Commission sends long-awaited proposed wellness-program rule for OMB approval

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CCH Daily Document Update: HR Compliance Library,¶33,830,— AGENCY GUIDANCE,(Mar. 24, 2015)doug for news.jpg


The EEOC is sending a long-awaited proposed rule on the interplay between employee wellness programs and the ADA and Affordable Care Act (ACA) to the Office of Management and Budget (OMB) for clearance. The Commission approved the proposed rule on Friday, March 20 in a bipartisan vote. Employers have been anxiously awaiting further guidance on how to structure such programs in a manner that will not run afoul of federal antidiscrimination laws, particularly with regard to the ADA.


The proposed rule would amend the regulations implementing the ADA’s equal employment provisions to address the interaction between Title I of the ADA and financial incentives offered through group health plans as part of wellness programs, according to a March 20 agency release. Following OMB approval, the proposed rule will be published in the Federal Register for a 60-day public notice and comment period. The proposal cannot be made public prior to publication in the Federal Register.


Guidance urgently needed. At a public meeting held by the EEOC on May 8, 2013, a panel of experts representing businesses, advocacy groups, and providers told the Commission that guidance is needed to avoid violations of federal EEO laws, noting that wellness programs are an increasingly common feature of employee benefits programs. At the time of the meeting, a majority of employers offered some sort of wellness program, with 94 percent of employers with over 200 workers doing so, as well as 63 percent of smaller ones, according to Karen Pollitz of the Kaiser Family Foundation. Many of those programs offered some sort of financial incentive for participation, which can range from gift cards to higher employer contributions for insurance premiums, or penalties such as additional surcharges to employees for health insurance. The popularity of such programs has no doubt increased since.


At the meeting, the EEOC’s Acting Associate Legal Counsel Christopher Kuczynski told the Commission that the most common intersection between wellness programs and the statutes that the EEOC enforces comes when the programs require medical exams or ask disability-related questions, both of which would ordinarily violate the ADA. While the ADA permits employers to ask for medical information in connection with voluntary wellness programs, the meaning of “voluntary” merited further clarification by the Commission, Kuczynski suggested.


And the question of exactly what is “voluntary” when financial and other incentives are offered in a wellness program has continued to perplex employers who have found value in such programs but yet are unsure about where the line is drawn in terms of lawfulness. Arguably, two Commission lawsuits filed in 2014 have sketched out some of the boundaries as the agency sees it, but neither addressed the type of incentive programs used by a much greater number of employers. In another cases, the Commission sought, but failed to obtain, injunctive relief to bar imposition of penalties in the form of surcharges while the agency investigated a pending charge.


Compulsory wellness program. Last August, the EEOC filed its first direct challenge to a wellness program in a lawsuit against Manitowoc, Wisconsin-based Orion Energy Systems, claiming that the company violated the ADA with mandatory medical exams and inquiries that were not job related but nonetheless mandated by its compulsory “wellness program.” The company purportedly fired an employee who objected to the program—but only after making her pay for all of her health insurance premium. The suit is the EEOC’s first direct attack on an employer wellness program.


Dire consequences for failure to participate. The Commission filed a second lawsuit in October 2014 against Flambeau, Inc., a Baraboo, Wisconsin-based plastics manufacturing company. There the EEOC asserted that the company violated the ADA by requiring an employee to submit to medical testing and assessment—or face dire consequences—in connection with a “wellness program.” The program in question required that employees submit to biometric testing and a “health risk assessment” or face cancellation of medical insurance, unspecified “disciplinary action” for failing to attend the scheduled testing, and a requirement to pay the full premium in order to stay covered, according to the EEOC.


Surcharge penalties. Later the same month, the EEOC sought to preliminarily enjoin Honeywell International, Inc. from imposing penalties on employees who decline to participate in biometric testing, as well as those whose spouses do not participate in the testing. After an employee filed an EEOC charge alleging discrimination under the ADA and GINA, the agency sought interim relief pending investigation of the charge under which the employer would advise employees that there would be no penalty for those who declined testing, but Honeywell refused to agree, the EEOC alleged in a petition filed in federal court in Minnesota.


The EEOC alleged that if employees or their spouses do not take the tests, employees could suffer penalties of up to $4,000 through surcharges and lost health savings account contributions of up to $1,500; a $500 surcharge on medical plan costs; and a “tobacco surcharge” of $1,000 each for the employee and/or his spouse.


The court, however, refused the EEOC’s bid for a temporary restraining order and presumably, the EEOC’s investigation is ongoing.


Employers and providers alike will be looking forward to the EEOC’s proposed rule to help fill the information gap about the Commission’s take on the lawful boundaries of wellness programs.


Source: By Pamela Wolf, J.D. for CCH, Inc.



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