- M. Lee Smith Publishers

<font size="1">Excerpted from Mississippi Employment Law Letter and written by attorneys at the law firms of Watkins Ludlam Winter & Stennis, P.A. </font><br /><br />Congress has never come close to making it mandatory for employers to provide health insurance to employees. But you know that to attract and keep the best employees, you must offer health insurance as a benefit. You also know that health insurance is costly and is becoming more costly every year. So what are your options?<br /><br /><strong><br />What's an employer to do?</strong><br /><br />The rising cost of health insurance has made employers test the waters for more imaginative ways of providing this attractive benefit to employees and their families. Unfortunately, employers are finding that the imaginative programs they put in place just aren't making a dent in lowering the cost of health insurance premiums. In fact, it's anticipated that health care spending in the United States will reach $4 trillion in 2015, or 20 percent of the gross domestic product.<br /><br />Why have health insurance costs and premiums continued to rise faster than inflation? A major reason is that Americans are using the health care system more than ever. Americans are living longer, and because of poor lifestyle choices, we are among the most unhealthy individuals in the world. Lifestyle challenges, including obesity, smoking, drug abuse, and physical inactivity, have contributed to an increased use of our health care system. According to the Centers for Disease Control and Prevention, more than 75 percent of an employer's health care costs and productivity losses are related to employee lifestyle choices.<br /><br />In response, insurance companies have raised premiums substantially, making it a challenge to find ways to address the rising costs. In the '80s and '90s, health maintenance organizations (HMOs) were first introduced to hold down costs. When HMOs proved too restrictive, preferred provider organizations (PPOs) were introduced in the late '90s. By 2002, however, many employers realized that PPOs weren't containing health care costs. In response, employers began to reduce benefits offered and instituted cost sharing.<br /><br />Still, premiums continue to rise. Now employers have refocused their thought process toward preventive care -- if utilization is the problem, can employers offer a program that encourages employees to change lifestyle habits to decrease utilization? Thus, the idea of wellness programs was born.<br /><br /><strong><br />Are wellness programs the answer?</strong><br /><br />What is a wellness program? A wellness program may include the following:<br />"       annual health and lifestyle assessments;<br />"       health results evaluation sessions (group workshops);<br />"       individual goals and action plans;<br />"       referral of high-risk persons (e.g., someone with high blood pressure) for needed care;<br />"       an opportunity for employees to participate in risk-reduction interventions and health enhancement programs such as blood pressure reduction, weight control, fitness, cholesterol reduction, and wellness campaigns;<br />"       monthly tracking/accountability programs to monitor progress toward goals, including exercise logging, health events, health screening, self-study projects, and wellness challenges; and<br />"       annual health outcome reports showing changes in whole organizations. <br /><br /><br />Other popular choices include health screenings, health fairs, subsidized flu shots, health risk assessments, and subsidized or discounted off-site programs or memberships.<br /><strong><br /><br />Privacy and other issues</strong><br /><br />Do wellness programs make sense? The Wellness Council of America says they do. It estimates that a $1 investment in a wellness program saves $3 in health care costs. But you must be cautious to avoid disability and privacy issues when instituting a wellness program.<br /><br />The Americans with Disabilities Act (ADA) prohibits employers from inquiring about employees' medical conditions unless the inquiries are "job related and consistent with business necessity." According to the Equal Employment Opportunity Commission's (EEOC) 2002 enforcement guidance, "Disability-Related Inquiries and Medical Examinations of Employees," you may conduct voluntary medical examinations and activities, including taking voluntary medical histories, that are part of an employee health program. You may do so even if the questions aren't job-related or consistent with business necessity. Medical records acquired as part of the wellness program must be kept confidential and separate from personnel records.<br /><br />But what does it mean to be "voluntary"? The EEOC states that the wellness program is "voluntary" so long as you neither require participation nor penalize employees who don't participate. It's predicted that as employees are required to take on an increasingly larger share of the costs of employer-sponsored health coverage, wellness programs may face challenges that premium rebates or decreased copayments are inherently coercive and violate the ADA.<br /><br />But wait! What about the Health Insurance Portability and Accountability Act (HIPAA)? HIPAA's nondiscrimination provisions generally prohibit group health plans from charging similarly situated individuals different premiums, deductibles, or copayments or offering rewards based on a health factor (e.g., health status, medical condition, claims experience, and medical history). There are exceptions for wellness programs, however. It's unclear whether compliance with HIPAA's proposed "total reward" regulation would satisfy the EEOC's requirement that a program be voluntary to avoid an ADA violation.<br /><br />In dealing with employee lifestyle choices, employers have also faced increased pressure to deal with issues outside the workplace, such as employees who smoke or abuse alcohol or drugs. <br /><br /><br /><strong>No easy answers to ever-increasing health care costs</strong><br /><br />Wellness programs may be the answer, but you need to be aware that as with any new idea, litigation inevitably will ensue until the "kinks" are worked out. If you choose to institute a program, be sure to have it "vetted" for legal compliance and to assess whether savings will be the result.<br /><br /><font size="1"><br />Copyright 2008 M. Lee Smith Publishers LLC. This article is an excerpt from MISSISSIPPI EMPLOYMENT LAW LETTER . MISSISSIPPI EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but rather to provide information about current developments in Mississippi employment law. Questions about individual problems should be addressed to the employment law attorney of your choice. Note: The Mississippi Bar requires the following statement: Listing of the previously mentioned areas of practice does not indicate any certificate of expertise therein.</font><br />