Bernadette Starzee, The Daily Record Newswire
Amid rising healthcare costs, employer wellness programs began to take off in the mid-2000s. The Health Insurance Portability and Accountability Act of 1996 had allowed companies to offer insurance premium discounts or rebates to incentivize employees to participate in certain programs to prevent disease. The Affordable Care Act of 2010 increased the incentives that employers could offer, the thinking being that encouraging employees to lead healthier lifestyles will create more productive employees and lower employer healthcare costs in the long run.
Though it sounds like a win-win, employers could end up losing.
“Wellness programs are in the unenviable position of being regulated by different laws,” said Aaron Pierce, an attorney concentrating his practice in employee benefits law, who is a member of Bond Schoeneck & King, which has offices in Garden City.
One of those laws is the Americans with Disabilities Act, which prohibits employers from asking employees for medical information that is not related to their job. While an exception is made in the case of voluntary wellness programs, the Equal Employment Opportunity Commission – after placing the issue on its agenda in May – has not yet issued guidance on what constitutes a voluntary program, leaving business leaders and their attorneys scratching their heads.
Despite the lack of guidance, the EEOC recently filed two lawsuits against employers for violating the ADA in penalizing employees for nonparticipation in wellness programs.
In August, the EEOC filed a suit against Manitowoc, Wis.-based Orion Energy Systems for allegedly violating federal law by requiring an employee to submit to medical exams and inquiries that were not job-related as part of its wellness program, and then by firing the employee when she objected to the program. Then in October, the commission brought a
suit against Bariboo, Wis. manufacturing company Flambeau Inc., alleging it required an employee to pay the entire health insurance premium after he refused to complete biometric testing and a health risk assessment, while participating employees had to pay just 25 percent of the premium cost.
“Employers certainly may have voluntary wellness programs … but they actually have to be voluntary,” John Hendrickson, regional attorney for the EEOC
Chicago district, said in a statement announcing the lawsuit. “They can’t compel participation in medical tests or questions that are not job-related and consistent with business necessity by cancelling coverage or imposing enormous penalties such as shifting 100 percent of the premium cost onto the back of the employee who chooses not to participate.”
The two lawsuits represent extreme cases, said Avi Sinensky, an associate attorney in the corporate law group at Meltzer, Lippe, Goldstein & Breitstone in Mineola.
“But companies should keep in mind that in order for a wellness program to be considered voluntary, there are limits to the incentives that can be offered,” Sinensky said.
The Affordable Care Act increased the maximum allowable reward for participation in a wellness program in connection with a group health plan from 20 to 30 percent of the cost of coverage. For those wellness programs designed to prevent or reduce tobacco usage, the maximum reward rose to 50 percent.
But beyond those limits, further guidance on what the EEOC deems voluntary is necessary, attorneys say.
“Employers are in a difficult position,” Pierce said. “Companies can hope the position of the EEOC will be consistent with the guidance under HIPAA and the Affordable Care Act, but there is no guarantee.”
Absent EEOC guidance, companies should make sure they closely adhere to HIPAA and Affordable Care Act guidelines when setting up wellness programs, Pierce said, noting they should provide an alternative means by which employees who are precluded from participating in the program for medical reasons could qualify for a reward.
“For instance, a wellness program might require participants to walk five miles a week and keep a log,” he said. “But if that’s not advisable for a certain employee’s health, the employee should be offered an alternative, such as attending a healthy eating class.”
There’s some thinking that it’s safer for employers to offer positive incentives for wellness program participation rather than penalties for not taking part, Sinensky said.
“This way, you’re not taking something away, but giving a bonus for participation,” he said.
But employers should keep in mind that if incentives are too great, employees could feel they are being penalized if they are not receiving them.
“It becomes more of a stick than a carrot,” said Howard Wexler, an associate in the labor and employment law group at Manhattan-based Seyfarth Shaw, who notes gift cards of modest dollar amounts and gym membership discounts are often considered safe incentives for program participation.
“Everyone would agree getting employees to be healthy is a good thing,” Wexler said. “The issue is to do so in compliance with rules and regulations when the guidance hasn’t caught up to what’s going on out there.”
