NCPA - National Center for Policy Analysis


September 11, 2007

First they tried nudging.  Now companies are penalizing workers who have high health risks such as obesity and high blood pressure or cholesterol as insurance costs climb, says the Associated Press.

For example, at Indianapolis-based Clarian Health:

  • The company will start reducing pay for employees in its health plan by $10 per paycheck if their BMI -- a measurement of body fat through a height and weight ratio -- is in the obese range of more than 29.9, starting in 2009.
  • The deduction will be $5 per check if they don't meet required cholesterol, blood pressure or blood glucose measurements.
  • Workers will be required to complete an annual health risk assessment and can appeal to have their fees dropped if they show improvement.


  • Western & Southern Financial Group adds between $15 and $75 monthly to the insurance cost of health plan participants according to their BMI scores.
  • A fitness center, weight loss programs and health screenings are provided, and employees reducing their BMI receive refunds.
  • Scott's Miracle-Gro Co. charges $40 more per month in health premiums for employees who don't complete annual risk assessments and $65 more for workers who don't try to reduce any high health risks that show up.

Businesses acknowledge they are trying to cut health care costs but say they also want to help employees get healthier.  The more aggressive tactics stem from confidence after federal regulations were recently finalized covering how wellness programs can comply with nondiscrimination requirements under the Health Insurance Portability and Accountability Act. Rewards (and therefore penalties) based on health factors cannot exceed 20 percent of the total cost of employee health coverage.

Source: Lisa Cornwell, "Some Companies Penalize for Health Risks," Associated Press, September 9, 2007.


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