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Wellness Programs and EEOC Enforcement

A federal judge recently ruled in favor of an employee wellness program charged by the EEOC with violations of the Americans with Disabilities Act (the “ADA“), but for a reason of little future use to employers while simultaneously rejecting what had been one of their best and most successful arguments. In 2014, the EEOC brought civil actions against three separate employers (Orion Energy Systems, Inc.; Flambeau, Inc.; and Honeywell International, Inc.) for alleged violations of the ADA by their employee wellness programs. In Honeywell, the EEOC also alleged violations under the Genetic Information Nondiscrimination Act (“GINA“). All three employers decided to contest the EEOC’s actions. The heavy negative attention given to the EEOC’s enforcement actions in the absence of any regulatory or other formal guidance eventually pressured the EEOC to issue regulations addressing the impact of the ADA and GINA on employer-provided wellness programs, which we addressed in May. On… Continue Reading

EEOC Clarifies Calculation of Wellness Incentive Limits Under ADA Final Regulations

In May, we provided information regarding the EEOC’s release of final ADA and GINA regulations and their impact on wellness programs, which is available here. The final regulations indicate that when an employer offers multiple medical plan options but enrollment is not required to participate in the wellness program, the applicable wellness incentive limits for ADA and GINA purposes are based on the total cost of self-only coverage in the lowest cost plan option available. The final regulations did not explicitly address how to calculate the applicable wellness limits when multiple medical plan options are available and enrollment is required to participate in the wellness program, but more than one option can be used to satisfy the enrollment requirement. The conservative approach is to assume a similar outcome and base the incentive limits on the total cost of self-only coverage in the lowest cost plan option available that permits participation in… Continue Reading

EEOC Provides Sample ADA Wellness Program Notice

The EEOC recently released a sample notice, along with a series of questions and answers, to assist employers that offer wellness programs in satisfying the notice requirement set forth in the final regulations regarding the compliance of employer-sponsored wellness programs with the Americans with Disabilities Act (“ADA”). Use of the sample notice is not mandatory, but employers that offer a wellness program are required to provide a notice to employees which informs them, in an understandable manner, of (i) the information that will be collected by the employer in connection with the wellness program, (ii) how such information will be used, (iii) who will receive it, and (iv) how it will be kept confidential. The effective date for compliance with the new ADA notice requirements is the first day of the plan year beginning on or after January 1, 2017. The sample notice is available here. The questions and answers are… Continue Reading

EEOC Issues Final Regulations on Wellness Programs

On May 16, 2016, the EEOC issued two sets of final regulations regarding the compliance of employer-sponsored wellness programs with the Americans with Disabilities Act (the “ADA”) and the Genetic Information Nondiscrimination Act of 2008 (“GINA”). The final regulations were generally consistent with the ADA and GINA wellness program proposed rules issued by the EEOC during 2015, which set forth limits on the inducements employers may offer to employees for participation in wellness programs that solicit health information from participants. Consistent with the proposed regulations, the final regulations also include confidentiality and notice requirements for wellness programs subject to the ADA and GINA. The effective date for compliance with the wellness program inducement limits and new ADA notice requirements is the first day of the plan year beginning on or after January 1, 2017. The final regulations under the ADA are available here. The final regulations under GINA are available here.

ACA Nondiscrimination in Health Programs and Activities Final Regulations Released

Section 1557 of the Affordable Care Act (the “ACA”) prohibits discrimination in certain health care programs and activities on the basis of race, color, national origin, sex, age, or disability. HHS recently issued final rules under Section 1557, which specify gender identity discrimination and sexual stereotyping as forms of sex discrimination. However, these rules only apply to “covered entities” as defined for this purpose. The term “covered entity” includes health care systems or providers that accept Medicare Part A or Medicaid and insurance carriers and/or third party administrators (“TPA”) that receive federal funding through participation in the public insurance marketplace, which will also have to comply with respect to benefits offered to their own employees. While HHS interprets the rule to impact an insurance carrier’s and/or a TPA’s entire book of business, a TPA is not responsible for discrimination due to a plan sponsor’s self-insured plan design decisions beyond the… Continue Reading

