In August, the EEOC filed its first lawsuit against an employer regarding a wellness program. In October, it filed another. Here’s what you need to know to avoid wellness program pitfalls.
If the employer requires participation or penalizes employees who do not participate, the EEOC does not considers the program voluntary
The second lawsuit, EEOC v. Flambeau, also claims an employer’s wellness program violates the ADA. Flambeau’s wellness program required employees to submit to biometric testing and a health risk assessment. If they did not, they faced cancellation of medical insurance, unspecified “disciplinary action,” and a requirement to pay their full health insurance premium to stay covered, according to the EEOC.
Learn from Others’ Mistakes
Orion made a mistake in its wellness program by making medical and disability inquiries that were not job-related. Flambeau required employees to submit to medical testing that was not job-related. Requiring employees to participate to obtain company-provided health insurance made these wellness programs mandatory, according to the EEOC.
Title I of the ADA allows employers to conduct voluntary medical examinations and activities, including obtaining information from voluntary medical histories, as part of an employee wellness program. However, if the employer requires participation or penalizes employees who do not participate, the EEOC no longer considers the program voluntary.
Laws Affecting Wellness Plans
The ADA is only one law that could affect your wellness programs. Other laws could apply as well:
HIPAA: The Health Insurance Portability and Accountability Act (HIPAA) was one of the first to specifically address wellness programs. It prohibits group health insurance plans from discriminating based on a health factor. Group health plans cannot charge similarly situated individuals different premiums or contributions based on a health factor, such as body mass index. However, HIPAA allows an exception for “bona fide wellness plans.” It permits premium discounts and rebates or reductions to copayments or deductibles in return for “adherence to programs of health promotion and disease prevention.” HIPAA capped such rewards to 20 percent of the total group health plan premium.
GINA: The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits genetic information discrimination in employment. Title II of GINA prohibits employers and other covered entities from requesting, requiring or purchasing genetic information. Six limited exceptions apply. One allows a covered entity to acquire genetic information about employees or their family members when it offers health or genetic services, including wellness programs, on a voluntary basis. The individual receiving the services must give prior written authorization. Participating employees and their genetic health providers may receive this genetic information, but employers can only receive it in aggregate form.
Final regulations implementing GINA make it clear that employers cannot offer financial incentives for individuals to provide genetic information as part of a wellness program.
Pregnancy Disability Act: This federal act prohibits sex discrimination on the basis of pregnancy. It requires employers to provide similar treatment to women affected by pregnancy, childbirth or related medical conditions as they would to other similarly situated employees. Employers’ wellness programs cannot treat women differently on the basis of pregnancy, and employers cannot require pregnant women to participate in a wellness program.
Affordable Care Act: The Affordable Care Act recognized the importance of wellness programs. It increased the maximum incentive for participating in wellness programs to 30 percent of premiums if participants must achieve a health-related goal. It boosted incentives for programs aimed toward eliminating or preventing tobacco use to 50 percent.
Guidance for Employers
Rules governing wellness plans under the Affordable Care Act became effective on January 1, 2014. These rules apply to fully insured and self-insured plans. Under these rules, a wellness program:
- must be reasonably designed to promote health or prevent disease;
- must have a reasonable chance of improving the health of, or preventing disease in, participating individuals;
- cannot be overly burdensome;
- cannot be a subterfuge for discriminating based on a health factor; and
- must use a reasonable method to promote health or prevent disease.
The final rules define two major types of wellness programs: “participatory wellness programs” and “health-contingent wellness programs.” Participatory wellness programs either do not provide a reward or do not require an individual to satisfy a health standard to obtain a reward. Examples include programs that reimburse employees for membership in a fitness center, a diagnostic testing program that does not base any part of the reward on outcomes, and a program that rewards employees for attending a no-cost health education seminar.
In contrast, health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward. Final regulations subdivide this category into: (1) activity-only wellness programs, and (2) outcome-based wellness programs, which require the achievement of some health-related standard, such as body mass index or cholesterol level.
Activity-only wellness programs must offer a “reasonable alternative standard” or waive the standard for individuals whose medical condition makes it unreasonably difficult or medically inadvisable to attempt to satisfy the standard. Because outcome-based programs condition receipt of a reward on meeting specific health standards, they must provide a “reasonable alternative standard” to all individuals who do not meet the initial standard, with or without a physician’s note.
No employer should avoid implementing a wellness program for fear of a lawsuit.
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