: Wellness Programs 

as a Solution 

• 50 to 70% of the nation’s health care costs are preventable 

– A significant portion of health care costs are used to treat a few chronic conditions including 

cardiovascular disease, diabetes, obesity and cancer 

– Research shows that 50% of an individual’s health status is a result of behavior 

Health care costs can be prevented, delayed, or curtailed through lifestyle modifications. 

• Health management or “wellness” 

programs that focus on prevention, 

management, and encouraging behavior 

modification have been shown to help 

reduce costs without ih drastically cutting 

benefits or excessively shifting costs to 

employees. 

– Overall, U.S. businesses could save $1 trillion 

in health benefits over the next decade 

through employee health and wellness 

programs 

– Health costs fall about $3.27 for every dollar 

spent on wellness programs 

– Absenteeism costs fall by about $2.73 for 

every dollar spent on wellness programs 

An article from the Journal of the 

American Medical Association (AMA) 

noted that in one research study, the 

"wellness" approach produced a 17% 

decline in total medical / doctor visits 

and a 35% reduction in medical / doctor 

visits for minor illness.

The Business Case: Wellness Programs 

as a Solution 

• Studies also show that employees are receptive to these programs. 

– 66% individuals are interested in participating p in wellness programs 

– 20% of individuals are even willing to pay extra for a wellness program. 

– 46 % of individuals who have participated in a wellness program felt that it positively 

impacted their behavior choices. 

• Employers have recognized that many employees view health promotion programs (e.g., 

exercise facilities) as a major benefit. 

– Employees are 8x more likely to be engaged when wellness is a priority in the 

workplace and 1.5x more likely to stay with their organization if health and wellness 

are actively promoted. Wellness is essential to employee engagement, gg organizational 

productivity, talent retention, and creativity and innovation. 

• 71% of organizations who have wellness programs expect their budgets to stay the same 

or increase in the next three years 

– This commitment t indicates dcatesthat atpoga program results have aebeen positive 

Carrots, Sticks and Lower Premiums, Steve Lohr, March 26, 2010, 

OptumHealth: White Paper: Best Practices for Creating Successful Wellness Programs 

A Call to Action: Creating a Culture of Health 2011, American Hospital Association”. Dan 

Hieb, “Healthways: Businesses could save nearly $1 trillion through wellness programs,” 

Nashville Business Journal, 9 Jun. 2010, 

Ali t i D “Th W ll I ti C ti M Eff ti O i ti ” W ld 

Alistair Dornan, “The Wellness Imperative: Creating More Effective Organizations,” World 

Economic Forum in partnership with Right Management (A Manpower Company), 2010, 

http://www.weforum.org/pdf/Wellness/RightMgmt-Report.pdf

The Business Case: Legal Factors 

Current law does not reflect practical realities of wellness programs. 

1. HIPAA Nondiscrimination Rules 

• Final Regulations under ERISA, Internal Revenue Code and Public Service 

Health Act affect design and operation of wellness programs 

• Prohibits discrimination in group health plans based on individual health 

factors (health status, medical condition, medical history and claims 

experience) 

• Different rules for “Participatory Programs” vs. “Outcome‐Based 

Programs” 

– “Participatory Program” –incentive offered regardless of outcome 

– “Outcome –Based Program” –incentive offered if participant 

achieves es an outcome related eatedtoto an “Individual dua Health Factor”.


1. HIPAA Nondiscrimination i i Rules (Cont.) 

• Five “Outcome‐Based Program” Rules 

1) Incentive limited to 20% of total cost of employee‐only y coverage 

2) Program must be reasonably designed to promote health or prevent 

disease 

3) Annual opportunities to qualify for incentive 

4) Incentive must be available to all similarly‐situated individuals or 

“reasonable alternative.” 

5) All program materials must describe the “Reasonable Alternative 

Standard”


HIPAA Nondiscrimination Rules and Health Care Reform 

• Health Care Reform includes nondiscrimination requirements. 

• Effective January 1, 2014, wellness programs will satisfy these 

requirements if HIPAA nondiscrimination requirements for 

Participatory and Outcome‐Based Programs are satisfied. 

• For Outcome‐Based Programs incentive cap is 30% of total 

• For Outcome‐Based Programs, incentive cap is 30% of total 

cost of employee‐only coverage (*subject to increases to 

50%).


2. Americans with Disabilities Act 

• Prohibits all disability‐related inquiries and medical examinations for existing 

employees unless they are job‐related and consistent with business necessity. 

• Exception for “voluntary” wellness programs 

• Per EEOC Enforcement Guidance “voluntary” = employer neither requires 

participation nor penalizes employees for non‐participation in the program. 

