Lexington, KY - As Dr. Lena Edwards explained in her article above, "The Increasing Girth of our Labor Market: What is the Solution?" the health consequences of obesity are taking a heavy toll on U.S. employers. Since a majority of health care costs are attributable to preventable illnesses, many employers have adopted wellness programs to reduce health care costs and absenteeism. However, employers should be aware of unforeseen legal consequences that may arise when implementing these well-intentioned programs. Before distributing a health risk assessment or lowering health insurance premiums for non-smokers, you might want to take some tips from the hypothetical cautionary tale of the Sunnyside Diner.
Sunnyside Diner, which employs 20 employees, implemented a wellness program to reduce health care costs. Sunnyside discounted health insurance premiums for those employees who participated in the wellness program and achieved a cholesterol count lower than 200.
Sunnyside also implemented an anti-smoking policy that made smoking a terminable offense regardless of whether it occurred at work or away from work. It fired four employees for refusing to submit to the company's mandatory smoking breath test to determine whether they smoked cigarettes. Has Sunnyside exposed itself to any legal risks by implementing its wellness program or its anti-smoking policy?
Yes. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibits group health plans and insurers from discrimination in eligibility, benefits, premiums, or contributions because of an employee's or dependent's medical condition, disability, evidence of insurability, or other health factors. Sunnyside's wellness program is subject to HIPAA because it relates to a health plan, it offers a financial incentive, and the financial incentive depends on an individual's ability to satisfy a standard related to a health status factor (an employee's cholesterol count). Therefore, the reward must be available to all similarly situated individuals. Here, some participants may be unable to achieve a cholesterol count under 200 due to a health factor or disability, and the plan does not make available a reasonable alternative standard for obtaining the premium discount. Thus, the premium discount violates the nondiscrimination requirements under HIPAA because it may require an individual to pay a higher premium based on a health factor or disability outside of the employee's control.
Furthermore, the Kentucky Civil Rights Act (KCRA) prohibits employers from discriminating against smokers. The KCRA makes it unlawful for an employer to discharge, refuse to hire, or otherwise discriminate against any individual with regard to compensation, terms, conditions or privileges of employment because the individual is a smoker. It is clear that the KCRA prohibits the type of anti-smoking policy implemented by Sunnyside. A Kentucky employer attempting to implement and enforce such a policy would likely encounter legal challenges and litigation expenses.
Even though Sunnyside Diner's wellness program violated HIPAA, it can be modified to comply with legal requirements. Sunnyside could offer the premium discount to employees simply for participating in the wellness program, regardless of whether the participants achieved a lower cholesterol count. Alternatively, Sunnyside could include the following statement in all of its plan materials describing the program: ''If it is unreasonably difficult due to a medical condition for you to achieve a cholesterol count under 200, or if it is medically inadvisable for you to attempt to achieve a count under 200, call us at the number below and we will work with you to develop another way to get the discount.''
Implementing a non-smoking policy is trickier because the KCRA does not allow the employer to prohibit employees or applicants from smoking outside the course of employment. However, it would be legal for an employer to implement a program that reimburses employees for the costs of smoking cessation programs without regard to whether an employee quits smoking.
Employers must also remember their responsibilities under the Americans with Disabilities Act (ADA). The ADA requires employers to offer a reasonable accommodation to an employee with a known disability, and it prohibits employers from making medical inquiries or requiring medical examinations (unless job-related and consistent with business necessity). It's also unlawful under the ADA to take any adverse employment action based on an individual's actual or perceived disability. An employer may conduct medical examinations and activities that are part of a voluntary wellness and health screening program. Therefore, offering employees the opportunity to voluntarily participate in health screening programs for cholesterol monitoring is not likely to violate the ADA, as long as there is no penalty for not participating.
If you are thinking about designing a wellness program, remember that participation in the program must be voluntary, you must keep confidential all information that you obtain, and you cannot use any obtained information to discriminate against an employee.
Do you have a question about employment law issues? E-mail Wendy Becker at wlb@gdm.com and your question may be addressed (anonymously, of course) in a future issue.
Wendy Becker, a member in the Lexington office of Greenebaum Doll & McDonald PLLC, advises and defends employers in employment-related matters. She can be reached at wlb@gdm.com. Alexis Kasacavage is an associate in the Labor and Employment group at Greenebaum, Doll & McDonald PLLC.
This article is provided as general information rather than legal advice. Questions about individual situations should be directed to legal counsel.