SOLVING PROBLEMS IN WORKPLACE WELLNESS PROGRAMS

HPLive WebinarBy Barbara J. Zabawa, JD, MPH

Center for Health and Wellness Law, LLC

1

AGENDA

• Reasonable Design• Tying Reward to Spouse• Data Privacy• Biometric Screening/Flu Shots• Incentive Maximums• Voluntariness• Taxation• Involving Children• Wellness Program is Term of Health Plan

2

REASONABLY DESIGNED

3

CASE SCENARIO #1

• ABC Health Company’s wellness program consists of an online HA. ABC’s HR department sees the results and sends those results to ABC’s health insurer. Employees do not see results. • Permissible?

4

ADA RULES

•Reasonably designed to promote health/prevent disease• Must provide follow-up after collecting medical

information• Should not be about collecting information

only.• Different from HIPAA/ACA

• Only health contingent need to be “reasonably designed”

5

CASE SCENARIO #2

• ABC Health Company offers a wellness program to its group health plan participants. Participants can earn points by selecting from a list of wellness activities. One of the activities participants can choose is to volunteer in the community for at least one hour each week.• Is this permissible? How large can the reward be?

6

HIPAA/ACA• To qualify for wellness program exception, must meet certain conditions:• Participatory programs must only be offered to

“similarly situated” individuals.• No limit on financial incentives.

• Health-contingent programs must meet 5 factor test.

7

HIPAA/ACA

• Distinction between participatory and “health contingent” is whether reward is tied to:

HEALTH STATUS

8

HIPAA/ACA

• Participatory program examples:• Fitness center membership reimbursement• Reward for participating in health assessment• Waiver of health plan cost-sharing for

preventive items or services• Smoking cessation program reimbursement• Reward for attending health education

seminar

9

HIPAA/ACA• Two types of health-contingent programs:• Activity

• May seek verification from physician that health factor makes it unreasonably difficult or medically inadvisable to satisfy activity.

• Outcomes-based• May not seek verification

• Both must meet 5 factor test. 10

HIPAA/ACA

•Five factors:1. Qualify for the reward at least

once/year.2. Total reward may not exceed 30%

(50% for tobacco prevention programs) of total cost of coverage.

3. Reasonable design to promote health or prevent disease.

11

HIPAA/ACA

•Five factors (cont.)4. Full reward must be available to all similarly situated

individuals.• Must provide reasonable alternative standard (or waiver of standard)

5. Disclosure of reasonable alternative standard (or waiver) in plan materials describing the wellness program terms.

• SPD• Communications disclosing individual did not meet initial

outcomes-based standard

12

CASE SCENARIO #3

• ABC Health Company has a number of employees whose primary language is a non-English language. ABC wants to implement a health contingent wellness program to its health plan participants that includes written instructions on how to earn points through the program. One of the activities includes taking a health risk assessment. The instructions on how to earn points and the health risk assessment are in English only. No interpreters are available. The non-English language-speaking employees are left to figure out how to participate and earn points in the wellness program.• Is this permissible? Should the ADA notice be in English only?

13

ADA RULES

• Programs that collect medical information must provide employees with notice.

14

ADA RULES

• Notice requirement applies even in absence of incentives• Notice must contain following:

• Be understandable• Describe type of medical information obtained• Describe specific purposes for which information will be used• Who will receive information• Restrictions on disclosure of medical information• Methods employer will use to prevent improper disclosure

15

DATA PRIVACY

16

CASE SCENARIO #1

• Wellways is a wellness vendor that contracts with ABC Health System to provide wellness services to ABC’s employees. The services include conducting a biometric exam and HRA. The wellness program is available to all ABC’s employees, regardless of whether the employee participates in ABC’s group health plan.• Is the health information collected by Wellways protected by the

HIPAA privacy and security rules?• What, if any, confidentiality protections must occur for the

information collected?

17

HIPAA

The HIPAA Privacy Regulations protect “Protected Health Information” or “PHI.”

18

PHI is “Individually Identifiable Health Information” that is transmitted or maintained in any form or medium.

