In light of the recent amendments to the Rehabilitation 1

Act of 1973, the analysis in this interim guidance also applies

to federal sector complaints of discrimination arising under

section 501 of that statute.

1. SUBJECT : Interim Enforcement Guidance on the application of

the Americans with Disabilities Act of 1990 to disabilitybased distinctions in employer provided health insurance.

2. PURPOSE : This interim enforcement guidance sets forth the 

Commission's position on the application of the Americans

with Disabilities Act to disability-based distinctions in

employer provided health insurance.

3. EFFECTIVE DATE : Upon issuance.

4. EXPIRATION DATE : As an exception to EEOC Order 205.001, 

Appendix B, Attachment 4, § a(5), this Notice will remain in

effect until rescinded or superseded. 

5. ORIGINATOR : Americans with Disabilities Act Division, 

Office of Legal Counsel.

6. INSTRUCTIONS : This enforcement guidance is to be used on an 

interim basis until the Commission issues final guidance

after publication for notice and comment. File after [ 

] of Volume II of the Compliance Manual. 

7. SUBJECT MATTER :

I. INTRODUCTION

The interplay between the nondiscrimination principles of

the ADA and employer provided health insurance, which is

predicated on the ability to make health-related distinctions, is

both unique and complex. This interplay is, undoubtedly, most

complex when a health insurance plan contains distinctions that

are based on disability. The purpose of this interim guidance is

to assist Commission investigators in analyzing ADA charges which

allege that a disability-based distinction in the terms or

provisions of an employer provided health insurance plan violates

the ADA. This interim guidance does not address the application 1

of the ADA to other issues arising in the context of employer

provided health insurance. Nor does it address the application

of the ADA to other types of "fringe benefits," such as employer

provided pension plans, life insurance, and disability insurance. 

These subjects will be addressed in future documents.
 The ADA also prohibits employment agencies, labor 2

organizations, and joint labor management committees from

discriminating in employment against qualified individuals with

disabilities. However, for convenience, only the term "employer"

is used throughout this document.

2

 

II. BACKGROUND AND LEGAL FRAMEWORK

 

The ADA provides that it is unlawful for an employer to 2

discriminate on the basis of disability against a qualified

individual with a disability in regard to "job application

procedures, the hiring, advancement, or discharge of employees,

employee compensation, job training, and other terms, conditions,

and privileges of employment." 42 U.S.C. § 12112(a). Section

1630.4 of the Commission's regulations implementing the

employment provisions of the ADA further provides, in pertinent

part, that it is unlawful for an employer to discriminate on the

basis of disability against a qualified individual with a

disability in regard to "[f]ringe benefits available by virtue of

employment, whether or not administered by the [employer]." 29

C.F.R. 

§ 1630.4(f). Employee benefit plans, including health insurance

plans provided by an employer to its employees, are a fringe

benefit available by virtue of employment. Generally speaking,

therefore, the ADA prohibits employers from discriminating on the

basis of disability in the provision of health insurance to their

employees.

The ADA also prohibits employers from indirectly

discriminating on the basis of disability in the provision of

health insurance . Employers may not enter into, or participate

in, a contractual or other arrangement or relationship that has

the effect of discriminating against their own qualified

applicants or employees with disabilities. 42 U.S.C. §

12112(b)(2); 29 C.F.R. 

§ 1630.6(a). Contractual or other relationships with

organizations that provide fringe benefits to employees are

expressly included in this prohibition. 42 U.S.C. § 12112(b)(2);

29 C.F.R. § 1630.6(b). This means that an employer will be

liable for any discrimination resulting from a contract or
3

agreement with an insurance company, health maintenance

organization (HMO), third party administrator 

(TPA), stop-loss carrier, or other organization to provide or

administer a health insurance plan on behalf of its employees.

 

Another provision of the ADA makes it unlawful for an

employer to limit, segregate, or classify an applicant or

employee in a way that adversely affects his or her employment

opportunities or status on the basis of disability. 42 U.S.C.

§ 12112(b)(1); 29 C.F.R. § 1630.5. Both the legislative history

and the interpretive Appendix to the regulations indicate that

this prohibition applies to employer provided health insurance. 

