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Companies Likely To Increase Health Plan Contributions For Employees With Unhealthy Habits

Armen Hareyan's picture

A small number of U.S. employers require employees with unhealthyhabits to pay more for health insurance as part of an effort to reducecosts, but the practice likely will expand after the finalization offederal rules "spelling out what's allowed by law," AP/USA Todayreports. Currently, some employers deduct more from the paychecks ofemployees with unhealthy habits for health insurance, increasesurcharges for those workers or offer discounts and rebates toemployees with healthy habits.

Linda Cushman, a health care strategist with Hewitt Associates,said, "Employers are paying the lion's share of health care costs andfeel that they have the right to call the shots." Some employees andadvocates have raised legal concerns and accuse employers that use thepractices of "trying to control private behavior and amassing hugeamounts of personal health information," according to USA Today. National Workrights Institute Legal Director Jeremy Gruber said, "It's a backdoor approach to weeding out expensive employees."

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However,employers "wary of legal problems feel more confident" after the July 1finalization of federal rules on the use of the practices in compliancewith the Health Insurance Portability and Accountability Act, USA Todayreports. Under the rules, discounts and rebates for employees withhealthy habits cannot exceed 20% of the cost of health insurance. Therules also require employers to consider the Americans withDisabilities Act and other federal and state laws.


Garry Mathison of the employment and labor law firm Littler Mendelsonsaid, "Employers know they have to do something," adding," I believethat in just the next two years, more employers will turn to penaltiesto change employee behavior."

Helen Darling, president of the National Business Group on Health,said that most employers prefer discounts and rebates for employeeswith healthy habits than increased payments for those with unhealthyhabits. She said, "I think it's a mistake to use penalties forsomething as complicated as maintaining weight in a society that doeseverything to make you inactive. It can make people mad, and we are ina war for talent" (Cornwell, AP/USA Today, 9/10).

Reprinted with permission from kaisernetwork.org. Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, afree service of The Henry J. Kaiser Family Foundation.