Practice Areas

Cutting Costs through Wellness Programs

October 2012

By: Peter E. Hansen, Esq.

Employers concerned about ever-increasing healthcare costs should consider instituting a "wellness program" to slow the growth of insurance costs. Wellness programs allow employers to offer financial rewards to employees who engage in a healthier lifestyle, subject to some restrictions. One of the most common wellness programs encourages employees to quit smoking by providing lower premium rates to non-smokers, which the Department of Labor recently stated would be allowed if:

  • The premium differential is not more than 20 percent of the total cost of coverage;
  • The program is designed to promote health and prevent disease;
  • Individuals eligible for the program are given an opportunity to qualify for the discount at least once per year;
  • The program accommodates individuals for whom it is unreasonably difficult to quit tobacco use due to addiction by providing reasonable alternatives (such as a discount in return for attending educational classes or for trying a nicotine patch); and
  • The employer distributes materials describing the terms of the premium differential and the availability of reasonable alternatives.

Some employers who have not yet established a wellness program may be able to do so with the help of grants from the federal government. Employers who employ less than 100 employees who work at least 25 hours per week may be eligible for a grant to establish a "comprehensive" wellness program - or a program that includes awareness initiatives, efforts to maximize employee engagement, initiatives to change unhealthy behaviors, and supportive environment efforts. As a result, if your company has been considering establishing a wellness program, now may be the perfect time to do so.

Questions? Please contact Wessels Sherman Attorney Peter E. Hansen at (262) 560-9696, or email pehansen@wesselsherman.com .