S. Rep. No. 116, 101st Cong., 1st Sess. (Senate Report) (1989) at

28-29; H.R. Rep. No. 485 part 2, 101st Cong., 2nd Sess. (House

Labor Report) (1990) at 58-59; H.R. Rep. No. 485 part 3, 101st

Cong., 2nd Sess. (House Judiciary Report) (1990) at 36; Appendix

to 29 C.F.R. § 1630.5. 

 Several consequences result from the application of these

statutory provisions. First, disability-based insurance plan

distinctions are permitted only if they are within the protective

ambit of section 501(c) of the ADA. (See the discussion in

Section III, infra .) Second, decisions about the employment of

an individual with a disability cannot be motivated by concerns

about the impact of the individual's disability on the employer's

health insurance plan. Appendix to 29 C.F.R. § 1630.15(a). 

Third, employees with disabilities must be accorded "equal

access" to whatever health insurance the employer provides to

employees without disabilities. See Appendix to 29 C.F.R.

§ 1630.16(f). Fourth, in view of the statute's "association

provision," 42 U.S.C. § 12112(b)(4); 29 C.F.R. § 1630.8, it would

violate the ADA for an employer to make an employment decision

about any person, whether or not that person has a disability,

because of concerns about the impact on the health insurance plan

of the disability of someone else with whom that person has a

relationship. 

As previously noted, this interim guidance is devoted solely

to the ADA implications of disability-based health insurance plan

distinctions. The ADA implications of other issues arising in

the context of employer provided health insurance will be

addressed in future guidance. 
 An "insured" health insurance plan is a health 3

insurance plan or policy that is purchased from an insurance

company or other organization, such as a health maintenance

organization (HMO). This is in contrast to a "self-insured"

health plan, where the employer directly assumes the liability of

an insurer. Insured health insurance plans are regulated by both

ERISA and state law. Self-insured plans are typically subject to

ERISA, but are not subject to state laws that regulate insurance. 

 The term "bona fide" is defined in Section III (C)(1), 4

infra .

4

 

III. DISABILITY-BASED DISTINCTIONS

A. Framework of Analysis

Whenever it is alleged that a health-related term or

provision of an employer provided health insurance plan violates

the ADA, the first issue is whether the challenged term or

provision is, in fact, a disability-based distinction. If the

Commission determines that a challenged health insurance plan

term or provision is a disability-based distinction, the

respondent will be required to prove that that disability-based

distinction is within the protective ambit of section 501(c) of

the ADA. 

 In pertinent part, section 501(c) permits employers,

insurers, and plan administrators to establish and/or observe the

terms of an insured health insurance plan that is "bona fide," 3 4

based on "underwriting risks, classifying risks, or administering

such risks that are based on or not inconsistent with State law,"

and that is not being used as a "subterfuge" to evade the

purposes of the ADA. Section 501(c) likewise permits employers,

insurers, and plan administrators to establish and/or observe the

terms of a "bona fide" self-insured health insurance plan that is

not used as 
 Section 1630.16(f) states: 5

 (f) Health insurance, life insurance and other benefit

plans-

(1) An insurer, hospital, or medical service company,

health maintenance organization, or any agent or entity that 

administers benefit plans, or similar organizations may 

underwrite risks, classify risks, or administer such risks 

that are based on or not inconsistent with State law.

(2) A covered entity may establish, sponsor, observe, or 

administer the terms of a bona fide benefit plan that are 

based on underwriting risks, classifying risks, or 

administering such risks that are based on or not inconsistent 

with State law.

(3) A covered entity may establish, sponsor, observe, or 

administer the terms of a bona fide benefit plan that is not

subject to State laws that regulate insurance.

(4) The activities described in paragraphs (f)(1), (2) and 

(3)... are permitted unless these activities are being used

as a subterfuge to evade the purposes of [Title I of the ADA]. 

 If an employer provided health insurance plan is a 6

"multiple employer welfare arrangement" (MEWA) pursuant to

section 3(40) of ERISA, it may be subject to certain state

insurance laws even if it is self-insured. See footnote 13,

infra .

