Employers continue to experience a rise in the cost of providing health coverage to employees, despite health care reform under the Patient Protection and Affordable Care Act (PPACA). Whether that will change when the new law is fully implemented remains to be seen. For the time being, however, employers continue to struggle with escalating costs and many are looking to wellness programs as part of the solution.

1303029Congress seems to agree. Under the PPACA, beginning in 2014, employers can increase the wellness incentive they provide under their group health plans from 20% to 30% of premium. The new law also provides for information gathering and funding to study wellness programs with an eye toward enhancing their effectiveness.

Even before health care reform, many looked to wellness programs as an important tool for helping to bend the health care cost curve by getting employees more educated about their own health and their health care options, and by providing incentives to encourage healthier behaviors. Competing statistics concerning wellness programs effectiveness exist for sure, although common sense certainly seems to support providing people with services, tools and/or resources to help them move away from unhealthy behaviors, such as smoking, to healthier behaviors, such as exercising, taking medications as prescribed, and eating right.

The success of any wellness program depends on three things – participation, participation and participation. You could design the best program for your employees and if, for example, they can not trust that their personal information will be maintained privately, participation likely will be low. Likewise, if rank and file employees do not see management participating or cannot understand the program, they might be less inclined to participate.

So what are some tips for designing/driving participation in your wellness programs:


1. Support from the top.

In our experience, having top management out in front of the company’s wellness initiatives is a significant driver of wellness program participation. If those at the top do not engage, it sends a strong message to employees that maybe this program is not worth the effort, or that the program is more about reducing costs than is it about improving health. Leadership here is critical.

2. Create a culture of health.

Few doubt a significant driving force behind wellness programs is to reduce the cost of providing health coverage to employees. The companies that seem to have successful wellness programs, however, are those that also are motivated to improve the health of their workforce. The rewards here could be huge – lower health care costs, lower rates of absenteeism, increased productivity, fewer workers compensation claims, fewer and shorter disability leaves of absence, increased employee morale, and so on. This is more likely achieved through creating a culture of health at the workplace, rather than a one dimensional wellness program, such as offering solely a health risk assessment.

Companies considering a wellness program often want to address a range of health issues through a multi-faceted program that includes such features as – smoking cessation, screenings, incentives to reduce weight/body mass index (BMI), cholesterol, blood pressure and so on. However, whether to roll out the entire program at once or start small is frequently a decision point for companies. There are concerns about cost, administration, employee reaction, and others.

On the one hand, rolling out a tobacco cessation premium discount program may be a good start, but it can leave employees with the view that the program is designed solely to reduce plan costs, without regard for the overall health of employees. On the other hand, rolling out complicated point systems and multiple hoops to jumps through can leave employees confused and less likely to participate. “Everything in moderation” is probably a good rule to follow when rolling out a wellness program.

A worthy goal for any organization is to create a culture of health, which does not happen overnight. It is a process that generally includes implementing methodically over a period of time a mixture of goal-based incentives with appropriate tools, resources and/or services to help participants achieve them. Examples of tools, resources and/or services include health screenings; flu shots; health risk assessments; educational materials such as newsletters; a support group or care management function; and other features. This approach surrounds employees with a support system and information to help the employee along the road to improved behaviors, while illustrating the company’s commitment to employee health, not just a lower health insurance bill.

3. Be serious about privacy.

Just about every day, another company announces a breach of personal information, many times that information is medical information. At the same time, particularly in a down economy, employees have concerns about whether decisions their employer makes about their employment will be based on their health condition. So, it is no wonder that employees will be reluctant to turn over their health information to an employer (or the employer’s vendor), even with attractive incentives to do so.

When implementing wellness programs, particularly those that require more input from employees, employers need to proactively address the privacy concerns of potential participants. Statements in program descriptions are not enough; confidence here is best built through action and example. Whether in connection with a wellness program or not, avoid communicating about sensitive issues relating to employee in hallways or around the water cooler, keep files locked and off your desk when not in use, don’t speak to spouses about the employee without the employee’s authorization, have written policies and procedures and training concerning privacy and data security. These and other steps will show the company is serious about employee privacy, and help to ease reluctance to wellness program participation.

4. Make your program materials clear.

Some wellness programs are very simple – if you use tobacco products, you will not qualify for the premium discount (unless the individual qualified for a reasonable alternative). However, many wellness programs can be more robust and, unfortunately, sometimes much more complicated. For example, some programs establish elaborate point-based systems for earning rewards . . . walk a mile get 5 points, read a health related magazine get 1 point, lose 15 pounds get 50 points. These kinds of programs can be difficult for employees to understand and/or time consuming to follow. Even if the program is not that difficult to follow, the explanation of it sometimes creates more confusion than the program itself.

Success here depends on really knowing your program, thinking it through all the way, and having others review it before rolling it out to potential participants. This step is critical because while the program may be clear in your mind, you need to understand how the words on the page (absent your deeper understanding of the program) will be understood by employees.

The communication strategy for the program, in terms of content, design and delivery, is critical. You need to reach all prospective participants and convey not only the program’s requirements, including the program’s rewards and how to achieve them, but the communication must also be convincing in terms of the program’s value proposition, and the company’s commitment to privacy and wellness.

5. Oh yes, compliance.

Last, but certainly not least, is that wellness programs, particularly those tied to group health plans, find themselves at the cross roads of many laws that workplace professionals know well. Examples include the HIPAA nondiscrimination rules, the ADA rules concerning medical inquiries and disability discrimination, the GINA limitations on the collection and use of genetic information (including family medical history), the ERISA requirements to describe plan benefits to participants, the Internal Revenue Code rules related to tax treatment of wellness rewards in different contexts, the Title VII/ADEA prohibitions on discrimination, the state law analogs to these including protections from “lifestyle discrimination.”

As we mentioned above, while the recently enacted health care reform law included language to increase the amount of the wellness incentives companies could provide, there are no express provisions in the new law to harmonize some potentially conflicting provisions in the laws noted above. For example, while the wellness provisions in the health care reform law (based principally on the HIPAA nondiscrimination regulations) will permit incentives of 30% and possibly 50% of health plan premiums, it remains unclear whether doing so would violate the “voluntariness” requirement under the ADA rules for making medical inquiries.

Currently there is very little guidance and only one pending case we are aware of that address wellness programs directly. In this environment, there certainly can be some legal and other risks to implementing a wellness program. However, there also are risks to doing nothing. Experienced counsel and thoughtful third-party vendors can be important members of a company’s team in developing a wellness program that is right for your organization, one that drives participation, creates the best opportunity for a healthier workforce and lower health-related costs, and minimizes applicable risks.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.