Employers and wellness advocates have long been confounded by the complex gauntlet of federal laws and regulations that must be considered when structuring wellness programs. HIPAA’s non-discrimination requirements, the Genetic Information Nondiscrimination Act ("GINA") and, perhaps most daunting, the Americans with Disabilities Act ("ADA") are among the laws that come into play when an employer is considering its wellness plan options.
Perhaps the most closely watched legal issue concerning wellness programs is this: May an employer offer a health coverage premium discount to those employees who complete a "health risk assessment" ("HRA")? Or, put another way, may employees who choose not to complete an HRA be subject to a premium surcharge? HIPAA regulations clearly allow employers to offer "bona fide wellness programs" with limited premium discounts; however, tying a discount to completion of an HRA presents a potential rub under the ADA.
Under the ADA, an employer may only require current employees to submit to medical inquiries or examinations that are "job-related and consistent with business necessity." Accordingly, an employer may not ask a current employee to provide medical information unless there is a legitimate basis to suspect that the employee’s medical condition may prevent him from safely performing his job. In light of this restriction, employee advocates have argued that tying a premium discount to completion of an HRA is an impermissible inquiry under this standard. To date, the Equal Employment Opportunity Commission has not taken a clear position on this issue. However, Commission representatives have stated that GINA would prohibit any financial incentive that is tied to a participant’s disclosure of genetic information (e.g. family medical history).
Lacking any guidance from the EEOC on the issue, employers have carefully watched one well-publicized federal court case that was filed in Florida in 2010. In Seff v. Broward County, the County implemented a wellness program that consisted of four components: 1) a biometric screening (i.e. finger stick for glucose and cholesterol); 2) disease management for five specified conditions; 3) an online HRA; and 4) a $20 bi-weekly charge for employees who participated in the health plan but who did not participate in the wellness program.
Bradley Seff and a group of County employees filed a class action suit alleging that the County’s $20 charge to non-participants violated the ADA’s prohibition against non-job related medical examinations and inquiries. After the case was dismissed by the trial court, Seff and his cohorts appealed to the U.S. Court of Appeals for the Eleventh Circuit.
In a decision dated August 20, 2012, the Eleventh Circuit upheld the trial court’s dismissal of the case. The court observed that the ADA contains a “safe harbor” provision exempting certain insurance plans from the ADA’s restrictions on medical examinations and inquiries. The safe harbor provides that the ADA shall not be interpreted to prohibit an employer from "establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks" so long as the terms are consistent with state law. Agreeing with the trial court, the Eleventh Circuit found that Broward County’s wellness program qualified as a "term of a bona fide benefit plan" under the safe harbor provision. Accordingly, the limitations on medical examinations and inquiries did not apply to the wellness program.
Although the Eleventh Circuit’s decision should come as welcome news for employers and wellness advocates, there are several reasons not to overstate the importance of the decision. First, the Eleventh Circuit has jurisdiction over only Alabama, Florida and Georgia; courts in other states may rule differently. Secondly, the Court based its decision on the fact that the County offered its wellness program as a term of its health plan; the County’s carrier sponsored the wellness program as part of its contract to provide coverage, and the program was only available to plan enrollees. The Court may have ruled differently if the County’s wellness program was offered independent of its group health plan. Finally, the EEOC may or may not agree with the Seff decision– employers outside of the Eleventh Circuit should continue to monitor the Commission’s position on this issue.
Until the EEOC issues guidance or other courts rule on the issue, the practice of tying premium discounts to HRAs will continue to be debated. However, the Seff decision is certainly a favorable development for employers. We will keep you apprised of further developments through our blog.