5

a "subterfuge." 42 U.S.C. § 12201(c). The text of

section 501(c) is incorporated into § 1630.16(f) of the

Commission's regulations. 

5

Consequently, if the Commission determines that the

challenged term or provision is a disability-based distinction,

the respondent will be required to prove that: 1) the health

insurance plan is either a bona fide insured health insurance

plan that is not inconsistent with state law, or a bona fide

self-insured health insurance plan; and 2) the challenged 6

disability-based distinction is not being used as a subterfuge. 
 The term "discriminates" refers only to disparate 7

treatment. The adverse impact theory of discrimination is

unavailable in this context. See Alexander v. Choate , 469 U.S.

287 (1985), a case brought under § 504 of the Rehabilitation Act

of 1973. See also the discussion of Choate in the Senate Report

at 85; House Labor Report at 137.

6

If the respondent so demonstrates, the Commission will conclude

that the challenged disability-based distinction is within the

protective ambit of section 501(c) and does not violate the ADA. 

If, on the other hand, the respondent is unable to make this twopronged demonstration, the Commission will conclude that the

respondent has violated the ADA.

 

B. What Is a Disability-Based Distinction?

It is important to note that not all health-related plan

distinctions discriminate on the basis of disability. Insurance

distinctions that are not based on disability, and that are

applied equally to all insured employees, do not discriminate on

the basis of disability and so do not violate the ADA. 

7

For example, a feature of some employer provided health

insurance plans is a distinction between the benefits provided

for the treatment of physical conditions on the one hand, and the

benefits provided for the treatment of "mental/nervous"

conditions on the other. Typically, a lower level of benefits is

provided for the treatment of mental/nervous conditions than is

provided for the treatment of physical conditions. Similarly,

some health insurance plans provide fewer benefits for "eye care"

than for other physical conditions. Such broad distinctions,

which apply to the treatment of a multitude of dissimilar

conditions and which constrain individuals both with and without

disabilities, are not distinctions based on disability. 

Consequently, although such distinctions may have a greater

impact on certain individuals with disabilities, they do not
 However, it would violate the ADA for an employer to 8

selectively apply a universal or "neutral" non-disability based

insurance distinction only to individuals with disabilities. 

Thus, for example, it would violate the ADA for an employer to

apply a "neutral" health insurance plan limitation on "eye care"

only to an employee seeking treatment for a vision disability,

but not to other employees who do not have vision disabilities. 

Charges alleging that a universal or "neutral" non-disability

based insurance distinction has been selectively applied to

individuals with disabilities should be processed using

traditional disparate treatment theory and analysis.

 This position is consistent with the case law developed 9

pursuant to § 504 of the Rehabilitation Act of 1973, as amended,

29 U.S.C. § 794, the statute on which the ADA is patterned. 

Courts faced with challenges to insurance plan distinctions

between physical benefits and mental/nervous benefits under the

Rehabilitation Act have held that such distinctions are rational

and do not discriminate on the basis of disability. See, e.g. ,

Doe v. Colautti , 592 F.2d 704 (3d Cir. 1979) (holding that

Pennsylvania's medical assistance statute was not required by the

Rehabilitation Act to provide the same level of benefits for

inpatient hospital treatment of mental illness as for inpatient

hospital treatment of physical illness; the court noted that

care for physical illness and care for mental illness were two

different benefits), and Doe v. Devine , 545 F. Supp. 576 (D.D.C.

1982), aff'd on other grounds , 703 F. 2d 1319 (D.C. Cir.

1983)( holding that Blue Cross "cutbacks" in mental health

benefits for federal employees are reasonable and do not

discriminate on the basis of disability). 

7

intentionally discriminate on the basis of disability and do not 8

violate the ADA. 9

Blanket pre-existing condition clauses that exclude from the

coverage of a health insurance plan the treatment of conditions

that pre-date an individual's eligibility for benefits under that

plan also are not distinctions based on disability, and do not

violate the ADA. Universal limits or exclusions from coverage of

all experimental drugs and/or treatments, or of all "elective

surgery," are likewise not insurance distinctions based on
8

disability. Similarly, coverage limits on medical procedures

that are not exclusively, or nearly exclusively, utilized for the

treatment of a particular disability are not distinctions based

on disability. Thus, for example, it would not violate the ADA

for an employer to limit the number of blood transfusions or Xrays that it will pay for, even though this may have an adverse

effect on individuals with certain disabilities.

