How Not to Save on Healthcare
Looking to trim healthcare costs? Stay away from these cost-cutting don'ts.
As healthcare costs continue to rise, many small business owners are looking for ways to cut costs. Be careful. Some cost-saving strategies might lead to lawsuits and headaches. Avoid the following legal pitfalls.
Don't play doctor. Don't suggest that employees avoid expensive treatments or seek out alternative treatments. If you offer poor advice, you may find yourself liable for negligence. Even if you don't, the employee might suffer from relying on mistaken advice.
Don't make employment decisions based on age. Older employees are more likely to have health problems than younger ones. But federal laws--and many states--prohibit employers from discriminating against employees over the age of 40. Don't consider an employee's age when making hiring or retention decisions.
Don't ask employees about family members' healthcare conditions. An employer may be liable for firing an employee because members of that employee's family had unusually expensive healthcare needs. In Dewitt v. Proctor Hospital, a case recently decided by a federal court, a hospital employee's husband suffered from prostate cancer. His treatments cost the employer hospital more than $100,000. The hospital, in an effort to cut costs, let the employee go. Ultimately, the hospital likely spent far more trying to defend this employment decision in court.
Don't make employment decisions based on weight. An employer may be liable for unlawful discrimination for refusing to hire obese employees. In Cook v. Rhode Island, an employer refused to hire an applicant on the grounds that the plaintiff's obesity impaired her ability to work and might have increased her risk of developing serious medical problems that would result in absenteeism and increased workers' compensation claims. The court held that obesity can be both an actual and perceived disability. A jury later found in favor of the plaintiff and awarded her $100,000 in compensatory damages.
Some states have also enacted laws prohibiting discrimination based on appearance. These laws may protect obese or overweight individuals not covered by the Americans With Disabilities Act.
Avoid wellness program mistakes. Wellness programs have become a popular way of promoting good health among employees. Many employers provide on-site exercise facilities or subsidize health club memberships. These efforts seem to be paying off. Studies indicate that businesses with wellness programs have shown substantial health-related cost savings, such as decreases in employee absences and turnover, and reduced insurance premiums. But other wellness programs--in which employers award "wellness points" to employees who meet certain benchmarks, allowing the employee to offset these points against insurance deductibles--are more controversial.
First, employment law experts question whether wellness points violate the ADA. Regulations issued by the Department of Labor specifically state that wellness programs cannot be "a subterfuge for discriminating based on a health factor." Wellness programs that reward and penalize workers based on arbitrary health indices--such as body mass index, cholesterol or blood pressure--likely violate these regulations. Preliminary research into the genetic causes of obesity also indicates that members of some racial and ethnic groups are disproportionately likely to be obese. This research raises the question of whether some employer obesity reduction programs unlawfully discriminate against employees based on race or national origin.
If you decide to create a wellness program, emphasize education. For example, teach employees how to eat a balanced diet or how to incorporate exercise into their lives. Avoid tactics or incentives that induce shame or guilt in employees who have trouble controlling their weight. Instead, encourage all employees to lead healthier lifestyles.
Elizabeth Milito is senior executive counsel with the NFIB Small Business Legal Center, www.NFIB.com/legal. This article is intended to provide general information for reference only and should not be considered legal advice.