The Benefits of a Healthy Workforce
by Jane C. Taber and Michele C. Spillman
Are your clients looking for a way to increase employee morale and productivity? Do they want to lower health insurance costs and increase profits? By requiring or incentivizing employees to commit to healthy habits—both inside and outside the workplace—employers may be able to do just that. From bans on smoking to wellness programs, employers have a variety of options to ensure and promote the health of their employees and the growth of their business.
The FDA estimates that smoking costs American employers approximately $200 billion per year in decreased productivity and increased medical costs. To combat this harsh reality, Texas employers can refuse to hire smokers, prohibit their employees from smoking and can even charge smokers higher insurance premiums.
Wellness programs are another attractive option for Texas employers. From rewarding employees who lose weight or lower their cholesterol, to offering insurance premium discounts to employees who undergo health screenings, employers are focusing on employee health issues in increasing numbers. According to a 2010 survey conducted by the National Business Group on Health and Fidelity Investments, more employers than ever are offering their employees and their dependents various incentives to participate in health improvement programs.
Some of Dallas’ top employers recognize the benefits gained from improving employee health. Baylor Health Care System recently announced, that beginning in 2012, it will refuse to hire smokers. Methodist Health System will also begin offering its employees health insurance premium discounts of up to $1,700. Both hospitals have already adopted wellness programs, as have several other employers in Dallas.
Although Texas employers generally have broad discretion with respect to their employees, other states like California, Colorado, New York, Illinois and Missouri have enacted legislation prohibiting discrimination based on lawful activity or the use of lawful products. These statutes restrict an employer’s ability to regulate such behavior and make it illegal to discriminate against employees who smoke or engage in other lawful conduct both inside and outside the workplace. Therefore, Texas employers who hire employees in other states should be aware of state law differences before enacting a company-wide wellness program.
Several federal laws also impact an employer’s ability to implement wellness programs or offer incentives to employees who engage in healthy habits. Specifically, the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), and the Health Insurance Portability and Accountability Act (HIPAA) affect wellness initiatives by regulating voluntary wellness programs, the treatment of disabled employees, and the disclosure and use of family medical history and health information.
To illustrate the federal law impact on employer sponsored wellness plans, HIPAA generally prohibits health plans from charging different premiums, deductibles or co-payments based on an individual’s health factor. However, wellness programs that meet the following five conditions are exempt from this prohibition:
(1) The premium differential is not more than 20 percent of the total cost of employee-only coverage;
(2) The program’s design is to promote health and prevent disease;
(3) Eligible individuals are allowed to qualify at least annually;
(4) A reasonable alternative standard of obtaining a review must be provided to individuals with difficulty in satisfying the initial standard; and
(5) The plan materials must disclose the alternative standard.
Therefore, in drafting a wellness program, employers must take into account the mandates to ensure the program meets federal law requirements.
Texas law is generally supportive to its employers in banning smoking or enacting a wellness program. Nevertheless, special legal nuances, particularly in regard to federal legislation or certain other states’ laws require that employers consult legal counsel to evaluate the legal implications of any proposed wellness programs before initiating them as part of the company benefits program.
Jane C. Taber is a partner at Taber Estes Thorne & Carr PLLC. Michele C. Spillman is an associate at Taber Estes Thorne & Carr PLLC. They can be reached at firstname.lastname@example.org and email@example.com,respectively.