Example 1 . The R Company health insurance

plan limits the benefits provided for the

treatment of any physical conditions to a

maximum of $25,000 per year. CP, an employee

of R, files a charge of discrimination

alleging that the $25,000 cap violates the

ADA because it is insufficient to cover the

cost of treatment for her cancer. The

$25,000 cap does not single out a specific

disability, discrete group of disabilities,

or disability in general. It is therefore

not a disability-based distinction. If it is

applied equally to all insured employees, it

does not violate the ADA.

In contrast, however, health-related insurance distinctions

that are based on disability may violate the ADA. A term or

provision is "disability-based" if it singles out a particular

disability ( e.g. , deafness, AIDS, schizophrenia), a discrete

group of disabilities ( e.g. , cancers, muscular dystrophies,

kidney diseases), or disability in general ( e.g. , non-coverage of

all conditions that substantially limit a major life activity). 

 

As previously noted, employers may establish and/or observe

the terms and provisions of a bona fide benefit plan, including

terms or provisions based on disability, that are not a

"subterfuge to evade the purposes" of the ADA. Such terms and

provisions do not violate the ADA. However, disability-based

insurance distinctions that are a "subterfuge" do intentionally

discriminate on the basis of disability and so violate the ADA.

 

Example 2 . R Company's new self-insured

health insurance plan caps benefits for the

treatment of all physical conditions, except

AIDS, at $100,000 per year. The treatment of
9

AIDS is capped at $5,000 per year. CP, an

employee with AIDS enrolled in the health

insurance plan, files a charge alleging that

the lower AIDS cap violates the ADA. The

lower AIDS cap is a disability-based

distinction. Accordingly, if R is unable to

demonstrate that its health insurance plan is

bona fide and that the AIDS cap is not a

subterfuge, a violation of the ADA will be

found. 

Example 3 . R Company has a health insurance

plan that excludes from coverage treatment

for any pre-existing blood disorders for a

period of 18 months, but does not exclude the

treatment of any other pre-existing

conditions. R's pre-existing condition

clause only excludes treatment for a discrete

group of related disabilities, e.g. ,

hemophilia, leukemia, and is thus a

disability-based distinction. CP, an

individual with acute leukemia who recently

joined R Company and enrolled in its health

insurance plan, files a charge of

discrimination alleging that the disabilitybased pre-existing condition clause violates

the ADA. If R is unable to demonstrate that

its health insurance plan is bona fide and

that the disability-specific pre-existing

condition clause is not a subterfuge, a

violation of the ADA will be found. 

It should be noted that the ADA does not provide a "safe

harbor" for health insurance plans that were adopted prior to its

July 26, 1990 enactment. As the Senate Report states, subterfuge

is to be determined "regardless of the date an insurance or

employer benefit plan was adopted." Senate Report at 85; see

also House Labor report at 136-138; House Judiciary Report at 70-

71; Appendix to 29 C.F.R. § 1630.16(f). Consequently, the

challenged disability-based terms and provisions of a pre-ADA

health insurance plan will be scrutinized under the same
 It has been suggested that the Commission should 10

interpret "subterfuge" under the ADA as having the same meaning

as was accorded that term under the Age Discrimination in

Employment Act (ADEA) of 1967, 29 U.S.C. § 621 et seq. In Ohio

Public Employees Retirement System v. Betts , 492 U.S. 158 (1989),

the Court held that a pre-ADEA benefit plan could not be a

subterfuge, and that, since the ADEA did not expressly apply to

fringe benefits, subterfuge required a showing of the employer's

specific intent to discriminate in some non-fringe aspect of the

employment relationship. However, both the language of the ADA,

expressly covering "fringe benefits," and the Act's legislative

history, rejecting the concept of a "safe harbor" for pre-ADA

plans, make plain congressional intent that the Betts approach

not be applied in the context of the ADA.

