Wellness programs cannot discriminate based on health

Employers offering incentives for healthy living must give alternatives to workers unable to qualify because of a health condition.

By Dave Hansen, AMNews staff. Feb. 18, 2008.

Washington -- Programs that reward employees for exercising or not smoking sound logical. But they could violate the Health Insurance Portability and Accountability Act if employers do not offer alternatives for workers unable to participate because of health factors, according to the U.S. Dept. of Labor.

HIPAA requires health plans to charge the same price for insurance regardless of preexisting conditions or health factors. It exempts supplemental benefits such as wellness programs. The extra benefits must be provided under a separate policy and fill gaps in primary coverage.

The Labor Dept. discovered that some insurance companies were issuing supplemental policies with lower deductibles for individuals who had healthy lifestyles, such as nonsmokers or people with normal blood pressure, said Sharon Cohen, an attorney and health care benefits expert for Watson Wyatt, an Arlington, Va., consulting firm. It didn't identify the health plans.

The department issued a December Field Assistance Bulletin that set several new conditions these policies must meet. The most significant: Policies cannot differentiate among individuals in eligibility, benefits or premiums based on any health factor.

To comply with the bulletin, employers and insurers must offer reasonable alternatives for individuals who cannot qualify for a wellness incentive because of a health condition, Cohen said. For example, supplemental policies that give extra benefits to nonsmokers must offer alternatives, such as a smoking cessation class.