YOUR MONEY - Is your boss watching your cholesterol?

(The author is a Reuters contributor. The opinions expressedare his own. This is part of a five-story package on employeebenefits and open enrollment season.)

By Chris Taylor

NEW YORK, Oct 10 (Reuters) - If you're an employee who'slooking to save money or make more of it, here's a littleadvice: Step away from the cigarettes and chocolate éclairs.They might cost you - and not just in your lungs or on yourhips.

That's because more companies than ever are attachingfinancial rewards and penalties to their employees' health. Do awellness screening, get $50. Stop smoking, enjoy lower insurancepremiums. Hit a weight or cholesterol target, get a contributionto your health savings account.

If you don't do any of those things, you get bubkes - or youmight even be penalized. Workers at Wal-Mart Stores Inc pay asurcharge of $10 per pay period if they smoke, for example.

"Companies are struggling to get people more engaged intheir health, and financial incentives are an increasinglyimportant piece of that puzzle," says Tom Billet, seniorconsultant for human resource consulting firm Towers Watson.

Indeed, some 61 percent of employers offeredwellness-related financial rewards in 2012, up from 54 percentin 2011, according to Towers Watson. And 20 percent are nowassessing penalties, up from 19 percent in 2011. (See Reutersgraphic, ).

These wellness incentives have been expanding in scoperapidly. Consulting firm Aon Hewitt found that among employersoffering health-based rewards, a full quarter are now attachingthem to biometric outcomes like healthy blood pressure or lowerbody mass index. Last year, just 4 percent did so.

"I never would have expected that number to go to 25 percentso quickly," says Dr. Michael Cryer, Aon Hewitt's medicaldirector. "But companies have been working on this for yearsalready, getting people to know their numbers like bloodpressure and weight and cholesterol. Now we're at the stagewhere they're encouraging employees to actively manage thosenumbers."

That raises troubling questions about such a nanny-likeapproach to employee health. Is it really your boss' business ifyou're gorging at buffets or running marathons? And doesn't itinvoke shades of Big Brother, to be constantly monitored forthings like blood pressure or glucose levels?

"It's a laudable goal to encourage employees to improvetheir health, but it's not clear this is the best way to goabout it," says JoAnn Volk, a research professor at GeorgetownUniversity's Health Policy Institute, who co-authored a recentwhite paper on wellness incentives.

There are also serious legal questions, too, abouthealth-related rewards and penalties. While they're allowedunder health laws like HIPAA (the Health Insurance Portabilityand Accountability Act of 1996), that doesn't mean companiescouldn't face potential action in the courts.

"You can't penalize workers if they have a family history ofa certain condition, or a particular genetic makeup," says Volk."There are also privacy issues, depending on who's running theprogram and whether the information is being kept confidential.So there are a number of different legal hurdles that companiesneed to clear."


Such rewards and penalties are most common regardingsmoking, with 35 percent of companies offering some kind ofcarrot or stick to get employees off tobacco, according toTowers Watson. Minneapolis-based food giant General Mills Inc

gives $10 a month to employees who are tobacco-free, andhas done so for years, says spokeswoman Maerenn Jepsen.

Companies typically trust employees to report their tobaccouse honestly, says Jepsen. But nicotine use is easily uncoveredwith a simple urine test.

Of course, it's no wonder that companies are eager to whiptheir staffers into better physical shape. Employers areexpected to spend $11,664 per employee on healthcare for 2012,according to Towers Watson, up from $10,982 last year. That'sexpected to rise on average in 2013 by 7 percent, according to aKaiser Family Foundation survey.

Companies are obviously desperate to get those figures undercontrol. Wal-Mart spokesman Randy Hargrove notes that smokers onaverage consume 25 percent more healthcare services thannon-smokers. While tobacco users do face a surcharge, "We alsooffer a free quit-tobacco program where our associates can takeadvantage of a personal coach who can create a plan for them,"Hargrove says.

After all, odds are a fit, non-smoking employee with acholesterol level of 160 is going to rack up fewer healthcarecosts in years to come than someone who is overweight with ablood cholesterol count of 300 milligrams per deciliter andsmokes a couple of packs a day.

"One of the outcomes is that you control costs, but then youalso reduce absenteeism and get higher productivity," says MarkSchmit, vice president of research for the Alexandria,Virginia-based Society for Human Resource Management (SHRM)."For every dollar you invest in wellness, you get a return of $3to $6, so there's definitely a positive effect on the bottomline."

Leery employees shouldn't be concerned about such data beingused against them, say experts. HIPAA expressly forbids that,notes SHRM's Schmit. Most companies use third-party benefitsproviders to run such wellness programs. That creates a firewallagainst any health information being shared internally.

Employees who worry that the information is being misusedare not totally powerless. They can complain to the Departmentof Labor's Employee Benefits Security Administration(), or the Equal Employment OpportunityCommission (), says Georgetown's Volk.

And you certainly can turn down any health screeningopportunities you're presented with. But you'll likely bemissing out on a growing set of financial perks.

Currently companies are allowed to assess rewards orpenalties that lead to a 20 percent differential in insurancepremiums. And under the Affordable Care Act, scheduled for fullimplementation by 2014, that's slated to go up even more, to 30percent.

That means we can expect even more health-related rewardsand penalties in the workplace. It may take some of thedeliciousness out of that pulled pork sandwich or croissant ifyou'll be paying even more for it later.

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Editing by Jilian Mincer, Linda Stern and Steve Orlofsky)

((Linda.Stern@thomsonreuters.com; 202 898-8347;Jilian.Mincer@thomsonreuters.com; 646 223-8704))