 See Morgado v. Birmingham-Jefferson County Civil 11

Defense Corps. , 706 F.2d 1184, 1189 (11th Cir. 1983, cert.

denied , 464 U.S. 1045 (1984) (employer relying on Equal Pay Act

provision allowing pay differentials for reasons other than sex

must prove entitlement to provision's protection because such

facts "are peculiarly within the knowledge of the employer");

EEOC v. Whitin Machine Works, Inc. , 635 F.2d 1095, 1097 (4th Cir.

1980) (when facts are "within [the] unique knowledge" of the

employer, it bears burden of proof concerning those facts); EEOC

v. Radiator Specialty Co. , 610 F.2d 178, 185 n. 8 (4th Cir. 1979)

10

subterfuge standard as are the challenged disability-based terms,

provisions, and conditions of post-ADA health insurance plans. 10

 

C. The Respondent's Burden of Proof

Once the Commission has determined that a challenged health

insurance term or provision constitutes a disability-based

distinction, the respondent must prove that the health insurance

plan is either a bona fide insured plan that is not inconsistent

with state law, or a bona fide self-insured plan. The

respondent must also prove that the challenged disability-based

distinction is not being used as a subterfuge. Requiring the

respondent to bear this burden of proving entitlement to the

protection of section 501(c) is consistent with the wellestablished principle that the burden of proof should rest with

the party who has the greatest access to the relevant facts. 11
("general principle of allocation of proof to the party with the

most ready access to the relevant

information" requires Title VII defendant to show

inappropriateness of labor pool statistics). 

 See footnote 3, supra , for a discussion of the 12

difference between "insured" and "self-insured" insurance plans.

 The term "applicable state law" refers both to the 13

determination of: 1) which state's laws are applicable to the

particular charge ( e.g. , which state's laws are applicable in the

event that the health insurance policy was drawn up in accordance

11

In the health insurance context, it is the respondent employer

(and/or the employer's insurer, if any) who has control of the

risk assessment, actuarial, and/or claims data relied upon in

adopting the challenged disability-based distinction. Charging

party employees have no access to such data, and, generally

speaking, have no information about the employer provided health

insurance plan beyond that contained in the employer provided

health insurance plan description. Consequently, it is the

employer who should bear the burden of proving that the

challenged disability-based insurance distinction is within the

protective ambit of section 501(c). 

1. The Health Insurance Plan Is "Bona Fide" and 

Consistent with Applicable Law

 In order to gain the protection of section 501(c) for a

challenged disability-based insurance distinction, the respondent

must first prove that the health insurance plan in which the

challenged distinction is contained is either a bona fide insured

health insurance plan that is not inconsistent with state law, or

a bona fide self-insured health insurance plan. If the health 12

insurance plan is an insured plan, the respondent will be able to

satisfy this requirement by proving that: 1) the health insurance

plan is bona fide in that it exists and pays benefits, and its

terms have been accurately communicated to eligible employees;

and 2) the health insurance plan's terms are not inconsistent

with applicable state law as interpreted by the appropriate state

authorities. If the health insurance plan is a self-insured 13
with the laws of the state of Maryland, but the insured employee

resides in the state of Virginia) and 2) which laws of that

appropriate state are relevant to the particular charge . With

respect to health insurance plans that are MEWAs, applicable

state law is determined with reference to ERISA section 514

(b)(6)(A). Questions concerning the "applicable state law"

should be directed to the Regional Attorney.

12

plan, the respondent will only be required to prove that the

health insurance plan is bona fide in that it exists and pays

benefits, and that its terms have been accurately communicated to

covered employees.

2. The Disability-Based Distinction Is Not a Subterfuge

The second demonstration that the respondent must make in

order to gain the protection of section 501(c) is that the

challenged disability-based distinction is not a subterfuge to

evade the purposes of the ADA. "Subterfuge" refers to

disability-based disparate treatment that is not justified by the

risks or costs associated with the disability. Whether a

particular challenged disability-based insurance distinction is

being used as a subterfuge will be determined on a case by case

basis, considering the totality of the circumstances.

