HRAs evaluate potential health risks of program participants by means of a health questionnaire. Questionnaires are often accompanied by biometric screenings, which are health screenings for blood pressure, cholesterol levels, and other health conditions.
Employers have been walking a tightrope of legal challenges in attaching incentives to HRAs.
A common approach for providing an incentive for employees participating in HRAs is offering a premium or benefits reward or penalty.
For example, employees who participate in the HRA receive a discount on their health insurance contribution.
Wellness programs are featured in healthcare reform’s Patient Protection and Affordability Act (PPACA), which follows the Health Insurance Portability and Accountability Act (HIPPA) final wellness rules for health plans.
HIPAA nondiscrimination provisions have one big BUT when prohibiting premium or benefit adjustments based on a health factor.
“An exception to the general rule is provided for certain wellness programs that discriminate in benefits and/or premiums based on a health factor.”
That exception does not mean health plan sponsors can go hog-wild in wellness program incentives.
- HIPAA regulations limit the incentives to no more than 20 percent of the total cost for wellness participants
- PPACA raises that percentage to 30 percent, effective January 1, 2014
American Disability Act
Recent court challenges cite the American Disabilities Act (ADA) as the basis for violation.
The ADA ~
- Prohibits employers from making disability-related inquiries – or –
- Requiring medical examinations
- Unless they are job-related or meet business necessity exemptions
The ADA does exempt bona-fide benefits plans that are based on underwriting risks, classifying such risks or administering such risks…
That’s the sticking point in a recent court case.
Broward County in Florida offers an employee wellness program.
At the heart of the court case was the following program incentives.
- The program was sponsored by the health plan insurer, Coventry Healthcare
- It offered an HRA and biometric (health) screenings
- A $20 penalty was assessed per paycheck for employees who did not participate in the wellness program
A former employee filed a suit, charging violation of the ADA prohibition of non-voluntary medical examinations and disability-related inquiries.
The 11th Circuit Court of Appeals ruled that the ADA’s safe harbor provision for insurance plans exempted the insurer-sponsored wellness program from potentially relevant ADA prohibitions.
Employees of Oregon Department of Corrections and State Police filed a similar lawsuit that has not gone to trial yet.
Recommendations for Employers
The Society for Human Resource Management Resource (SHRM) offered tips for employers.
- Take care in structuring wellness programs
- Stand-alone programs could be subject to ADA prohibitions
- Review for voluntary vs non-voluntary participation, applicable legal exemptions, or assurance that the program is a term of the health plan
Program communications is also critical.
Notice of Disclaimer –Cathy Miller is not an attorney or health care provider and cannot provide legal or health care advice. The information provided is for your general background only, and is not intended to constitute legal or health care advice as to your specific circumstances. We recommend you review legislation with legal counsel and visit your physician for health care issues.