Wellness incentives fine; no penalties for opt-outs
Hospitals slow to catch on to national trend
Hospitals are boosting incentives for wellness programs, with the hopes that healthier employees will have lower medical claims and better productivity. That push for greater incentives is likely to continue despite a recent advisory notice cautioning employers not to penalize employees who choose not to participate.
The Equal Employment Opportunity Commission (EEOC) issued a letter - informal guidance but not a formal ruling - that advises employers that participation in a health risk assessment must be truly voluntary. A health risk assessment is usually the first step toward enrollment in a wellness program.
Incentives are permitted in voluntary wellness programs, and "a wellness program is voluntary if employees are neither required to participate nor penalized for nonparticipation," says Joyce Walker-Jones, senior attorney adviser in the EEOC's ADA division in Washington, DC.
Clearly, it's acceptable to provide token gifts or rewards to employees who take the health risk assessment. But some employers have provided substantial cash bonuses or discounts on health insurance premiums for active participation in wellness programs.
"At what point is an incentive so great that it's a penalty to those who don't participate? We know that in order to get people interested the incentive has to be something more than a T-shirt or mug," says Walker-Jones. The EEOC will continue to consider the question of incentives, she says.
Meanwhile, some guidance comes from the Health Insurance Portability and Accountability Act (HIPAA), which states that financial inducements can't exceed 20% of the cost of the employees' health insurance. "[T]he percentage limit is designed to avoid a reward or penalty being so large as to have the effect of denying coverage or creating too heavy a financial penalty on individuals who do not satisfy an initial wellness program standard that is related to a health factor," HIPAA states.
While many employers are taking an increasingly aggressive approach to encouraging wellness, hospitals are just beginning to recognize the merits of wellness programs and incentives, says Michael Wood, MS, MPH, senior consultant specializing in health and productivity with the Watson Wyatt consulting firm in Seattle.
"The hospitals have not taken a strategic systematic approach to improving the health of their work force, which is problematic not only because of health care costs but also from a work force management approach," he says.
Reducing absenteeism among nurses, for example, could significantly reduce a hospital's per diem costs for their temporary replacement, he says.
The link between health status and productivity is driving a trend toward greater wellness incentives, says Wood. Some employers simply offer $50 or $100 bonuses to employees who complete a health risk assessment.
"Some of the most radical incentive plans on the horizon are ones that tie actual health status and participation [in wellness programs] to compensation," he says. For example, employees may receive additional contributions to their 401K plans or cash bonuses if their blood pressure or cholesterol is in the normal range.
Hospitals are boosting incentives for wellness programs, with the hopes that healthier employees will have lower medical claims and better productivity.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content