A spate of recent lawsuits against employers by the Equal Employment Opportunity Commission (EEOC) has put several common features of wellness program design at risk, including medical screenings, biometric testing, health risk questionnaires and mandatory spousal participation.

469802019The EEOC sued two Wisconsin employers during the last four months for conditioning health plan enrollment on employees’ submission to biometric screening or shifting the entire cost of coverage to employees who declined to participate. These programs seem permissible under the Affordable Care Act (ACA) and Health Insurance Portability and Accountability Act (HIPAA), but the EEOC, who is charged with enforcing the Americans with Disabilities Act (ADA), has alleged they violate the ADA’s prohibition on involuntary medical screenings.

While these cases raised the eyebrows of wellness program sponsors, relatively few have this aggressive design for employees who fail to complete a health risk assessment. But a recent challenge in federal court against Honeywell International by the EEOC seemed to broaden the offensive to include routine wellness program arrangements.

Honeywell’s Wellness Program

Honeywell’s program, and the EEOC’s claims against it, hit closer to home. The Honeywell program appears to be compliant with ACA and HIPAA wellness program rules. But after receiving complaints from some employees, the EEOC asked a federal trial court in Minnesota to prevent Honeywell from implementing important aspects of its wellness program for 2015.

Published reports indicate that the Honeywell program includes the following relatively common wellness program features:

  • Health savings account (HSA) contributions are conditioned upon the employee and an employee’s covered spouse completing a health risk questionnaire and biometric screening.
  • Employees/spouses who do not complete the biometric screenings are assessed a health insurance premium surcharge.
  • Employees/spouses who are tobacco users, and those who refuse to submit to testing for tobacco use, are assessed an additional health insurance premium surcharge.

“What’s more, the EEOC seems to be challenging the mere fact of requiring spouses to participate in a wellness program to get an employee discount in the Honeywell case,” says Lockton ERISA Compliance Attorney Scott A. Behrens. “An EEOC win could strip employers’ ability to require spousal participation, which is a critical piece of the puzzle. Spouses often have more healthcare costs than employees, and if a wellness program is prohibited from addressing key factors that drive healthcare costs it loses much of its effectiveness and reason to exist,” Behrens adds.

The ADA’s Application to Wellness Programs

The ADA limits the circumstances in which an employer is permitted to require a medical examination or require employees to answer health-related questions. Typical health risk questionnaires and biometric screenings will be considered medical inquiries within the purview of the ADA. Exceptions under the ADA apply to examinations or questions that are voluntary, but they won’t be considered “voluntary” if there’s a penalty for not participating.

So what comprises a penalty? The EEOC has been infuriatingly silent on this question for years. The EEOC’s Wisconsin employer suits seem to indicate that shifting all the cost of coverage to employees, or denying coverage outright, goes too far and amounts to a penalty. While the Honeywell suit reflects an effort by the EEOC to broaden the definition of penalty to encompass rather common wellness program incentives.

There’s another ADA exception that’s relevant here. Medical inquiries, like biometric screenings, are permissible under the ADA if they’re part of a “bona fide benefit plan.” In a 2012 ruling, a federal appeals court concluded that a wellness program sponsored by Broward County, Florida was not subject to challenge under the ADA, because it was part of the County’s health plan; that is, it was part of a bona fide benefit plan. Broward Country assessed a $20-per-pay-period premium surcharge against employees who refused to submit to biometric screenings.

513633405It‘s unclear how the federal trial court will rule in the Honeywell case, but Behrens says a couple of things are clear: First, the results in the Broward County case are not binding in the Honeywell or Wisconsin cases, but the courts in the latter cases will certainly read and consider the Broward County decision. Certainly, that decision signals federal courts’ willingness to be more flexible than the EEOC.

“What’s more, we know courts are loathe to assume that Congress intended to make laws that conflict with each other. Where laws appear to conflict, as the ADA and ACA/HIPAA appear to do with respect to wellness programs, courts will search for a way to reconcile them. It seems plausible to us that the courts will allow the ACA/HIPAA rules to trump the EEOC’s more restrictive interpretation under the ADA,” he adds.

Evaluating Your Response

But that remains to be seen. In the meantime, wellness program sponsors who want to take extra steps to insulate their programs from EEOC scrutiny might consider whether their wellness programs are treated as part of their health plan. Facts that the appeals court in the Broward County case found important were that the wellness program was available only to health plan enrollees, the wellness program was communicated as part of the health plan in multiple disclosures to employees, and the same insurer provided both the health plan coverage and wellness program services.

Further, wellness program sponsors might want to consider plan design changes if they currently condition health plan participation upon the completion of a health-related questionnaire/biometric screening or require employees who fail to complete the questionnaire/biometric screening to pay all or a significant amount toward the cost of health plan coverage.

Behrens concludes: “The suits against Honeywell and both Wisconsin employers were filed by the EEOC’s Chicago regional office. The Chicago regional office oversees most of northern Illinois, Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin. Of course, other EEOC regional offices might begin pursuing similar claims, but employers in these six states may have extra incentive to review and update their wellness program design.”

“We may see the national EEOC office try to reign in the Chicago regional office, once they’ve provided guidance on what constitutes a penalty and fleshed out the voluntary program details,” he adds.

Please feel free to reach out if I can support you in any way at RRuotolo@Lockton.com.

 

 

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