Wellness Programs – EEOC Casts Uncertainty on Popular Corporate Incentive Programs

December 9, 2014

Employee Benefits & Executive Compensation

Action Item: Employers with wellness programs that involve higher premiums or other increased cost-sharing for employees who do not participate should review their wellness strategies to assess their compliance with the Americans with Disabilities Act.

The U.S. Equal Employment Opportunity Commission (“EEOC”) has sued Honeywell, Inc., claiming that its employer-sponsored wellness program violates the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act, the EEOC’s third such lawsuit in three months. In each of the cases, the challenged programs aim to improve employee health and control employer health care costs by imposing greater cost-sharing on employees who do not participate in specific health risk assessments and biometric testing.

Each of the challenged programs is clearly within the guidelines for “participatory” wellness programs established jointly by the U.S. Department of Labor, the U.S. Department of Health and Human Services, and the Internal Revenue Service under both the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act (“ACA”). However, the EEOC claims that the programs violate the ADA’s proscription against disability-related inquiries and medical examinations that are not job-related and consistent with business necessity. Further, the EEOC claims that because employees who fail to participate in the program are penalized with higher premiums for health care coverage, the programs do not qualify for the ADA’s exception for “voluntary” wellness programs.

The EEOC has not issued any guidance as to what constitutes a “voluntary” wellness program for purposes of the ADA, but has suggested informally that even a program that rewards participation rather than penalizing non-participation may not be voluntary. We also note that the ADA’s limits on wellness programs, unlike those under HIPAA and the ACA, apply to all wellness programs, not just those offered as part of a group health plan.

 

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