[firm] blog logo

Agencies Issue FAQs Clarifying Wellness Program and Other Health Plan Requirements Related to COVID-19 Vaccines

The DOL, Treasury Department, and HHS have jointly issued a set of FAQs that provide helpful clarifications regarding certain requirements under the CARES Act, the HIPAA nondiscrimination rules (the “Nondiscrimination Rules”), and the Affordable Care Act (the “ACA”) related to COVID-19 vaccines (“Vaccines”).  Wellness Programs under the Nondiscrimination Rules Among other items, the FAQs provide guidance under the Nondiscrimination Rules regarding an employer’s imposition of a premium discount under a wellness program for an individual’s receipt of a Vaccine. If the wellness program is itself, or is part of, a group health plan that is not otherwise exempt from the Nondiscrimination Rules, the FAQs confirm that a premium discount would constitute a “health-contingent, activity-only” wellness program that must, among other requirements, offer a “reasonable alternative standard” to qualify for the discount for individuals for whom it is unreasonably difficult due to a medical condition, or medically inadvisable, to receive the… Continue Reading

Keeping Your Wellness Program Healthy

For years, employers have used wellness programs with the hope they would help improve employees’ overall health while simultaneously reducing group health plan costs. The pandemic has presented challenges for wellness programs though, as employees have found it more difficult to meet the requirements for discounts because of lockdowns and fears of COVID-19. To address these challenges, some employers are considering modifications to their programs to allow employees to qualify for discounts if they obtain a flu or COVID-19 vaccine. Before adopting any changes, employers should use caution, as wellness programs are subject to numerous legal requirements, including requirements under the ACA, ERISA, HIPAA, and the Americans with Disabilities Act. By carefully evaluating changes and considering the myriad of legal requirements applicable to wellness programs prior to implementing any changes, plan sponsors can avoid jeopardizing the legal health of their wellness programs.  Our prior blog posts regarding wellness program compliance… Continue Reading

EEOC Wellness Regulations Vacated Beginning in 2019

We previously reported that the U.S. District Court for the District of Columbia required the EEOC to reconsider its wellness regulations under the Americans with Disabilities Act (the ?Ç£ADA?Ç¥) and the Genetic Information Non-Discrimination Act (?Ç£GINA?Ç¥). The court recently granted a motion filed by the American Association of Retired Persons (?Ç£AARP?Ç¥) to amend that judgment and vacate the permitted 30 percent incentive level under the applicable ADA and GINA regulations, effective as of January 1, 2019. Generally, the ADA and GINA regulations permitted wellness programs to provide incentives of up to 30 percent of the cost of coverage under an employer group health plan without such programs being considered ?Ç£involuntary.?Ç¥ Employers should be aware that new guidance regarding permitted incentives under the ADA and GINA may be issued later this year to be effective as of January 1, 2019. View AARP v. U.S. Equal Employment Opportunity Commission.

Court Requires EEOC to Reconsider Wellness Program Regulations

Generally, the Americans with Disabilities Act (the “ADA“) and the Genetic Information Non-Discrimination Act (“GINA“) permit employers to offer certain wellness programs if they are “voluntary.” The EEOC issued regulations in 2016, which we discussed here, permitting wellness programs to have incentives of up to 30 percent of the cost of health plan coverage in order to align with permitted incentives under the Health Insurance Portability and Accountability Act (“HIPAA“). The AARP sued the EEOC claiming that this 30 percent limit was still coercive and was contrary to the “voluntary” requirement under the ADA and GINA. The U.S. District Court for the District of Columbia granted AARP’s motion for summary judgment, concluding that the EEOC failed to adequately explain its decision to interpret “voluntary” as permitting a 30 percent incentive level. Although governmental agencies are generally given deference, the “EEOC does not appear to have considered any factor that actually… Continue Reading

IRS Chief Counsel Clarifies Tax Treatment of Certain Benefits Paid by Self-Insured Health Plans

On April 24, 2017, the IRS Chief Counsel issued a memorandum addressing the tax consequences of employer provided, self-insured health coverage that primarily provides cash payments (or other taxable benefits) to participating employees upon the completion of various wellness-related activities. The IRS noted it was aware these programs were being marketed to employers as a way to provide cash and cash-equivalent compensation to employees on a tax-free basis. In addition to providing a discussion on whether and when an arrangement would be considered accident or health insurance, the memorandum clarifies that even if employees pay an after-tax contribution to participate in the plan, the value of cash payments (or other taxable benefits) received under the plan would be considered taxable wages to employees if the average value of the cash (or other taxable benefits) received are expected to exceed any after-tax contributions paid by participating employees. In other words, the… Continue Reading

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 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 (?Ç£ADA?Ç¥). 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?áhere. The questions and answers are… Continue Reading

EEOC Issues Proposed Regulations on Wellness Programs and GINA

On October 30, 2015, the U.S. Equal Employment Opportunity Commission (the ?Ç£EEOC?Ç¥) issued proposed regulations amending previously issued proposed regulations under Title II of the Genetic Information Nondiscrimination Act of 2008 (?Ç£GINA?Ç¥) 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 (?Ç£HRA?Ç¥) 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?ÇÖs 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 Files Second Wellness Program Lawsuit Against an Employer

The U.S. Equal Employment Opportunity Commission (?Ç£EEOC?Ç¥) sued an employer claiming it violated the Americans with Disabilities Act (?Ç£ADA?Ç¥) 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?ÇÖs ADA lawsuit earlier this year against a different employer that terminated an employee for failing to participate in the employer?ÇÖs 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?ÇÖs Press Release can be found here.

EEOC Sues Employer Over ?Ç£Involuntary?Ç¥ Wellness Program

The U.S. Equal Employment Opportunity Commission (the ?Ç£EEOC?Ç¥) recently sued Orion Energy Systems, Inc. (?Ç£Orion?Ç¥), a Wisconsin employer, for allegedly violating the Americans with Disabilities Act of 1990, as amended (the ?Ç£ADA?Ç¥), in connection with Orion?ÇÖs 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 ?Ç£voluntary?Ç¥ provided that participation is not required and the employer does not ?Ç£penalize?Ç¥ 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

November 2022