United States: EEOC Must Provide Clarity On Wellness Programs, Senate Hearing Panelists Testify

Recent actions by the Equal Employment Opportunity Commission (EEOC) were under scrutiny during Thursday's Senate hearing on wellness programs. The EEOC bore the brunt of the criticism unleashed during the hearing for acting at odds with provisions the Affordable Care Act (ACA) to promote the use of such programs.  Both Democratic and Republican members of the Committee on Health, Education, Labor and Pensions advocated employer-provided wellness programs, and asked witnesses to explain the difficulties they have faced in implementing such programs. 

Chairman Lamar Alexander (R-TN) began the hearing by noting that 159 million Americans receive their health insurance through their employers, and that according to one survey, 18% of private-sector employers already use outcome-based wellness incentives to promote employee health. 

Dr. Gary W. Loveman, President and CEO of Caesars Entertainment Corporation and testifying on behalf of the Business Roundtable, said that by implementing a wellness program, his organization has been able to able to maintain the same health insurance contribution rate for employees for six years.  He and other panelists, however, said they need clarification from the EEOC about how the requirements of the ACA, Americans with Disabilities Act (ADA), and the Genetic Information Non-Discrimination Act (GINA) interact.  Loveman said that recent actions by the EEOC have given pause "to what we consider a well-intentioned program." 

Attorney Eric Dreiband, former General Counsel of the EEOC and former deputy administrator of the U.S. Department of Labor's Wage and Hour Division, provided a chronology of the legislative and regulatory treatment of wellness programs. He explained that the ADA, enacted in 1990, authorizes employers to conduct voluntary medical examinations that are part of an employee health program.  The ADA contains a safe harbor provision that allows a covered organization to establish, sponsor, observe, or administer the terms of a "bona fide benefit plan" that is based on "underwriting risks, classifying risks, or administering risks based on or consistent with state law." 

In July 2000, the EEOC took the position that a wellness program is voluntary if it neither requires nor penalizes employees who participate. Six years later, regulations under the Health Insurance Portability and Protection Act (HIPAA) provided that a wellness program conditioning an incentive on the participant meeting a standard related to a health factor (e.g., bringing one's body mass index, blood pressure, or other health-related measure within certain limits) is acceptable and would not violate the HIPAA nondiscrimination requirements so long as it met certain criteria. Specifically, the value of the wellness plan incentive could not exceed 20% of the cost of coverage; the wellness program itself must be reasonably designed to promote health or prevent disease; the incentives must be offered to eligible participants on an annual basis; an alternative standard must be offered if a participant demonstrates it would be dangerous or medically impossible to meet the standard; and the terms of the wellness program and availability of a reasonable alternative must be offered each year. 

Dreiband testified that the EEOC initially endorsed this HIPAA standard in 2009, then rescinded that endorsement the same year. To date, the EEOC has yet to offer concrete guidance on what it considers the appropriate the standard for "voluntariness." 

A year after the EEOC rescinded its endorsement of the HIPAA standard, Congress enacted the Affordable Care Act. The ACA contains provisions permitting an employer to offer financial incentives for outcome-based wellness programs, so long as those inducements do not exceed 30% of the cost of health coverage. The ACA and its regulations, issued in 2013, also authorize an increase in this maximum amount of up to 50% in certain circumstances.   

Meanwhile, in 2012, the U.S. Court of Appeals for the 11th Circuit held that an employer's wellness program did not violate the ADA because the program fell under the ADA's "bona fide plan" safe harbor exception. 

Despite the HIPAA and ACA wellness regulations endorsing such programs, the ADA's safe harbor provision, and the 11th Circuit's finding that the safe harbor does indeed apply to outcome-based wellness programs, the EEOC filed several lawsuits in 2014 on the grounds the employer's program violated equal employment laws.  For example, in EEOC v. Honeywell International Inc., the EEOC tried to enjoin the employer from implementing its program, alleging it violated both the ADA and GINA by penalizing employees for not participating in biometric screenings.  Although a Minnesota district court rejected the EEOC's position, the agency filed similar lawsuits in August and October of 2014, indicating that this issue continues to be a focal point for the EEOC. 

The agency held a public meeting on wellness programs in 2013, noting it planned to issue regulations clarifying its position, but it has yet to do so.  According to several panelists, the EEOC's "flip-flopping perpetuates confusion and uncertainty" within the business community. 

If the EEOC fails to act, more than one witness urged Congress to introduce legislation establishing the legality of wellness programs. Panelist Dreiband said the EEOC should either more clearly define its "voluntariness" standard under the ADA with respect to wellness programs, or endorse the 11th Circuit's decision that the ADA's safe harbor provision applies to employee wellness programs.  Alternatively, he said it should be up to Congress to define the voluntariness standard. 

When asked whether the ACA's regulations need to be amended, Dreiband claimed the regulations "clearly authorize employee wellness programs," and that the problem and confusion lies with the EEOC.  He said it is "patently unfair" to endorse a standard, then rescind it, and not offer clarity. 

Sen. Barbara Mikulski (D-MD) urged the EEOC to issue regulations on this point. Ranking member Patty Murray (D-WA) agreed, noting that businesses need to take a look at these regulations once issued and provide comments so the final rule can be issued. 

A list of the hearing panelists, links to their testimony, and an archived webcast of the hearing can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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