• PHI excludes:- education records - student medical records- employment records

HIPAA

19

HIPAA

Applies to Covered Entities

20

HIPAA

Covered Entities:• - Health Plans • - Providers who conduct one or more of

the HIPAA-defined transactions electronically• KEY: HIPAA does not apply to entities

that don’t engage in covered electronic transactions

• - Clearinghouses21

CASE SCENARIO #2

• Same facts as Scenario #1, except ABC offers the wellness program to its group health plan participants only. • Is the information collected subject to HIPAA privacy and security

rules?• Can Wellways disclose individually identifiable health information to

ABC as the plan sponsor?

22

HIPAA

Many parts also apply to:

Business Associates

23

HIPAA

What is a “Business Associate?”• Not a member of the CE’s workforce who, with respect to a CE:

1. Performs a function or activity using individually identifiable health information involving:• Claims processing or administration• Data analysis, processing or administration• Utilization review• QA• Billing• Benefit management• Practice management• Repricing 24

HIPAA

2. Performs any other function or activity regulated by HIPAA; or

3. Provides any of the following services to or for the CE (and which involves the disclosure of individually identifiable health information):• Legal

• Actuarial

• Accounting

• Consulting

• Data aggregation

• Management

• Administrative

• Accreditation

• Financial

25

HIPAA

BA also includes:• Companies that “maintain” PHI on behalf of a CE

• Data storage company• Patient safety organizations• Companies that transmit PHI to a CE

26

HIPAA

More BA examples:

• PHR vendors

• Subcontractors to BAs that create, receive, maintain or transmit PHI on behalf of the BA.

27

CASE SCENARIO #3

• ABC company decides to start a wellness program that includes an employee HRA. Employees are asked to fill out an HRA in fall 2016. Employees who do so are eligible to earn a 10% premium discount off their 2017 plan rates that take effect on January 1, 2017. • When should ABC company issue the notice required by the ADA

rules?

28

CASE SCENARIO #4

• WellWays is a wellness vendor with an online portal. Employees who participate in their employer wellness program can log onto WellWays’ portal to take a health risk assessment and access other wellness educational resources. Before a participant can access the HRA or other resources, he or she must “click” to agree to WellWays’ privacy policy. The privacy policy does not appear anywhere else or at any other time on WellWays’ website.• Is this privacy notice practice sufficient?

29

CASE SCENARIO #5

• Terry, employee of ABC Company agrees to provide health status information to earn an incentive through the employer wellness program. Terry logs onto an online portal sponsored by a wellness vendor to provide the information. The portal contains the following privacy statement:• We will not share your PHI with any third party, including your

employer. We have strict security controls in place to ensure that the information you provide is kept private and secure.

• Is this privacy statement sufficient under the ADA or GINA?

30

REWARDING SPOUSES

31

CASE SCENARIO #1

• Employee can earn reward (the value of which is no more than 30% of the total cost of self-only coverage) if both the employee and spouse meet a certain cholesterol level. If either employee or spouse fails to meet the cholesterol target, the employee does not earn the reward. • Permissible?

32

GINA • Like ADA Final Rule, collection of spousal information must be part of wellness program reasonably designed to promote health or prevent disease.

• Not reasonably designed if:• Impose a penalty on individual because of spouse’s disorder

prevents spouse from participating in program or achieving certain outcome;

• Collection of information does not include follow-up information or advice or not used to design a program that addresses conditions identified by information.

33

GINA• Employers May Not Deny Access to Health Coverage Based on Spouse’s Refusal to Provide Information.

• Employers May Not Retaliate Against Employee Based on Spouse’s Refusal to Provide Information.

34

CASE SCENARIO #2

• Employee earns a reward equal to 15% of the total cost of employee-only coverage and another 15% of that cost if both the employee and spouse do the following:• Complete an HRA• Attend a biometric screen (results are irrelevant for purposes of reward)• Attend four seminars• Provide evidence of a physical exam by their primary care physician

• If either the spouse or employee fail to complete all four activities (which all four are presumed to qualify as “participatory” programs under the HIPAA/ACA rules), the employee’s reward is $0. That is, both employee and spouse must complete all four activities to earn the full 30% reward. • Is this permissible?

35

GINA• Appeared in May 17, 2016 Federal Register (alongside final ADA rule)

• Allows wellness programs to offer incentives for employee’s spouse to provide certain information• Information limited to spouse’s own manifestation of disease or disorder;

• Must be part of a health assessment or medical examination or both.