• EEOC Informal Discussion Letters: 

– January 6, 2009 letter‐ there is no ADA violation where the inducement to 

participate in the program does not exceed the HIPAA limitations (i.e., 20%) 

– March 6, 2009 letter‐ rescinds above finding 

– Awaiting further guidance.


2. Americans with Disabilities Act (Cont.) 

• Seff v. Broward County 

• April 11, 2011‐ Southern District of Florida 

• Facts: Broward County health plan offered a wellness program that included an HRA and 

screenings for cholesterol and glucose. Failure to participate resulted in a $20 surcharge 

on health plan premiums. The incentive was not based on the HRA responses or 

screening results. 

• Claim: The wellness program violated ADA’s prohibition on mandatory medical 

examinations and disability‐related inquiries. Class certified. 

• Finding: ADA does not prohibit wellness programs offered by an employer health plan 

where the program meets the ADA safe harbor for bone fide benefit plans. Summary 

judgment granted in favor of health plan. 

Court did not address whether program “voluntary” under ADA.


3. Genetic Information Nondiscrimination Act (“GINA”) GINA) 

• Absent an exemption, wellness programs that provide incentives for 

completing HRA’s that solicit genetic information may violate GINA. 

• GINA Final Regulations 

• No GINA violation where: 

1) Employees are not required to provide genetic information 

on the HRA; and 

2) Employees are not penalized for refusing to provide genetic 

information.

Best Practice 

Employers who want to implement a wellness program need to develop a plan for 

implementation and define clear goals and objectives. Successful programs have the 

following elements: 

• Top leadership support, participation and commitment 

• Population Assessment ‐‐ data, demographics & behaviors 

– Employee needs and interests; health literacy 

– Health Risk Assessments 

– Medical and Rx claims, lab/biometric screening results, absence and LOA, 

WLQ/productivity 

• Leverage data to identify health risks and personalize programs 

• Risk stratification methodology with a health management plan for each segment of the 

population –behavior change across the health care continuum 

• Whole person approach (what programs to offer through what resources) 

• Operating plan 

– Vision and Mission Statement and goals and objectives 

– Identified roles and responsibilities for everyone 

– Itemized Budget 

continued…

Best Practice 

continued… 

• Compelling communications and incentives 

• Track and evaluate results 

– Method for evaluation and continuous quality 

improvement (CQI), including return on investment 

(ROI) 

• Make wellness a part of the company culture 

– The wellness program should have a continuous 

presence throughout the year –it should not be a one 

time event

Engagement: Communication 

Communication and incentive strategy is more than email. 

Supportive Environment 

• Include all levels of health 

• Encourage social/community aspects of health improvement‐‐ develop a healthy culture 

where employees influence one another 

• Celebrate successes/acknowledge efforts 

• Support employees who need to take time off for preventive care 

• Subtle messages are found in the oddest places –for example, snacks in worksite vending 

machines and catering at employee meetings and events (avoid mixed messages) 

• Involve the family and other important systems of support and intervention

Engagement: Communication 

Communication 

• Who is the target audience and who is it not? 

• What is the target audience(s) current behavior and level of awareness? 

• What are the best methods to reach the intended audience? 

• What is the key message per focus area? 

– General population based communication 

– Targeted individual communication 

• What are the motivators or barriers to receiving and/or believing/rejecting the 

information? 

At the end of the day, it is all about empowering employees to take charge; 

make and sustain change to improve health

Engagement Challenges 

• Employee Behavior 

– Lack of time 

– Lack of energy 

– Lack of interest 

• Employees are geographically g widespread/ off‐site 

• Security/privacy concerns 

• Language preferences 

• Shift workers 

• Cultural differences 

• Technology access 

• Range of education and literacy levels. 

• Motivating employees over extended dtime periods 

“Organizations looking to address these and other barriers cited by survey respondents need 

to find ways to make wellness convenient and exciting for employees using programs that 

encourage social networking and can be accessed either 24/7 or via the work site 

– OptumHealth Research Study “ Wellness in the workplace”

General Employment Law Considerations 

• Title VII 

• ADEA 

• NLRA 

• HIPAA PRIVACY & SECURITY

TITLE VII 

• Prohibits discrimination based on race, color, religion, sex 

and national origin 

• Since wellness programs cannot discriminate based on 

gender, offer rewards for appropriate weight goals for 

women and men, not the same weight (or BMI, 

cholesterol level, etc.

