Source: https://www.dorsey.com/newsresources/publications/2014/12/wellness-watch
Timestamp: 2019-04-25 02:18:24+00:00

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According to reports, more than half of all businesses with over 200 employees ask employees to participate in biometric screening, and nearly 10% of them provide a financial incentive for employees to participate. As a part of employer-sponsored “wellness programs,” these screenings usually involve blood tests, body mass index (BMI) determinations, and assessments of other types of personal health information. Gym memberships, smoking cessation programs, and other initiatives to improve health may also constitute “wellness programs,” especially when made part of employer-sponsored health plans. Employers hope that such programs will lead to a healthier workforce and lower health care premiums.
The number of wellness programs has grown since Congress passed the Affordable Care Act (ACA). Expanding on provisions of HIPAA, the ACA carves out an exception for wellness programs to rules generally prohibiting discrimination in health benefits.1 Appearing to encourage wellness programs, Congress increased the extent to which employers can incentivize smoking cessation programs and other wellness initiatives. Specifically, for “health-contingent” programs in which employees attempt to achieve a specific outcome, e.g. a certain cholesterol level, employers may offer a “reward” (or impose a “penalty”) of 30-50% of the amount of the plan’s premium. Regulations promulgated by the Departments of the Treasury, Labor, and Health and Human Services further support employer-sponsored wellness plans.
Against these recent legislative and regulatory developments favoring wellness initiatives, the EEOC has reminded employers that wellness programs remain subject to the Americans with Disabilities Act (ADA). The ACA and HIPAA do not say otherwise, and indeed, their associated regulations explicitly state that compliance with these statutes does not constitute compliance with the ADA. Under the ADA, disability-related questions and “medical examinations” (which include biometric screenings) can be asked of employees only when 1) their purpose is job-related and consistent with business necessity, see 42 U.S.C. § 12112(d)(4)(A), or 2) they are part of an employee health program that is “voluntary.” See 42 U.S.C. § 12112(d)(4)(B) (emphasis added).
The EEOC’s recent challenge to Honeywell’s wellness plan highlights the tension between the provisions of the ADA and the ACA. Employees who do not participate in Honeywell’s plan are allegedly subject to an annual “surcharge” of $500, the loss (depending on their incomes) of up to $1500 in contributions to their HSA accounts, and a “nicotine surcharge” of up to $2000. As the judge hearing the EEOC’s challenge observed, Honeywell’s program “appears to comply with the ACA’s surcharge limits while also supporting one of the goals of healthcare reform: reducing overall healthcare costs." EEOC v. Honeywell International, Inc., 2014 WL 5795481 (D. Minn. November 6, 2014). The EEOC argued, however, that because employees were subject to “penalties” of up to $4000 if they chose not to participate, the program could not be considered “voluntary.” In addition to citing the provisions of the ADA, the EEOC also relied on its own Enforcement Guidance, which states that wellness programs can be considered “voluntary” only so long as they neither require participation nor penalize employees who do not participate.
In addition, Honeywell contended that regardless of whether its wellness program was “voluntary,” it fell within the ADA’s “safe harbor” allowing it to administer the terms of “a bona fide benefit plan” that is based on “underwriting risk.” See 42 U.S.C. § 12201(c)(2). Seff v. Broward County, 691 F.3d 1221 (11th Cir. 2012) (holding that similar program meets ADA’s “safe harbor” provisions). But citing Barnes v. Benham Group, 22 F. Supp.2d 1013 (D. Minn. 1998), the EEOC argued that “underwriting risk” refers to premium setting, not “penalties” that are associated with rising health care costs.
In the meantime, the political branches may attempt to reconcile the tension between the ACA and the ADA. In an “Open Meeting” before the agency in May 2013, public comments reflected, among other things, a desire that the EEOC provide guidance about when an incentive allowed under the ACA becomes a “penalty” that violates the ADA. Since then, of course, the EEOC argued in Honeywell that a “$4000 penalty “crossed the line,” and has also issued opinion letters stating that employers cannot terminate coverage for employees who do not participate in wellness plans.3 But aside from acknowledging that “nominal incentives” are allowed, the EEOC has not provided guidance about where along the continuum employers might safely incent their employees to participate in a wellness plans. The soon-to-be Republican majority members of the Senate Health, Education, Labor and Pensions Committee recently exhorted the Chair of the EEOC to provide more guidance so employers could better judge the legality of their plans, and the EEOC has indicated such guidance may be forthcoming.
1 Generally, a wellness program’s compliance with HIPAA regulations will depend on whether the program is participatory (based solely on participation, such as reimbursement for a gym membership), contingent and based on activities (i.e. rewards for exercising), or contingent and based on outcome (i.e. achieving a certain cholesterol level).
3 The EEOC has brought two lawsuits in Wisconsin federal court where it alleges that employees were required to bear the entire cost of coverage and faced other disciplinary action because they declined to participate in such screenings. See EEOC v. Orion Energy Systems, Inc., and EEOC v. Flambeau, Inc.

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