The ACA and the EEOC's Lawsuits
Last week’s post highlighted several news items about the Affordable Care Act (ACA), including news about the EEOC attacking several corporate wellness programs, despite the ACA specifically authorizing and encouraging such plans.
What’s the problem? And what’s the potential fallout?
Wellness programs are designed to encourage healthy living and activities by employees, and hopefully, this will result in reduced costs to employer’s health plan costs, as well as healthier, happier employees who are more productive. Hmmmm. Pretty lofty goal. Most major employers have some sort of wellness program in place, and many small to mid-size employers are jumping on the bandwagon.
Plans have traditionally offered various rewards for participation in activities and health awareness programs. These rewards often start out as prizes and gifts for simply participating (regardless of outcome) in the activities and some biometric screenings, and then progress to including discounts on insurance premiums or deductibles, or penalties for not participating. Some programs will penalize participants (or remove rewards) for not reaching certain goals. While participation is voluntary, an employee can miss out on some substantial cost-savings for not "getting with the program". In fact, the state of Maryland’s program, in which participation is required as part of insurance coverage, allows for penalties of as much as $450 per person by 2017 for those who fail to undergo certain screenings and fail to follow treatment plans for chronic conditions. The state said the program could save $4 billion over the next 10 years. That’s a pretty big incentive for a major employer to maintain such a program. (I wonder if the EEOC will go after the state of Maryland’s program?)
It is these very rewards and penalties that the ACA allows and encourages, and the same ones the EEOC is now calling "illegal". How can that be?
The EEOC’s position is that what it sees as substantial penalties make the programs essentially "involuntary" and therefore in violation of both the ADA and HIPAA regulations. It reasons that if the penalty is too large or onerous, it’s not a truly voluntary decision not to participate (but who decides what it too large or onerous?) And this is where the cat fight begins…..
And that fight has angered a lot of people, enough that the Business Roundtable, a group of CEOs from more than 200 large U.S. corporations, is planning to meet with President Obama on the issue, according to a report by Reuters. "The fact that the EEOC sued is shocking to our members," said Maria Ghazal, vice-president and counsel at the Business Roundtable. She continues "They don't understand why a plan in compliance with the ACA (Affordable Care Act) is the target of a lawsuit."
In November, Roundtable president John Engler sent a letter to the Labor, Treasury and Health and Human Services cabinet secretaries who oversee the ACA asking them to "thwart all future inappropriate actions against employers who are complying with" the law's wellness rules, and warning of "a chilling effect across the country."
Since the EEOC’s recent lawsuits, there have been indications that some of these large employers might pull back their support of the ACA and instead stand with its opponents.
That could be a major setback for the Obama Administration, since large employers were some of the few entities to actually support the law. But they say they did so primarily because of its wellness provisions, which as noted above, stood to save them substantial amounts of money on health care plan costs, which could take the sting out of ever-increasing premiums.
Republicans want to change the law at the very least (remove the employer mandate; change the "full-time" definition to 40 hours/week, etc.). Also, more Democrats are even starting to criticize the Administration for its handling of the law. So, maybe all big business has to do is bring a few Democrats over to the other side of the aisle for the ACA to see some significant changes.
With the Supreme Court hearing a case on the legality of subsidies offered through the federal exchange, the EEOC lawsuits against wellness programs as a backdrop, the ACA could face some real backlash this coming year. When employers get a full taste of the reporting requirements that go along with the employer mandate, they could renew their opposition to the law. While the ACA is probably here to stay, I predict there will be substantive changes coming.