Employee Rewards Regulations You Must Know

Providing employee rewards for wellness program participation is becoming quite popular but knowing the “rules” of the game has been quite challening.? Employers need to be sure that they are in compliance with HIPAA’s non-discrimination rules as well as those set forth by the Department of Labor and the U.S. Treasury Department.

As I meet with clients, I continually get asked about employee reward program guidelines that need to be followed. To me, they have always been unclear and fuzzy!

As worksite health promotion programs continue to become increasingly popular its best that we? know and understand these rules so that we don’t get into too much trouble.

Here is what you need to know to be sure you are not breaking any “rules.”

Participation Rewards

These rewards employess for their participation in any wellness program or offering. They are OK as long as you do not penalize employees that do not participate. Below are examples of compliant rewards for participation:

Reimbursing employees for the cost of smoking-cessation programs without regard to the results.

Offering rewards tied to employees attending a monthly health education seminar or working with a health coach.

Encouraging preventive care by waiving the co-pays or deductibles for these services (i.e., prenatal care, routine exams, laboratory work)
inancial rewards for completing a health risk appraisal so long as the reward is based on participation and not the results.

Reimbursing all or a portion of the cost of fitness club memberships.

Conditional Rewards

These rewards are OK but these are very sensitive. Lets say you want to make the employee reward conditional upon employees meeting a specific health goal (example: giving an employee a 20% reduction in their health insurance premiums if they lower their body weight or blood pressure) it is fine but you must also meet other requirements including:

The reward can’t exceed 20% of the employee-only cost (or, if you allow dependents to participate, employee-plus-dependent) coverage under your health plan.

The standards must be reasonable (e.g. you can’t limit rewards to individuals who are already of normal weight or blood pressure). The rewards also can’t be used as a way to negatively single out certain employees (e.g., wellness incentives for only non-obeseemployees.)

Participants must have the opportunity to qualify for the reward at least once per year.

Rewards must be made available to all “similarly situated employees.”? You can’t make the company-paid weight loss program available to certain employees but not others.

Federal officials also say that if, for medical reasons, it is difficult for an employee to satisfy the conditions that are otherwise reasonable, employers must offer an alternative.? This might include a pregnant employee being unable to meet certain fitness requirements and employers must offer an alternative for this individual to qualify for the reward.

Negative Rewards that violate HIPAA.

Basically if you are punishing employees for certain health conditions you are violating the rules set forth by federal guidelines. The rules prohibit employers from charging different premiums, contributions, co-pays or deductibles based on personal health factors such as tobacco use, obesity, diabetes, etc. It is however OK to reimburse these expenses based on someone’s participation in the wellness program, unattached to their success.

Something new that has been added–an employers’ health plan can’t deny benefits for treatment of injuries resulting from a medical condition, even if the condition wasn’t diagnosed before the injury.