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Company to Fine Unhealthy Workers; Change in Federal Rules Allows Punitive Programs

A company that has spent the past five years encouraging workers to take steps to improve their health will start punishing workers who fail to...
July 10, 2007

A company that has spent the past five years encouraging workers to take steps to improve their health will start punishing workers who fail to do so - and a change in federal rules makes doing so legal as of July 1, 2007.

Beginning in 2009, Indianapolis-based Clarian Health will charge employees more for their health insurance if they allow health risks such as tobacco use, obesity or high cholesterol to go unchecked. This punitive approach is permitted under the new final rules the federal government issued last December to ensure that wellness programs comply with the nondiscrimination provisions of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, benefit experts say. The new rules became effective July 1, 2007.

Clarian Health's decision to impose fees came after several years of operating a comprehensive wellness program, according to Steven Wantz, senior vp for administration and human resources at Clarian Health, which has 13,000 employees working at five hospitals in the Indianapolis metropolitan area. "We didn't just decide this. We have five years of wellness program history that included health risk appraisals, health coaching and other resources to help people reduce their risk factors," he said. But even with the wellness initiatives, Clarian Health's annual health benefit costs continued to climb.

So when the U.S. departments of Labor, Health and Human Services and Treasury released final rules to ensure that wellness programs comply with HIPAA, "it was our window of opportunity," Mr. Wantz said. "We believe that by using this premium charge approach, where it shows up in employees' paychecks every two weeks, it will keep (costs) in front of the person, and we think it will be more effective at creating behavior change."

The program will assess $5 per-paycheck fees on employees who do not meet minimum standards for nonuse of tobacco, body mass index, cholesterol, blood glucose and blood pressure. In addition, those who cannot claim nonuse of tobacco for at least six months will be assessed a surcharge of $5 per paycheck in 2008.

What It Means to Agents:  While everyone would agree that encouraging good health is a good thing, one thing missing from this debate is: are we becoming less free as a society? Personal responsibility exists alongside personal freedom. Part of living in a free society is the fact that some people will exercise their freedom in ways with which we may not agree. Is it right for the government to restrict freedom because people do not agree with the government's dictates? And now, government has passed the power to erode freedom on to private companies.

Employer to Fine Unhealthy Workers (Business Insurance 7/9/07)