ADEA 

• ADEA does not prohibit employers from implementing a 

wellness program geared at promoting good health and 

preventing disease 

• However, ADEA cannot be used to discriminate against 

older employees –be aware of disparate impact claims 

• Wll Wellness program that requires employee to achieve a 

certain score, e.g., blood pressure or cholesterol, must 

make allowance for differences in age and health 

conditions of older workers

NLRA 

• If you are in a unionized work environment and are 

considering implementing wellness program that offers 

rewards, better review your CBA 

– You may have a duty to bargain with union before 

implementing

HIPAA PRIVACY & SECURITY 

• The HIPAA Privacy Rule establishes national standards to protect individuals’ medical records and other personal 

health information and applies to health plans, health care clearinghouses, and those health care providers that 

conduct certain health care transactions electronically. 

• The Rule requires appropriate safeguards to protect the privacy of personal health information, and sets limits and 

conditions on the uses and disclosures that may be made of such information without patient authorization 

• The Privacy Rule is located at 45 CFR Part 160 and Subparts A and E of Part 164. 

• The Privacy Rule protects all "individually identifiable health information" held or transmitted by a covered entity 

or its business associate, in any form or media, whether electronic, paper, or oral. The Privacy Rule calls this 

information "protected health information (PHI).“ 

• “Individually identifiable health information” is information, including demographic data, that relates to: 

– the individual’s id past, present or future physical or mental tlhealth or condition, 

– the provision of health care to the individual, or 

– the past, present, or future payment for the provision of health care to the individual, 

– and that identifies the individual or for which there is a reasonable basis to believe it can be used to identify 

the individual. id Individually id identifiable health lthinformation includes many common identifiers (e.g., name, 

address, birth date, Social Security Number). 

• There are no restrictions on the use or disclosure of de‐identified health information. 

Accomplished by the removal of specified identifiers of the individual and of the individual’s relatives, 

household members, and employers is required, and is adequate only if the covered entity has no actual 

knowledge that the remaining information could be used to identify the individual

Engagement: Incentives 

• Building incentives into wellness programs raises participation among employees. 

• Incentives strategy should encompass movement from engagement to participation to outcomes, and can 

include things such as: 

– Premium reductions 

– Cash 

– Gift cards 

– Merchandise 

– Time off 

– Expense reduction within the health plan (e.g., no co‐pays for certain medications) 

– Competition; positive peer pressure 

• Most recently‐surveyed benefits consultants and wellness vendors believe that at least $100 is needed to 

motivate a single behavior. 

$ 

A hospital noted they have recently seen a $1 million savings in cardiac‐related claims, and 

an employer reported they have seen improved participation in completion of health risk 

assessments (HRA) and participation in fitness programs as a result of their organizations’ 

incentives program. 

Ha T. Tu and Ralph C. Mayrell, “Employer Wellness Initiatives Grow, But Effectiveness Varies Widely,” National 

Institute for Health Care Reform Research Brief No. 1, July 2010: 1-13, http://www.nihcr.org/Employer-Wellness- Programs.pdf 

Katherine Baicker, David Cutler, and Zuri Song, “Workplace Wellness Programs Can Generate Savings,” Health Affairs, Vol. 29, No. 2: 304-311 (February 2010). - A Call to Action: Creating 

a Culture of Health 2011, American Hospital Association” 

Benchmarks in health and wellness incentives, The Healthcare Intelligence network, 2009

Incentives: Tax Considerations 

• Code Sections 105‐ health plan benefits generally tax‐free unless discriminate in favor of 

highly compensated employees. 

• Code Section 106‐ employer‐paid premiums for employee health plan coverage tax‐free. 

• Code Section 132‐ taxation of cash and other incentives for wellness program 

participation . 

• Code Section 125‐ cafeteria plan rules; prohibits discrimination in favor of highly 

compensated employees with respect to eligibility, benefits and contributions. 

• Code Section 409A‐ taxation of deferred compensation 

• Code Sections 61/3401/3121/3301‐ / / income definition/ employee income tax 

withholding/FICA tax /FUTA tax. 

• State and local tax obligations

Engagement: Outcome‐Based Incentives 

As participation levels increase in wellness programs and activities, employers may choose to shift 

toward Outcome based incentives: 

Outcome based incentives: A statement about personal responsibility 

• Require participants to gradually increase/maintain their engagement in healthy lifestyle behaviors 

year over year to obtain the maximum incentive or; 

• Employees must demonstrate concrete results before they are rewarded 

Outcome based incentives drive action because the result is something a participant would not want to 

happen and will try to avoid 

• Higher health care premiums or surcharges 

• Smoker Surcharge 

• Refusal to hire or retain smokers 

Outcome Based Concerns 

• The inability to control outcomes in spite of best efforts 

• Privacy concerns 

A gradual, multi-year approach when implementing outcome-based incentives: start with simply awarding 

participation in year one, completion in year two or three and outcomes in year three or four.


