Wellness Programs Versus The EEOC: Who Will Win?

 

The Equal Employment Opportunity Commission’s (EEOC) recent challenges to wellness programs, including the widely reported lawsuit against Honeywell International, was given an in-depth analysis by Alden J. Bianchi of Mintz, Levin, Cohn, Ferris, Glovsy and Popeo, P.C., in the National Law Review. Bianchi concludes that the Patient Protection and Affordable Care Act (ACA) and the Americans with Disabilities Act (ADA) must be reconciled to reduce confusion and potential missteps.

Wellness programs, generally. Bianchi noted that wellness programs that are part of employer sponsored group health plans are commonplace, and that the ACA codified and expanded particular types of wellness plans. These plans were the subject of a 2013 final rule issued in tandem by HHS and the Departments of Labor and the Treasury. The final rule increased maximum permissible rewards under health-contingent wellness programs to 30 percent of the cost of coverage, increased permissible rewards to 50 percent for programs preventing or reducing tobacco use, and provided clarification regarding plan designs and reasonable alternatives that must be offered by wellness programs to avoid discrimination, which is prohibited. The final rule provided two categories of wellness programs: (1) those that do not require a participant to meet a standard related to a health factor in order to obtain a reward and are permissible without any conditions, and (2) those that have health-contingent participation, either activity or outcome based. Health contingent participation programs could include a reward for those participants who do not use or decrease their use of tobacco, or reward a participant for reaching a specific weight, cholesterol level or body mass index.

The ADA. Generally the ADA prohibits employers from discriminating against qualified individuals with disabilities because of the disability. This includes a prohibition from discriminating on the basis of disability in the provision of health insurance. The ADA ensures employees with disabilities are accorded equal access to health insurance, and imposes limits on when an employer may make disability-required inquiries of employers or ask them to take medical exams. Bianchi notes that “According to the EEOC, a wellness program is voluntary as long as an employer neither requires participation nor penalizes employees who do not participate. At issue is whether a wellness program reward amounts to a requirement to participate, or whether withholding of the reward from non-participants constitutes a penalty, thus rendering the program involuntary.” Notably the EEOC has not taken a position on that.

Furthermore, Bianchi discusses the ADA exception involving the establishment of a group health plan based on “underwriting risks” and that is not used to circumvent or evade the purposes of the ADA, but notes that the EEOC claims only insurance carriers do underwriting so only fully-insured plans may qualify. Bianchi is unable to point to statutory support for this.

Honeywell. In October 2014, the EEOC filed a motion for an injunction against Honeywell International’s wellness program, which provides financial incentives for employees and their spouses to participate in biometric screening. The motion for the injunction was denied, but the underlying lawsuit is ongoing. Bianchi also discusses similar lawsuits against wellness programs that the EEOC has filed against Flambeu, Inc., and Orion Energy Systems, Inc., claiming they violate Title I of the ADA because they require submission to involuntary medical exams that are not job-related or necessary for business.

Conclusion. Bianchi concludes that reconciliation between the ADA and the ACA is necessary and suggests, “It seems to us the best way to reconcile the ADA and the ACA is to use the ADA exceptions either for ‘voluntary’ wellness programs or for those that are bona fide in nature and satisfy the basic underwriting standards.” In the meantime, all eyes are open for the EEOC’s upcoming proposed rules that are intended to tackle Health Insurance Portability and Accountability Act (HIPAA) concerns and wellness program incentives, which might create further complications for corporations.

For more information, visit http://www.natlawreview.com/article/affordable-care-act-countdown-to-compliance-employers-week-4-eeoc-v-honeywell-and-fu.

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