36

GINA• Applies to All Wellness Programs

• Unlike proposed GINA rule, incentive rule applies regardless if spouse or employee enrolled in employer health plan.

37

GINA• Incentive Limit Calculation:

• Employees enrolled in Employer Plan• 30% total cost of self-only coverage (includes both employee and employer

contribution)• All Employees Regardless of Plan Enrollment

• 30% total cost of self-only coverage under employer’s plan• All Employees when Multiple Plans Offered

• 30% total cost of lowest cost self-only plan available • All Employees when No Plan Available

• 30% cost of self-only coverage under 2nd lowest cost Silver Plan for 40 yo/nonsmoker on Exchange

• 30% Incentive Applies to Spouse and Employee Separately 38

GINA

•Calculation Example:•Cost of family coverage is $14,000. Self-only cost is $6,000. Incentive can be up to $1,800 for employee and $1,800 for spouse (30% of $6,000).

39

CASE SCENARIO #3

• Same facts as Scenario #2, except the reward is equal to 30% for the employee’s participation and 30% for the spouse’s participation. • Would this be permissible?

40

CASE SCENARIO #4

• Employee can earn a reward of up to 60% of the total cost of employee-only coverage if both the employee and spouse join a fitness club, attend at least three health education classes (from a list of over a dozen options), and volunteer in the community. • Is this permissible?

41

ADA• Incentive Limit Applies to

• Participatory and • Health Contingent Programs:

• Only applies to programs with HRAs/Biometric Screens

42

CASE SCENARIO #5

• Terry, spouse of employee of ABC Company agrees to provide health status information to help employee earn an incentive through the employer wellness program. Terry logs onto an online portal sponsored by a wellness vendor to provide the information. The portal contains a privacy statement but nothing else. It is up to Terry to decide whether to read the privacy statement. Terry can just skip the statement and proceed right to the portal to provide his/her information. • Is this privacy statement sufficient?

43

GINA • In addition to Employee, Spouse must provide prior, knowing,

voluntary and written authorization.• Authorization must contain several elements, such as:

• Be easy to understand;• Description type of genetic information to be obtained and

purpose for which it will be used;• Describe restrictions on disclosure of genetic information;• Genetic information is collected for purposes of providing health or

genetic services;• Information only provided to individual and licensed health care

professionals involved in providing genetic services and not disclosed to employer except in aggregate terms. 44

BIOMETRIC SCREENING/FLU SHOTS

45

CASE SCENARIO #1

• WellWays, a wellness vendor, contracts with employers to conduct A1c fingerstick tests to screen for diabetes in employees. WellWays has a Certificate of Waiver under the Clinical Laboratory Improvement Amendments Act (CLIA) to perform the fingerstick test. The manufacturer’s instructions for the fingerstick test state that the intended use of the test is to monitor patients who have already been diagnosed with diabetes.• Can Wellways screen employees for diabetes with the

fingerstick test?46

CLIA

• CLIA governs ”laboratories.”• “Laboratories” = facilities that perform certain testing on

human specimens to obtain information that can be used for diagnosis, prevention, or treatment of any disease or impairment of a human being; or the assessment of the health of a human being; or procedures to determine, measure or otherwise describe the presence or absence of various substances or organisms in a human body.

47

CLIA

• Facilities that meet definition of laboratory must obtain appropriate CLIA certificate before conducting patient testing.

• Three categories of certificates:• Waived• Moderate Complexity• High Complexity

48

CLIA

• Most on-site, point-of-care biometric screens in workplace wellness programs fall within the ”Waived” category.

• Waived tests face fewer regulatory requirements than the other categories.

• Laboratories with a Certificate of Waiver must:• Follow the manufacturers’ instructions for performing the

test; and • Meet other certificate of waiver requirements under 42 CFR

s. 493.35-39.

49

CASE SCENARIO #2

• Wellways, a wellness vendor, wants to administer flu shots to employees at their place of work. Wellways employs licensed practical nurses to administer the flu shots. Wellways does not employ any physicians. ABC company, a California-based employer, hires Wellways to give all of its employees a flu shot. • Can Wellways’ LPNs perform the flu shot? 50

INCENTIVES

51

CASE SCENARIO #1

• ABC Company, a for-profit Wisconsin-based company, decides to host a raffle as the incentive to increase wellness program participation. All employees who complete an HRA and biometric screen are entered into a drawing to win a Disney vacation for a family of four (which amounts to approximately $5,000). ABC has 300 employees, so each employee has a 1 in 300 chance of winning the Grand Prize, assuming all 300 employees participate. Thus, each chance to win is worth about $17 (1/300*$5000). • Is this raffle permissible?

