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CAREERS

Wellness Programs Get a Health Check

Designed to Motivate Workers to Get in Shape, Employers Tread Carefully With
Toughened Plans
By LAUREN WEBER
October 10, 2014

Wellness programs are supposed to help workers stay fit but some lawsuits say employers are crossing the line. WSJ's Adam
Auriemma reports on the News Hub. Photo: Getty.

Companies are trying to figure out just how far they can go to keep their workers fit and healthy.
Employer wellness programs, designed to motivate employees to get in shape and address medical and
lifestyle issues, have proliferated in recent years as bosses look for new ways to manage health-care
costs. Nearly every major employer has some sort of initiative, many of which reward workers for their
participation with discounts on insurance premiums or extra cash in their reimbursement accounts.
Those are the carrots. Sticksadding a surcharge to premiums for those who dont complete certain
requirements, for exampleare being applied as well. Thats due in part to the Affordable Care Act,
which encouraged the growth of wellness programs by increasing both the maximum incentives and the
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Wellness Programs Get a Health Check - WSJ

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maximum penalties employers may use.

The state of Maryland this week said its wellness program, required as part of insurance coverage,
could bring penalties of as much as $450 per person by 2017 for those who fail to undergo certain
screenings and fail to follow treatment plans for chronic conditions. The state said the program could
save $4 billion over the next 10 years, according to news reports.

Bruno Mallart

Workers at CVS Health Corp. who dont complete an annual health risk assessment and health
screening pay $600 more per year for their insurance premiums. CVS said the information is kept
confidential by a third party and cannot be accessed by company management.
But employers are treading carefully when it comes to toughened wellness programs, lawyers and
benefits executives say, as two federal lawsuits raise the volume on concerns about workers privacy
and the border between voluntary and compulsory participation.
The suits, and the lack of firm guidance from the Equal Employment Opportunity Commission, which
brought them to court, complicates an already fraught question: How to get involved in employees wellbeing without sowing discontent among the workforce or inviting legal and ethical complaints.
The EEOC has thrown a fly in the ointment by cautioning that wellness programs might violate the law
when they are nominally optional but essentially required in practice, said Jim Napoli, a partner at
employer-side law firm Seyfarth Shaw LLP.
One suit, filed last week, alleges that Flambeau Inc., a Wisconsin-based plastics manufacturing firm
owned by Nordic Group of Companies Ltd., canceled the insurance coverage of an employee and
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shifted the full cost of his premium to him after he failed to complete biometric testing, which can include
cholesterol or glucose checks, and a questionnaire about health risks.
The other suit, filed in August, claims Orion Energy Systems Inc., also in Wisconsin, essentially required
employees to take medical exams and then fired a worker after she objected to the wellness program.
Orion declined to comment. A call to Flambeau wasnt returned.
Both suits allege violations of the Americans with Disabilities Act, which forbids employers from requiring
medical exams and making disability-related inquiries. The EEOC held hearings on wellness programs
last year that addressed, among other things, concerns that the plans might single out people with
specific conditions such as obesity.
The actions will definitely have us take extra precautions, said the head of benefits at a New York
financial institution, who didnt want to be named because of the current compliance spotlight on
wellness.
Kristen Brown, benefits director at JetBlue Airways Corp. , said the marketplace for wellness is new and
ever-evolving. The airline places as much as $400 a year into full-time employees health savings or
reimbursement accounts for about 45 different activities such as signing up for smoking-cessation
programs or completing an Ironman race. JetBlue canvasses workers annually and adds or deletes
activities based in part on that feedback.
JetBlue is currently testing a program in the New York area with a company called LifeVest that ties
monetary incentives of as much as $500 to measures like employees body-mass index. Youve got to
see the real results. It cant be something thats a health game you can play online while still eating your
bag of Doritos, said Ms. Brown.
In terms of compliance, she said, the key issue is making sure there are alternatives for someone who
is incapable of getting the benefits [through a single component of the plan]. Thats one of the reasons
we offer a lot of choices.
Beyond legal and ethical issues, understanding what inspires people to improve their health is also a
challenge, companies are finding.
At Johnson & Johnson, which has had a wellness program in place for decades, employees receive a
$500 credit toward their annual medical premium if they participate in a health assessment as well as
health coaching. In 2010, the company created an additional incentive to reward obese and overweight
workers who reduced their weight by 10%. That effort was discontinued in 2012 because of low
participation, said Fik Isaac, J&Js vice president for global health services.
They were not interested in taking J&J up on the offer, he said. Instead, the company is focusing on
non-monetary campaigns, such as a walking program that recognizes people who take more than one
million steps in a year.

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Workers are wary of anything that smacks of coercion or discipline. In a June poll by the Henry J. Kaiser
Family Foundation, 62% of those surveyed said it is inappropriate for employers to require workers to
pay more for their health insurance premiums if they dont participate in wellness programs, and 74%
said companies shouldnt charge higher premiums if employees dont achieve predetermined health
goals.
On the other side of the equation, employers are stymied by the difficulties of measuring the financial
and health impact of wellness programs that can be as varied as providing an advocate to manage a
workers heart-transplant process to hosting walking challenges that use FitBit, a fitness tracking
bracelet.
A September report from the Bipartisan Policy Centers CEO Council on Health and Innovation found
that results of studies about the return on investment of wellness programs are mixed.
Despite that, the use of incentives appears to be on the rise. Seventy-four percent of employers with
wellness programs planned to offer incentives this year compared with 57% in 2009, according to the
National Business Group on Health. The median incentive has risen to $500 from $338 in 2010.
Even carrots, however, have some employers nervous. The New York financial firm offers incentives in
the form of gift cards for workers who complete health assessments and screenings, but has shied away
from discounts on premiums. Were just not there yet and given everything thats going on, Im not sure
its a good place to be, the executive said.
Adam Auriemma contributed to this article.
Corrections & Amplifications
Jim Napoli is a partner at law firm Seyfarth Shaw LLP. Also, JetBlue Airways is currently testing a
program in the New York area with LifeVest that ties monetary incentives of as much as $500 to
measures including employees body-mass index. An Oct. 7 version of this article incorrectly provided
the name of Mr. Napolis previous employer Constangy, Brooks & Smith LLP, and only body-mass index
was noted as a measure for JetBlues program with LifeVest.
Write to Lauren Weber at lauren.weber@wsj.com
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