Anecdote: 

The Washoe County school district has successfully used an outcome-based incentive for the past 12 years to 

raise participation in their annual health screening. 

1. All 9,000 members in the school district pay a $40 per month “good health incentive contribution” that is 

directed from their paychecks into the district’s wellness account. 

2. Each year, those 9,000 members are given close to eight months to complete a screening form as part of 

their annual physical or at any scheduled site. 

3. Outcomes: 

• For those adults who complete the screening and are not found to be at risk, their contribution is zero. 

• Those members that take the screening and are found to be at risk for blood pressure, tobacco use or 

body mass index (BMI), and then take responsible actions to reduce risk, also have their contributions 

reduced to zero.” 

• Those who refuse to take part in the screening, or do not take action based off high-risk h ikresults, pay 

$40 a month. 

• Some employees pay double because they must also pay for spouses on the plan who do not 

participate 

This systems funds the district’s s wellness efforts and hasn’t cost the district or taxpayers a penny 

2009 Benchmarks in Health & Wellness Incentives . © 2009, Healthcare Intelligence 

Network — www.hin.com


Legal Analysis: 

1. Is this a group health plan/welfare plan under HIPAA and ERISA? 

2. Does this wellness program discriminate under HIPAA? 

Does incentive exceed 20% of total cost of coverage? 

Does program promote health or prevent disease? 

Can members qualify at least annually? 

Is program available to all similarly situated members and is there a reasonable alternative standard? 

Is the reasonable available standard disclosed in wellness program materials? 

3. Does this wellness program violate the ADA? 

Does this program require a medical examination or disability-related inquiry? 

Is this program “voluntary”? 

4. Does this wellness program violate GINA? 

 

Does this program solicit genetic information from employees? 

Will incentive be provided whether or not genetic information is provided? 

5. Does this program violate any other employment-related laws? 

6. What are the tax consequences of the wellness program to the members?

Value Based Plan Design 

• Using incentives to encourage employees to make choices (among treatments, tests, 

physicians) based on value is broadly referred to as value‐based benefit design. 

• It is not about charging people more for their health insurance. 

• It is a system of cost sharing that tailors co‐payments to the evidence‐based value of 

specific services for targeted groups of patients. 

– Currently, cost sharing is nearly always based on the cost of the service or medicine 

and rarely is related to its potential benefit to a patient. 

• The way it works is simple: useful interventions or tests, as well as doctors who have 

demonstrated high quality, cost less for the employee; unnecessary interventions and 

unproven providers cost more. 

– For instance, thinking of getting a flu shot? It’s on the house. Considering a generic 

alternative to an expensive prescription? You’ll save a bundle. But if you want an MRI 

to diagnose a routine backache, it’ll cost a small fortune. 

• In addition, this can also apply to local health providers that you partner with to provide 

services to your workforce and hold accountable for health management outcomes. 

• While value‐based benefit design makes intuitive sense, the real question is, “does it 

work?” According to dozens of employers that have already embraced the concept, the 

answer is yes.

ROI 

• To track the success of their health and wellness programs, 

employers must first measure and increase participation and 

then build a system to track outcomes. 

• In order to achieve ROI, employers must first commit to 

effectively measuring ROI over several years. 

• There ees is currently no uniform standard d for measuring ROI of 

wellness programs. Best indicator for experience or self 

insured plans is trend. 

-“A Call to Action: Creating a Culture of Health 2011, American Hospital Association”

ROI 

ROI Measurements 

• Direct health care costs 

– Health care costs for specific 

subpopulations 

• Impact on employee claims 

• Productivity 

• Absenteeism 

• Presenteeism 

• Employee movement from high to 

low risk 

– Smoking 

– Blood pressure 

– Cholesterol 

– Weight loss 

• Participation rates in programs 

offered 

– Including Biometric Screening 

– HRA 

• Employee feedback and 

testimonials 

– Employee Survey 

• Number of previously undiagnosed 

employees identified 

• Care compliance 

• Medical management savings 

• Missed opportunities for generics 

alternatives and equivalents 

-“A Call to Action: Creating a Culture of Health 2011, American Hospital Association”

Summary 

Healthcare costs continue to rise, and employers must find ways to 

mitigate it 

Workplace wellness programs offer a solution 

– Solid Business Case 

– Significant ROI 

– Increase in employee satisfaction 

Employers should follow legal compliance obligations and developments 

associated with wellness programs at all stages: 

– Planning 

– Implementation 

– Execution 

– Education and Tax Reporting

WORKPLACE WELLNESS WORKPLACE ... - Blank Rome LLP

Create successful ePaper yourself

Delete template?

Save as template?