Clarification Needed for Workplace Wellness Programs

Wellness programs are good for employers and employees, but a current conflict between regulations needs to be cleared up, witnesses giving testimony to a U.S. Senate committee contended. 

Noting that the Equal Employment Opportunity Commission (EEOC) has already filed several lawsuits, Eric S. Dreiband, a partner at Jones Day in Washington, D.C., told members of the Health, Education, Labor and Pensions (HELP) Committee: “Employers that design and implement wellness plans that comply with the ACA may be unpleasantly surprised to find that the EEOC asserts that such plans may violate the ADA.”

With respect to wellness programs, the Patient Protection and Affordable Care Act (ACA) allows for a reward for participating in employer wellness programs. The reward may be in the form of a discount or rebate of a premium or contribution, a waiver of all or part of a cost-sharing mechanism, the absence of a surcharge, or the value of a benefit that would otherwise not be provided under the plan.

According to Dreiband, prior to the passage of the ACA in 2010, the EEOC said a wellness program is “voluntary”—and does not violate the Americans with Disabilities Act (ADA)—if the employer “neither requires participation nor penalizes employees who do not participate.” In January 2009, the EEOC’s Office of Legal Counsel announced that a wellness plan would be “voluntary” (and therefore lawful) if “the inducement to participate” does not “exceed twenty percent of the cost of employee only or employee and dependent coverage under the plan, consistent with regulations promulgated pursuant to the Health Insurance Portability and Accountability Act.”

Dreiband pointed out to lawmakers that two months later the EEOC rescinded its statement and announced that it was “continuing to examine what level, if any, of financial inducement to participate in a wellness program would be permissible under the ADA.” Even though the agency has yet to decide on what constitutes “voluntary” for wellness plans, it has filed several lawsuits against employers claiming their wellness programs were not voluntary because employees who did not participate in them paid a surcharge for interest coverage or did not share in the wellness program “incentive.” The EEOC says this penalizes workers for not participating.

“The public is also left with a government that has spent more than half a decade trying to figure out the meaning of the word ‘voluntary,’” Dreiband said. He called on Congress to step in if the EEOC did not issue clarification soon.

Jennifer Mathis, from the Bazelon Center for Mental Health Law in Washington, D.C., told the HELP Committee the ACA does not conflict with the ADA’s requirements concerning medical inquiries in wellness programs and both laws should be given effect. She noted that the ACA does not address whether penalties may be imposed for failure to answer wellness program medical inquiries, and to the extent that it addresses penalties generally, it speaks to whether such penalties constitute insurance discrimination, not workplace discrimination, which is the focus of the ADA.

“The ACA is not an employment discrimination statute. It does not purport to address whether wellness program penalties or other aspects of wellness programs constitute disability-based employment discrimination. Instead, the ACA prohibits disability-based discrimination in insurance coverage,” Mathis said. She noted that under the ACA, wellness programs offering rewards that are not based on satisfying a standard related to a health status factor—which presumably would include rewards for answering medical inquiries—comply with the non-discrimination requirement as long as participation in the program is made available to all similarly situated individuals.

Mathis added that if the ACA required penalties or rewards that were prohibited by the ADA, the two statutes would conflict. “It would be particularly inappropriate to look to the terms of the ACA to determine what constitutes a violation of the ADA. Both statutes apply to wellness programs and both impose independent obligations that do not conflict,” she stated.

Catherine Baase, chief medical officer for The Dow Chemical Company, also testifying on behalf of the American Benefits Council. She told the committee, “To maintain global competitiveness and help to achieve health in our communities, American companies must encourage healthy behavior with every tool in our toolkit.” She suggested that Congress and/or the EEOC work within the existing legislative and regulatory framework to provide certainty and flexibility to employers.

A replay of the hearing and witness testimony can be viewed here.