Understanding the Legal Framework of Wellness Programs: A Guide for Business Owners
Wellness programs have gained more and more popularity in recent years, as businesses have become more concerned with the well-being of their staff. However, implementing a wellness program is not as straightforward as it may seem. Business owners must ensure that their program complies with a variety of legal obligations, or else incur risk. In this article, we’ll explore the legal framework surrounding wellness programs and offer actionable advice to business owners who are considering implementing these programs at their workplace.
What is a Wellness Program?
A wellness program is a health promotion activity that aims to encourage employees to develop and maintain healthy habits in order to improve their overall well-being. These programs can range from simple educational campaigns to complex incentive-based programs that offer rewards for healthy habits such as weight loss or completing a certain number of steps per day.
Legal Obligations
When implementing a wellness program, employers must ensure that they comply with a variety of legal obligations. The most significant of these are under the Americans with Disabilities Act (ADA) and the Health Insurance Portability and Accountability Act (HIPAA).
The ADA prohibits discrimination against disabled individuals, and that includes discriminatory practices in wellness programs. For example, offering incentives for employees to meet certain biometric targets could be considered discriminatory against employees with disabilities that make it harder for them to meet those targets. Employers must also ensure that any medical information that is collected through wellness programs remains confidential and is only accessible by appropriately-trained personnel.
HIPAA mandates that any medical information that is collected through wellness programs is kept confidential. Furthermore, employers must provide written notice to employees before collecting any medical information. The notice must outline what health information will be collected, how it will be used, who will be able to access it, and how the information will be protected.
ADA and HIPAA compliance can be challenging, and business owners should consult with legal professionals to ensure compliance.
Incentives and Penalties
Wellness programs often offer incentives or penalties to encourage employees to participate or meet certain health goals. However, doing so can be tricky. The Equal Employment Opportunity Commission (EEOC) has issued rules outlining what is permissible in terms of incentives and penalties.
In general, incentives or rewards should be limited to 30% of the cost of health insurance premiums. This includes incentives for meeting biometric targets, completing a health risk assessment or attending coaching sessions. It’s important to note, in keeping with the ADA, that incentives should be offered in a non-discriminatory way.
On the other hand, the EEOC has stated that penalties for non-participation in wellness programs are permissible but must still comply with the ADA’s requirement that wellness programs must be voluntary. This means that penalties cannot be substantial enough to make participation involuntary.
Conclusion
Wellness programs can offer numerous benefits for both employees and businesses alike. However, it’s important that business owners ensure their wellness program complies with legal obligations, such as those under the ADA and HIPAA. Business owners should also be aware of the EEOC’s rules around incentives and penalties. By doing so, business owners can avoid attracting legal liability and ensure that their employees are able to participate in wellness programs without any concerns.
