Wellness programs have become popular in many work places in the last several years as a means of promoting employee health and reducing healthcare costs. A federal district court recently evaluated the validity of an Equal Employment Opportunity Commission (EEOC) rule dealing with incentives – financial or otherwise – that may be offered to employees in connection with employer-sponsored wellness programs.
Wellness programs are regulated in part by the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA). HIPAA prevents health plans and insurers from discriminating on the basis of “any health status related factor,” but allows covered entities to offer “premium discounts or rebates” on a plan participant’s copayments or deductibles in return for that individual’s compliance with a wellness program.
However, because employer-sponsored wellness programs often involve the collection of sensitive medical information from employees, including information about disabilities or genetic information, these programs often implicate the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) as well. As both the ADA and GINA are administered by EEOC, this brings wellness programs within EEOC’s purview.
The ADA prohibits employers from requiring medical examinations or inquiring whether an individual has a disability unless the inquiry is both job-related and “consistent with business necessity.” But the ADA makes some allowances for wellness programs: it provides that an employer may conduct medical examinations and collect employee medical history as part of an “employee health program,” as long as the employee’s participation in the program is “voluntary”. The term “voluntary” is not defined in the statute.
Similarly, GINA prohibits employers from requesting, requiring, or purchasing “genetic information” from employees or their family members. The definition of genetic information includes an individual’s genetic tests, the genetic tests of family members such as children and spouses, and the manifestation of a disease or disorder of a family member. Like the ADA, GINA contains an exception that permits employers to collect this information as part of a wellness program, as long as the employee’s provision of the information is voluntary. Again, the meaning of “voluntary” is not defined in the statute.
The Equal Employment Opportunity Commission (EEOC) issued a Final Rule in 2016 that went into effect on January 1, 2017, and defined voluntary and what constituted an employee health program under the ADA and GINA. It also defined the maximum incentives/penalties that can be offered to entice employees to participate in the voluntary programs. The EEOC Final Rule stated that the maximum allowable incentive/penalty can be up to 30% of the total cost of self-only coverage of the group health plan in which the employee is enrolled.
But, on August 22, 2017, a U.S. District Court held that the EEOC did not adequately justify its conclusion that the maximum of incentive/penalty of 30% of the group rate does not make participation involuntary. AARP v. United States EEOC(D.D.C. 2017).
The Court reasoned that the EEOC did not provide any data, studies or analysis that supported the thirty percent threshold. Therefore, the Court held that the Final Rules for both the ADA and GINA were arbitrary and capricious, and remanded them to the EEOC for further consideration.
However, the Court did not vacate the rules, so they will still be in effect while the EEOC considers changing the rules, or at least attempts to better justify them.
For questions about health plans, HIPAA, the ADA, GINA or any other employment matter, please feel free to contact an FHKAD attorney at (614) 221-1216.