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Administration Issues Final Rules on Employer-Sponsored Wellness Programs

Posted on: June 11, 2013 by Caitlin Morgan

Administration Issues Final Rules on Employer-Sponsored Wellness Programs

Administration Issues Final Rules on Employer-Sponsored Wellness Programs

Group health insurance coverage for “plan years” beginning on or after January 1, 2014 will be subject under the Affordable Care Act to a rule that allows employers to reward or penalize employees who meet specific standards related to their health. Such outcome-based wellness programs could, for example, reward employees who do not use tobacco or who achieve a specific cholesterol level, weight or body mass index.

The final rules, which were issued by the U.S. Department of Health and Human Services on May 29th, allow employers to use employee wellness programs, with financial rewards and penalties for workers worth up to 50% of the premium as an incentive to exercise, quit smoking, lose weight, eat more healthful food and lower cholesterol and blood pressure. According to the Labor Department, tens of millions of workers could be affected, as more than 90% of employers with 200 or more employees have programs to promote healthful behavior or prevent disease.

An employer under these rules could charge higher premiums to employees who smoke. However, the employer would have to offer an alternative means for employees to avoid the surcharge — for example, by participating in a smoking-cessation program, regardless of whether they actually stop smoking. The final rules also state that if an alternative incentive standard is simply a less stringent variation of the initial standard, employees must be given additional time to comply.

Administration officials said they struggled to balance incentives for healthful behavior with the need to prevent discrimination against employees who might have medical conditions that make it difficult or impossible for them to achieve specific clinical goals.  In fact, some are indeed concerned about potential areas of discrimination. Judith L. Lichtman, a senior adviser at the National Partnership for Women and Families, said that penalties in wellness programs could have “an unjustified disparate impact” in violation of civil rights laws. Older people tend to have more medical problems than the young, and “many health conditions, like obesity, diabetes and hypertension, disproportionately affect members of racial minorities,” Ms. Lichtman said this month at a hearing of the Equal Employment Opportunity Commission (EEOC).

What’s more, compliance with the rule does not free employers from obligations they may have under other laws like the Americans With Disabilities Act of 1990.

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Sources: NY Times, HHS, Business Insurance

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Posted in: Employee Benefits Wellness Program