52

ADA• Incentive Limit Applies to

• Financial• In-Kind Incentives

• Time off• Prizes

53

STATE ANTI-GAMBLING LAWS

• Wis. Stat. s. 563.907:• Any local religious, charitable, service, fraternal or veterans

organization or any organization to which contributions are deductible for federal income tax purposes or state income or franchise tax purposes, which has been in existence for one year immediately preceding its application for a license or which is chartered by a state or national organization which has been in existence for at least 3 years, may conduct a raffle upon receiving a license for the raffle from the department. No other person may conduct a raffle in this state.

54

CASE SCENARIO #2

• ABC Company wants to educate its workforce on how to live well. It decides to institute a point-based incentive system: the more activities you participate in, the more points you earn. Employees earn points by attending classes in nutrition, fitness, the mind-body connection, as well as getting their flu shot, purchasing fresh fruit and vegetables from a local market, and purchasing a park pass. An employee who earns the maximum amount of points could earn up to $5,000 in prizes.• Is this permissible?

55

ADA

• Guidance to the ADA final rule:• “Not all wellness programs require disability-related inquiries

or medical examinations in order to earn an incentive. Examples may include attending nutrition, weight loss, or smoking cessation classes. These types of programs are not subject to the ADA incentive rules discussed here, although programs that qualify as health-contingent programs (such as an activity-based program that requires employees to exercise or walk) and that are part of a group health plan are subject to HIPAA incentive limits.” 81 Fed. Reg. at 31141 (May 17, 2016).

56

VOLUNTARINESS

57

CASE SCENARIO

• ABC Company administers an online HRA. Participation has been lagging. To help increase participation, the wellness vendor is asked to disclose the names of the nonparticipants to ABC’s managers and supervisors, who can then encourage those employees to participate. • Permissible?

58

ADA

• Carves out exception to general prohibition on taking employee “medical exams” for “voluntary” medical exams part of employee wellness program.

59

ADA

• In order to be considered “voluntary,” an employer may not retaliate against, interfere with, coerce, intimidate, or threaten employees in violation of Section 503 of the ADA, codified at 42 USC 12203. 81 Fed. Reg. at 31133 (May 17, 2016).

• That is, you cannot coerce an employee to participate in an employee health program or threaten to discipline an employee who does not participate. Id.

60

TAXATION

61

CASE SCENARIO #1

• ABC Company offers free noon-time Insanity workout classes to all employees. Employees who attend 80% of the eight-week session receive a $50 gift card to IHOP. ABC does not withhold any taxes on the $50 amount or report it on the employees’ W-2 as income. • Is this permissible?

62

INTERNAL REVENUE CODE• Excludes from gross income amounts

received for “medical care”• Expenses beneficial to general health or

wellbeing not “medical care” expenses• E.g. Gym memberships usually taxable• On-site athletic facilities not taxable

• De minimus benefits excludable• Cash or cash equivalent incentives not

excludable from gross income

63

CASE SCENARIO #2

• ABC Company implements a wellness program for employees who participate in ABC’s group health plan. The wellness program consists of outcomes-based components, such as achieving a certain amount of weight loss or lowering one’s cholesterol. ABC reimburses employees who achieve one or more of these goals 20% of the premium amount paid by the employees. • Is the premium reimbursement taxable?

64

INTERNAL REVENUE CODE

• IRS Memorandum from April 14, 2016 provides guidance on issue.

• Section 106(a) allows an employee to exclude from income the cost of health insurance premiums paid through an employer plan.

• According to Revenue Ruling 2002-3, employer reimbursements to employees for amounts the employee pays for health insurance premiums are not excludable from the employee’s gross income under 106(a).

