FOCUS ON THE JOY OF HEALTHCARE

1. Incentives, Disincentives and the Law: Legally Compliant Wellness Program and Health BenefitsMarcia L. Augsburger, Esq.

2. FOCUS ON THE JOY OF HEALTHCARE 2

3. Why me?

4. We Must Change Behaviors Now 4

5. PATIENT PROTECTION AND AFFORDABLE CARE ACT • Provides that Medicare will cover annual wellness visit • and 100% of the cost for most preventative services; • 2. Provides for many grants and incentives to promote wellness and prevention; • 3. Establishes a national diabetes prevention program; • 4. Provides for incentives and programs to educate physicians on preventative medicine; • 5. Requires CDC to study and evaluate best employer-based wellness practices and provide an educational campaign and technical assistance to promote the benefits of worksite health promotion; and • 6. Requires nutrition labeling of standard menu items at chain restaurants. 5

6. INCENTIVIZE You can help drive the change!

7. What is at issue? HIPAA ERISA Internal Revenue Code ADA State Law 7

8. To be conservative, Thou Shalt . . . • Maintain the Confidentiality of Employee Health Information • Make it Clear That Participation is Voluntary • Never Discriminate in Administering the Wellness Program and In Rewarding Participants • Consider the Tax Consequences of Rewarding Participants

9. Confidentiality under HIPAA: Need Exception or Authorization • Exception for “treatment, payment and health care operations” does not apply.

10. HIPAA Nondiscrimination Rules and ERISA: Application is your choice. 1. Do the incentives affect the plan’s benefits or costs? 2. Are incentives or benefits contingent on employee satisfying a standard related to a health factor, i.e., are you requiring a certain outcome? 10

11. Incentivizing Damned if you do; damned if you don’t? 11

12. Are the Incentives Really Penalties?

13. Ok? • Voluntary cholesterol testing without any required result

14. Ok? • Maintaining recommended BMI

15. “Benign Discrimination” 10% reduction in employee premium contributions for participants with diabetes who complete HbA1c tests at least twice annually.

16. Ok? • Smoking cessation program requiring an individual to quit smoking

17. Completion of a Health Risk Assessment as a condition of enrollment in your health plan

18. Ok, If . . . • Employee answers are fed into a computer that identifies risk factors and health plan/TPA sends educational information to the employee’s home address.

19. Genetic Information Nondiscrimination Act Questions on HRAs are prohibited if the answers will be used for “underwriting purposes,” which includes offering employees discounts on their monthly premium contributions or lowering deductibles for taking HRAs. 19

20. How To Require Results If benefits are contingent on reaching a goal or standard, program must be a “bona fide” wellness program.

21. Reward limited to 30% of total cost of participant’s benefit package Total cost of benefit package =employer and employee contributions, including employee-plus dependents if family members participate

22. Wellness program benefits and rewards must be available to all similarly situated individuals.

23. Not overly burdensome • No “subterfuge” • Program must be reasonably designed to promote goodhealth or prevent disease

24. Plan must disclose availability of reasonable alternative standards in all plan materials describing the program

25. Eligible employees must have opportunity to qualify at least once per year.

26. Are Wellness Rewards Taxable to Employees? • Non-taxable: • Cost of an HRA • In-house use of fitness facility • At work health seminars or classes • Vouchers for an on-site cafeteria, likely small gift cards or restaurant vouchers, etc. • Smoking cessation or weight loss programs based on a physician’s recommendation

27. Taxable: • Taxable: • Cash • Large fitness equipment (treadmill or bicycle) • Vitamins or supplements without a physician diagnosis and recommendation • Fitness memberships without a physician’s diagnosis and recommendation

28. Über Incentives What about companies who refuse to hire smokers or fire them?

29. The following states have laws protecting individuals who use tobacco products from employment discrimination: * Arizona and Virginia - applicable to public employees only.

30. Can employers dictate what happens in the privacy of their employees’ homes?

31. The ADA Trumps The ADA prohibits disability-related inquiries 31

32. Smoking and Overeating: A Disability? 32

33. Smoking and Overeating: A Disability? Does the individual have a mental or physical impairment that substantially limits a major life activity? 33

34. Nine States Protect Individuals Who Use Any “Lawful Products” • Minnesota • Nevada • New York • North Carolina • Tennessee • Wisconsin • Illinois • Missouri • Montana

35. Three States Protect Lawful Conduct • Colorado (current employees only) • North Dakota • and . . . Three states protect lawful conduct.

36. California.

37. Off-Duty Conduct Courts have held that an employer may restrict moonlighting that is “detrimental to the mission and functions of the employer.” City of San Diego v. Roe, 543 U.S. 77 (2004).

38. Legal Challenges Invasion of privacy and discrimination based on disability, race, gender, and national origin.

39. Summary • Wellness programs pay dividends in terms of cost savings and contributing to the wellbeing of our workforces and communities. • Brokers should get in the game and help drive change. • The legal concerns are not an obstacle.