Thursday, April 23, 2015

EEOC Releases Wellness Program Guidelines

Are they helpful?

Finally, in response to the uproar over several lawsuits the EEOC filed against employer wellness programs, the agency has released its "guidance" on how such plans can operate without violating ADA, GINA and HIPAA laws. But, it looks like the guidance may pose even more questions.

Much of the EEOC’s lawsuits hinged on the fact that it felt that the penalties imposed under some company’s wellness programs were so harsh (their opinion) that they rendered the programs "involuntary", thus violating the above mentioned laws. Of course, this didn’t take into account that those plans were well within the allowances of the Affordable Care Act for wellness programs. The ACA states that employers can offer wellness incentives/penalties as long as they don’t exceed 30% of the value of an individual’s insurance premiums (50% if the incentives are tied to smoking cessation). Hence the skirmish.

A Few Highlights:

The rule allows employers to impose penalties on employees who do not participate or do not achieve certain health outcomes. The maximum allowable penalty an employer can impose is 30% of the total cost of employee-only coverage. The calculation of the penalty must be based on the total cost of the coverage – the total of the amount the employer and the employee pay. So, the 30% allowed is not 30% of what the employee pays for his/her coverage, but 30% of the total premium. If the total premium is $5,000, the maximum penalty can only be $1,500. 

In order for a wellness program to be considered voluntary, it must not

  • Require employees to participate,
  • Deny access to health coverage or limit coverage for non-participation
  • Take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten employees who do not participate or who fail to achieve certain health outcomes

Asking employees to complete a health risk assessment or have a biometric screening for the purpose of alerting them to health risks (for example, having high cholesterol or high blood pressure) is acceptable under a wellness program.

While businesses will probably welcome these rules (if for no other reason than if the EEOC sues them, at least they’ll know why they’re being sued), there are some problematic issues here. The proposed rule would limit incentives to 30% of the cost of employee-only coverage; even when the employee chooses employee-plus-one or family coverage, instead of allowing up to 30% for all levels of coverage. This seems to be counter to what the ACA had intended. According to the HR Policy Association, there are also some undefined terms in the rule that are not in the 2013 final ACA rules on wellness programs, including what it means for such programs to have "unreasonably intrusive procedures." Is a test for high cholesterol or blood glucose unreasonably intrusive? HR Policy has scheduled a conference call with Commissioner Lipnic on May 13th (see link for details and to register for the conference call), to hopefully get clarification on these and other issues.

The public has until June 19, 2015 to comment on the proposed rules. The EEOC will then vote on a final rule. After approval, it will be sent to the Office of Management and Budget before it’s published in the Federal Register.

Nothing I’ve seen has indicated what effect, if any, the proposed rule will have on the lawsuits the EEOC has filed.

So, we still wait for a final resolution on this issue.

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