Human Resources News & Insights

What CVS’ controversial wellness plan means for HR

CVS Pharmacy is getting a lot of press (good and bad) for its controversial new wellness initiative. Is it legal? And, if so, should your company follow suit?

CVS recently launched a wellness initiative requiring staff on the firm’s health plan to have a doctor measure their weight, height, body fat, blood pressure, glucose and fasting lipid levels by May 1 and report the findings back to the company.

Those who fail to do so will be charged an extra $50 per month in health insurance premiums.

CVS has promised to pay for the screenings. But critics of the program, which include the data privacy group Patient Privacy Rights, say the $600 annual bump in premiums makes the program involuntary.

Wellness plan was deemed OK

The privacy group and unhappy employees may not have much of a leg to stand on, however, if they decide to take the matter to court.

A district court — and later an appeals court — both have ruled that these kinds of wellness penalties and programs are legal because they slide in under an ADA safe harbor.

Broward County, FL, implemented a wellness program similar to that of CVS. The county asked its health plan participants to undergo a glucose and cholesterol test, as well as complete an online health risk assessment. Those who failed to do so were assessed a $20 biweekly penalty.

An employee of the county, Bradley Seff, then sued the county. He claimed the wellness plan violated the ADA because the program’s $20 charge for non-participation made the wellness initiative involuntary.

Both courts that heard the case, however, said the wellness penalties and programs were legal.

While the appeals court acknowledged the ADA forbids employers from requiring its workers to undergo medical examinations that aren’t directly job-related, it said the law contains a safe harbor that allows employers to create programs to help in “underwriting risks, classifying risks, or administering such risks.”

The county’s wellness plan was deemed OK because it was tied directly to its health plan and was used to determine future risk.

So what’s the downside?

Although the courts are saying these kinds of programs/penalties are OK, there is one big downside to them, as demonstrated in the cases of both Broward County and CVS: Employees don’t like feeling bullied into performing health-related activities.

So the challenge for employers is to try to find a way to sell these programs to their health plan participants.

One way may be to market the wellness penalties as incentives. Example: In Broward’s case, instead of imposing a $20 fee on employees, the best course of action may be to raise each plan participant’s premiums by that amount and offering a discount to those who take part in health assessments.

In the end, the company would end up paying the same amount. But the program would look totally different in employees’ eyes.

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