 

The respondent can prove that a challenged disability-based

insurance distinction is not a subterfuge in several ways. A

non-exclusive list of potential business/insurance justifications

follows.

a. The respondent may prove that it has not engaged in the

disability-based disparate treatment alleged. For example, where

a charging party has alleged that a benefit cap of a particular

catastrophic disability is discriminatory, the respondent may

prove that its health insurance plan actually treats all

similarly catastrophic conditions in the same way. 
 Actuarial data that is seriously outdated and/or 14

inaccurate is not legitimate actuarial data. The respondent, for

example, will not be able to rely on actuarial data about a

disability that is based on myths, fears, or stereotypes about

the disability. Nor will a respondent be able to rely on

actuarial data that is based on false assumptions about

disability, or on assumptions that may have once been, but are no

longer, true. For example, a respondent would not be able to

justify an exclusion of epilepsy from its insurance plan that is

based on an erroneous assumption that people with epilepsy are

more likely to have serious accidents (and thus file more claims

for insurance benefits) than are individuals who do not have

epilepsy.

 Risk classification refers to the identification of 15

risk factors and the grouping of those factors that pose similar

risks. Risk factors may include characteristics such as age,

occupation, personal habits ( e.g. , smoking), and medical history. 

Underwriting refers to the application of the various risk

factors or risk classes to a particular individual or group

(usually only if the group is small) for the purpose of

determining whether to provide insurance. 

13

b. The respondent may prove that the disparate treatment is

justified by legitimate actuarial data, or by actual or 14

reasonably anticipated experience, and that conditions with

comparable actuarial data and/or experience are treated in the

same fashion. In other words, the respondent may prove that the

disability-based disparate treatment is attributable to the

application of legitimate risk classification and underwriting 15

procedures to the increased risks (and thus increased cost to the

health insurance plan) of the disability, and not to the

disability per se . 

c. The respondent may prove that the disparate treatment is

necessary ( i.e. , that there is no nondisability-based health

insurance plan change that could be made) to ensure that the

challenged health insurance plan satisfies the commonly accepted

or legally required standards for the fiscal soundness of such an

insurance plan. The respondent, for example, may prove that it

limited coverage for the treatment of a discrete group of

disabilities because continued unlimited coverage would have been
 Adverse selection is the tendency of people who 16

represent poorer-than-average health risks to apply for and/or

retain health insurance to a greater extent than people who

represent average or above average health risks. Drastic

increases in premiums and/or drastic decreases in insurance

benefits foster an increase in adverse selection, as those who

are considered to be "good" insurance risks drop out and seek

enrollment in an insurance plan with lower premiums and/or better

benefits. An insurance plan that is subjected to a significant

rate of adverse selection may, as a result of the increase in the

proportion of "poor risk/high use" enrollees to "good risk/low

use" enrollees, become not viable or financially unsound. 

14

so expensive as to cause the health insurance plan to become

financially insolvent, and there was no nondisability-based

health insurance plan alteration that would have avoided

insolvency.

d. The respondent may prove that the challenged insurance

practice or activity is necessary ( i.e. , that there is no

nondisability-based change that could be made) to prevent the

occurrence of an unacceptable change either in the coverage of

the health insurance plan, or in the premiums charged for the

health insurance plan. An "unacceptable" change is a drastic

increase in premium payments (or in co-payments or deductibles),

or a drastic alteration to the scope of coverage or level of

benefits provided, that would: 1) make the health insurance plan

effectively unavailable to a significant number of other

employees, 2) make the health insurance plan so unattractive as

to result in significant adverse selection , or 3) make the 16

health insurance plan so unattractive that the employer cannot

compete in recruiting and maintaining qualified workers due to

the superiority of health insurance plans offered by other

employers in the community. 

e. Where the charging party is challenging the respondent's

denial of coverage for a disability-specific treatment, the

respondent may prove that this treatment does not provide any

benefit ( i.e. , has no medical value). The respondent, in other

words, may prove by reliable scientific evidence that the

disability-specific treatment does not cure the condition, slow

the degeneration/deterioration or harm attributable to the
 However, the respondent may be found to have violated 17

the ADA if the evidence reveals that the respondent's health

insurance plan covers treatments for other conditions that are

likewise of no medical value.