• Therefore the reimbursement amounts are wages subject to employment taxes. 65

INVOLVING DEPENDENTS

66

CASE SCENARIO

• ABC Company implements a wellness program that includes an HRA. ABC wants all employees and their families to participate, so it offers a 10% premium discount to employees who participate, another 5% discount for spousal participation and another 5% discount if any of the employee’s children participate. • Is this permissible?• What if ABC removed the discount for the children and just

offered the HRA to the children who want to participate? Would that be permissible

67

GINA

• GINA final rule Preamble:• “No inducements are permitted in return for information about the

manifestation of disease or disorder of an employee’s children” (whether adult or minor children).

• This does not mean employers are prohibited from offering health or genetic services (including participation in an employer’s wellness program) to an employee’s children on a voluntary basis. “They may do so, but may not offer any inducement in exchange for information about the manifestation of any disease or disorder in the child.” (Emphasis added.)• 81 Fed. Reg. at 31147 (May 17, 2016); 29 CFR s. 1635.8(b)(2)(A)

(iii).68

GROUP HEALTH PLAN ISSUES

69

CASE SCENARIO #1

• ABC Company offers a wellness program to its group health plan participants only. The wellness program is clearly a term of the group health plan, as it is described in the Summary Plan Description. The SPD states that employees who attend a fitness class are eligible for a 10% lower deductible in their health plan. Are employees who leave ABC Company and take COBRA coverage eligible for the lower deductible if they too attend the fitness class?

70

COBRA

• Employer can require plan beneficiary to pay 102% of the cost of coverage under COBRA. 26 CFR s. 54.4980B-8. So, reduced premium reward would not apply to COBRA beneficiaries.

• COBRA coverage must be identical to coverage provided to non-COBRA participants. ERISA s. 602(1).

• Arguably, a lower deductible for attending a fitness class would need to be offered to COBRA participants.

71

CASE SCENARIO #2

• ABC Company wants to implement a wellness program for all of its employees. However, it also hopes to reduce its overall spending on health care over time. So, it would like to offer financial incentives to employees who participate in ABC’s group health plan, but allow all employees to participate in the program. • Can ABC limit financial incentives to group health plan

participants only?

72

CASE SCENARIO #3

• It is 2018 and ABC Company has established a workplace wellness committee to design a wellness program. The committee decides it wants all group health plan employees to participate in an HRA. Employees who do not participate must pay 100% of their health insurance premium. • Permissible?

73

ADA SAFE HARBOR• Safe harbor for administering terms of bona fide benefit plan• Based on underwriting risks, classifying risks or administering such

risks.• Applies whether exam/inquiry is voluntary or not.• Seff v. Broward County, 691 F.3d 1221 (11th Cir. 2012) and EEOC v.

Flambeau, Inc., Case No. 14-CV-638 (Dec. 31, 2015); but see EEOC v. Orion Energy Systems, Case No. 14-CV-1019 (E.D. Wis. Sept. 19, 2016).

74

FLAMBEAU• Court Applied ADA insurance safe harbor provision

• Allows employer to establish/administer terms of bona fide benefit plan based on:• Underwriting risks• Classifying risks• Administering such risks.

• Wellness program requirement was a “term” of its benefit plan• No matter that Flambeau did not specify the

requirement in its SPD or collective bargaining agreement.

75

EEOC TAKE ON ADA SAFE HARBOR

• Language in final rule:• “The ‘safe harbor’ provisions in s. 1630.16(f) of this part applicable to health insurance, life insurance, and other benefit plans do not apply to wellness programs, even if such plans are part of a covered entity’s health plan.”

76

ORION ENERGY SYSTEMS

• Very similar facts to Flambeau case• Court rejected safe harbor

• Agreed with EEOC’s reasoning in the Final ADA Rule• Generally wellness programs unrelated to basic underwriting and risk

classification• Implementation of wellness program usually occurs after premium

established• Orion adopted its wellness program separately from health plan and

wellness program not included in Orion’s SPD.• EEOC did not overstep its authority in issuing ADA regulations about the

safe harbor.• Final ADA rules are reasonable.

77

WHAT DOES THIS MEAN FOR WELLNESS PROGRAMS?

• Time for a compliance audit!

78

QUESTIONS?

• For more information, contact:Barbara J. Zabawa, JD, MPHThe Center for Health and Wellness Law, LLCPhone: 608-579-1267Email: bzabawa@wellnesslaw.com

79