Court Rules Against EEOC in Wellness Case Brought under the ADA

The EEOC brought civil actions against three separate employers (Orion Energy Systems, Inc.; Flambeau, Inc.; and Honeywell International, Inc.) in 2014 for alleged violations of the Americans with Disabilities Act (“ADA”) by their wellness programs. On December 30, 2015, a federal district court in Wisconsin ruled in EEOC v. Flambeau, Inc. that Flambeau’s requirement for employees to complete a health risk assessment and biometric screening in order to be eligible to enroll in the employer’s group medical plan fit within the ADA’s bona fide benefit plan safe harbor because it was a term of the plan for purposes of underwriting, classifying, and administering risk. The court determined the wellness program could be construed as part of the plan since it was a condition of enrollment, despite the fact that the wellness program was not described in the plan’s summary plan description. The application of the safe harbor was similar to… Continue Reading

EEOC Issues Proposed Regulations on Wellness Programs and GINA

On October 30, 2015, the U.S. Equal Employment Opportunity Commission (the “EEOC”) issued proposed regulations amending previously issued proposed regulations under Title II of the Genetic Information Nondiscrimination Act of 2008 (“GINA”) regarding employer wellness programs. Among other items, the proposed regulations explain that wellness programs that request or require employees (or their covered spouses) to provide genetic information as part of health or genetic services (e.g., through a health risk assessment (“HRA”) involving a medical questionnaire or medical examination) must be reasonably likely to promote health or prevent disease. Furthermore, the proposed regulations clarify that GINA does not prohibit employers from offering limited inducements to employees whose spouses (who are covered under the employer’s group health plan) complete an HRA under which genetic information is provided, subject to the requirements that the provision of such information by the spouse is voluntary and that prior written authorization is obtained from… Continue Reading

EEOC Issues Proposed Regulations on Wellness Programs and the ADA

On April 16, 2015, the U.S. Equal Employment Opportunity Commission (the “EEOC”) issued proposed regulations applying Title I of the Americans with Disabilities Act (the “ADA”) to employer wellness programs offered through a group health plan. The proposed regulations clarify that, under the ADA, wellness programs that collect employees’ medical information or require them to undergo medical examinations must be reasonably likely to promote health or prevent disease. Moreover, employees may not be forced to participate in the program or be denied coverage if they refuse to participate. In addition, employers will be required to provide employees with a notice describing what medical information will be collected as well as how it will be used and protected. The proposed regulations can be found here. A fact sheet for small businesses can be found here. A question and answer document can be found here.

EEOC Files Second Wellness Program Lawsuit Against an Employer

The U.S. Equal Employment Opportunity Commission (“EEOC”) sued an employer claiming it violated the Americans with Disabilities Act (“ADA”) when the employer cancelled coverage and transferred 100% of the premium to the employee for failing to complete biometric screening and a health risk assessment. Employees who completed the screening were charged only 25% of the premium. This lawsuit follows the EEOC’s ADA lawsuit earlier this year against a different employer that terminated an employee for failing to participate in the employer’s wellness program. The EEOC has taken the position that wellness programs must be voluntary and cannot compel participation by cancelling coverage or imposing onerous penalties. The EEOC’s Press Release can be found here.

EEOC Sues Employer Over “Involuntary” Wellness Program

The U.S. Equal Employment Opportunity Commission (the “EEOC”) recently sued Orion Energy Systems, Inc. (“Orion”), a Wisconsin employer, for allegedly violating the Americans with Disabilities Act of 1990, as amended (the “ADA”), in connection with Orion’s employee wellness program. Under this program, participants received a 100 percent subsidy on their health plan premiums while non-participants were required to pay the full cost. The EEOC charged that the Orion wellness program was not voluntary, and thus violated the ADA, because (1) it imposed a financial penalty for non-participation and (2) the sole non-participant was terminated from employment shortly after declining to participate in the program. EEOC guidance states that a wellness program is “voluntary” provided that participation is not required and the employer does not “penalize” employees who do not participate. However, the EEOC has not issued formal guidance regarding whether or to what extent an employer may offer financial incentives… Continue Reading

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