15

condition, alleviate the symptoms of the condition, or maintain

the current health status of individuals with the disability who

receive the treatment. 

17

 

IV. COVERAGE OF DEPENDENTS

The coverage of an employee's dependents under an employer

provided health insurance plan is a benefit available to the

employee by virtue of employment. Consequently, insurance terms,

provisions, and conditions concerning dependent coverage are

subject to the same ADA standards, including the application of

section 501(c) to disability-based distinctions, as are other

insurance terms, provisions, and conditions.

The ADA, however, does not require that the coverage

accorded dependents be the same in scope as the coverage accorded

the employee. For example, it would not violate the ADA for a

health insurance plan to cover prescription drugs for employees,

but not to include such coverage for employee dependents. Nor

does the ADA require that dependents be accorded the same level

of benefits as that accorded the employee. Thus, it would not

violate the ADA for a health insurance plan to have a $100,000

benefit cap for employees, but only a $50,000 benefit cap for

employee dependents. 

V. CHARGE PROCESSING

1. In General

Charges alleging that a term or provision of an employer

provided health insurance plan discriminates on the basis of

disability should be processed in accordance with the foregoing

guidance. When confronted with a charge alleging that a health

insurance plan distinction is a disability-based distinction that

violates the ADA, the investigator should initially determine

whether the challenged insurance term or provision is, in fact, a
16

disability-based distinction . To do this, the investigator

should determine whether: 

1) the insurance term, provision, or condition singles

out a particular disability, discrete group of

disabilities, or disability in general; and/or 

2) the insurance term, provision, or condition singles

out a procedure or treatment used exclusively, or

nearly exclusively, for the treatment of a particular

disability or discrete group of disabilities ( e.g. ,

exclusion of a drug used only to treat AIDS). (Section

III. B, supra .)

If it is determined that the challenged insurance term or

provision is not a disability-based distinction and is applied

equally to all insured employees, the investigator should

conclude that the health insurance plan distinction does not

violate the ADA.

On the other hand, if the challenged insurance term or

provision is found to be a disability-based distinction, the

investigator should determine whether the respondent can justify

the disability-based distinction by satisfying the requirements

of section 501(c) of the ADA. To make this determination, the

investigator should take the steps described below. 

1) The investigator should obtain evidence from the

respondent that the health insurance plan is a bona

fide plan. (Section III.C.1, supra .)

2) If the health insurance plan is an insured plan,

the investigator should also obtain evidence from the

respondent that the health insurance plan is not

inconsistent with the applicable state law(s). (Section

III.C.1, supra .)

3) The investigator should obtain evidence from the

respondent relevant to any business/insurance

justification proffered to justify the disability-based

insurance distinction. The evidence obtained should be

specific and detailed. For example, if the respondent

is relying on actuarial data to justify the disability-
17

based distinction, the investigator should require a

detailed explanation of the rationale underlying the

disability-based distinction, including the actuarial

conclusions arrived at, the actuarial assumptions

relied upon to reach those conclusions, and the factual

data that supports the assumptions and/or conclusions.

Similarly, if the respondent asserts that the

disability-based distinction is justified by actual or

reasonably anticipated experience, the investigator

should obtain evidence about the respondent's insurance

claims experience, and the way in which the respondent

has reacted to similar previous experience situations. 

If the respondent asserts that the disability-based

distinction was necessary to prevent the occurrence of

an unacceptable change in coverage or premiums, or to

assure the fiscal soundness of the health insurance

plan, the investigator should obtain evidence of the

nondisability-based options for modifying the health

insurance plan that were considered and the reason(s)

for the rejection of these options. If the respondent

asserts that its health insurance plan excludes a

disability-specific treatment because it is of no

medical value, the investigator should obtain evidence

regarding the scientific evidence relied upon by the

respondent in reaching that determination. (Section

III.C.2, supra .) 

Commission staff should direct questions concerning the

guidance or its application in particular cases to the Office of

Legal Counsel Attorney of the Day.

____________________ _____________________________

Date Approved: Tony Gallegos

 Chairman