The Chicago District Office of the Equal Employment Opportunity Commission (EEOC) filed two lawsuits against employers over wellness programs where the arrangements, among other things, shifted the entire premium cost to the employee for non-participation in certain medical exams. Also in a third lawsuit, the EEOC is challenging an aggressive incentive-based program sponsored by Honeywell. In this case, the EEOC alleges violations under the Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA).
As framed by the EEOC, the relevant facts and issues are as follows. It is expected that the employers dispute some, or all, of the allegations.
Honeywell announced for the 2015 plan year, covered employees, and their covered spouses if applicable, would need to undergo biometric testing (a blood draw). Failure to do so would result in potential lost contributions and surcharges totaling as much as $4,000 for the year. Specifically, non-participants could lose up to $1,500 in HSA contributions and face a $500 surcharge on medical premiums. Declining the blood draw also resulted in a $1,000 tobacco related surcharge per employee and/or covered spouse regardless of whether the employee/spouse declined the blood draw for non-tobacco reasons. Prior to implementation, two employees filed complaints with the EEOC’s Chicago District Office alleging ADA and GINA violations. Briefly, the EEOC alleges: A blood draw is a medical exam and is not job related and consistent with business necessity. Therefore, to be permitted under the ADA, the program must be voluntary. Employees failing to participate in the blood draw are penalized though lost HSA contributions and surcharges. The EEOC believes this program is involuntary under the ADA. In addition, to avoid lost contributions and surcharges, a covered spouse must also participate in the blood draw. The EEOC alleges this violates GINA because it is an impermissible collection of an employee’s genetic information (defined to include the manifestation of a disease or disorder in a spouse as reported in the blood work).
In a press release, Honeywell strongly disputes the EEOC’s allegations and specifically states their program complies with the requirements under HIPAA and the ACA.
The EEOC maintains that the employer instituted a wellness program that required medical examinations and the completion of disability-related questions through a health risk assessment. When an employee declined to participate in the program she was required to pay 100% of her health insurance premium. Had she participated in the program, the employer would have paid the full premium associated with her health coverage. Another component of the program required use of a Range of Motion (RM) machine to avoid a $50/month surcharge. When the employee expressed her objection to the program she was terminated from employment. The EEOC alleges the medical examination and subsequent action to terminate the employee violated the ADA.
The EEOC alleges employees were required to complete biometric testing and a health risk assessment consisting of blood work, measurements, and a self-disclosure of medical history. In this case, the employee was unable to complete the biometric testing and risk assessment on the day indicated by the employer because the employee was on a medical leave. Once he returned from medical leave, the employee requested additional time to complete the requirements of the wellness program, but the request was rejected by the employer. Subsequently, the employer cancelled his health insurance coverage, but allowed for reinstatement at the full premium cost. The employee could not afford that cost and his insurance remained cancelled. The employer also informed employees that failure to attend the testing at the appointed time could result in "disciplinary action." Employees who participated in the program did not have their coverage cancelled and paid 25% of the premium cost.
While the plan designs described above may not be the "norm," the alleged facts provide a helpful reminder that employers need to carefully evaluate and identify potential risks in their wellness programs with employment counsel. This is particularly true in light of the EEOC action against Honeywell.
Based on the ongoing litigation, the EEOC’s statements and other informal guidance, some practices that should be avoided with respect to wellness programs include:
- Terminating employees for non-participation in a wellness program.
- Requiring the employee to pay a significant amount of the cost for health insurance coverage if the employee does not participate in the wellness program, when participating employees are required to pay little, or nothing, for coverage.
- Denying access to a benefit (including an HRA) for failing to participate in a wellness program.
In addition, in light of Honeywell, employers should carefully review the use of financial incentives to encourage participation in biometric tests, medical exams or health risk assessments. Absent clarification, any incentive (even if it satisfies HIPAA requirements) has the potential to trigger a problem under the ADA and GINA.
Brian McLaughlin is vice president of USI's Affinity Benefits Solutions Group.