Shifting The Healthcare Risk

More and more companies are now linking health factors to what employees pay for health insurance benefits. With the implementation or revision of employer-sponsored wellness programs, those employees having health risks such as high blood pressure, cholesterol or obesity are being required to pay more toward their health insurance premiums than their healthy counterparts. Is this fair? That depends on whether one believes an employee should bear some responsibility for his/her health and the attendant costs of their health insurance coverage.

The battle lines are being drawn as healthcare costs continue to skyrocket. On the one hand, companies are attempting to reduce their costs for high-risk, "unhealthy" employees by imposing penalties in the form of insurance surcharges, and rewarding good health through the use of reduced paycheck deductions, insurance discounts or rebates. On the other hand, the argument is made that such employer actions violate employee privacy rights by attempting to control private behavior, and may also violate anti-discrimination laws such as the Americans with Disabilities Act (the “ADA”).

In February of this year, new Federal regulations went into effect that apply to group health plans for plan years beginning on or after July 1, 2007. The Regulations amend and clarify the non-discrimination provisions under the Health Insurance Portability and Accountability Act (“HIPAA”) which must be considered in relation to other federal and state laws. Despite the effort at clarification, the Regulations remain confusing. Compliance with the new Regulations does not necessarily mean that an employer is in compliance with other provisions of HIPAA or any State or other Federal law. For example, wellness programs and related health assessments which comply with the new Regulations may violate the ADA and/or other anti-discrimination laws. Many employers who believe they are in compliance with the new Regulations may find that they've run afoul of other laws.

Confusing? You bet. Is it a good thing? Maybe. Will monetary incentives and penalties motivate employees to get healthy or maintain good health? Probably. Will lawyers benefit from the litigation and related work which is bound to result from all of this? Definitely!