Download The EEOC and Wellness Programs

Wellness Programs after
the Affordable Care Act
(and Later Regulations)
Presented by:
Charles P. Stevens
Michael Best & Friedrich
The Window of Opportunity
What is legal?
Conservative
What works?
Aggressive
MRA Employment Law Update
How far can an employer go?
Education
Participation
Achievement
of Standards
Participation in
Programs
Regarding
Identified
Health Factors
Robust
Disease
Management
MRA Employment Law Update
Incentives to Participate
Employer Programs
 Employer A has a wellness program that encourages participation
in a Health Risk Assessment (HRA) with a blood draw, taking vital
statistics, and a medical questionnaire. It provides a $50 per
month premium discount if the employee participates in the HRA.
 Employer B’s program requires participation in the HRA or imposes
a 20% higher deductible.
 Employer C’s program charges an extra $200/month for health
coverage if the employee fails a test that considers tobacco use,
blood pressure, cholesterol, and body-mass index.
MRA Employment Law Update
Health Risk Assessments
(and biometric screening)
 Questionnaires about health history, exercise,
alcohol and tobacco use, and eating habits.
 Basic screenings at the employee’s worksite, to
include blood pressure, body mass index, blood
sugar, and bone density screenings.
 Sometimes, complete physical examinations at a
doctor’s office or hospital.
MRA Employment Law Update
Background: HIPAA Nondiscrimination Rules
before the Affordable Care Act
 HIPAA prohibits plans from providing different eligibility
rules or benefits based on an individual’s “health status”
 Includes health history, claims, and medical condition
 Regulations promulgated in 2006 allowed premium, copayment, or deductible discounts in return for adherence
to health promotion and disease prevention
 “Participation Only” programs; and
 “Standard-Based” programs limited to 20%
MRA Employment Law Update
Background: ACA – Congress says . . .
 For plan years beginning on or after January 1,
2014, the reward provided under a standardbased program may be up to 30% of the cost of
coverage, with another 20% for tobacco use.
 Wellness benefits cannot be reduced or
withheld based upon lawful ownership, use,
storage, or possession of a firearm or
ammunition.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
June 2013 HHS regulations imposed new rules recognizing
the impact of the Affordable Care Act on wellness
programs. Now, wellness programs are broken down as
follows:
1. Participatory wellness programs
2. Health-contingent wellness programs
a) Activity-only wellness programs
b) Outcome-based wellness programs
MRA Employment Law Update
A Visual
Participatory Programs
Health Contingent Programs
Activity-Only
Outcome-Based
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
“Participatory wellness programs” are those that do
not condition eligibility for a reward upon a
participant’s satisfying a health standard and where
participation in the programs is available to all
similarly situated individuals.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Participatory programs include, for example:
 Reimbursement of health club fees
 Reimbursement for smoking cessation programs
(regardless of whether the program is successful)
 Waiver of co-payments or deductibles for well-baby visits
 Incentives to participate in health fairs or testing
(regardless of testing results)
 Rewards for attending monthly health education seminars
 and . . .
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Participatory programs also include:
 Engaging in a health risk assessment regarding current health
status (including biometric screening), without any further
action (educational or otherwise) required with regard to health
issues identified by the assessment.
 Once the results of the HRA and biometric screening come
back, can you require the employee to come to a meeting to
listen to the results? Yes, as long as you require everyone to
do so regardless of results.
 However, further education required based on health status
may convert the program into a health contingent program.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Health-contingent wellness programs require an
individual to satisfy a standard related to a health
factor. Two types:
1. “Activity-only wellness programs” require
performance or completion of an activity but does
not require attainment of a specific health
outcome.
2. “Outcome-based wellness programs” require
attainment of a specific health outcome.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Examples of activity-based wellness programs
include:
 Walking four miles per week
 Participating in an aerobics or exercise class
 Engaging in a weight loss program
The rule presumes that some people may be
unable to participate due to health factors, so the
“activity” involves more than mere education and
discussion.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Outcome-based wellness programs require the
attainment of a standard related to a health factor,
rather than simply participating or engaging in an
activity. Thus, they require the employee to actually
succeed at wellness. Examples include:
 Discounted premium for individuals who are tobacco
free.
 Discounted premium for individuals who have a bodymass index within a specified range.
 Discounted premium for individuals who have an annual
cholesterol test showing a cholesterol level under 200.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Permitted penalty for noncompliance:
 Participatory programs: Unlimited financial penalties
and rewards are permitted, including barring from
eligibility to participate in the health plan.
 Caution: Other parts of the ACA limits the severity of
the penalty:
 Final regulations issued in November 2014 provide that
required affordability of health coverage is determined
by “deeming” all participants in all non-tobacco related
wellness programs plans as non-compliant.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Permitted penalty for noncompliance:
Health-contingent wellness programs (both kinds):
The reward or penalty may not exceed 30% of the total cost of
employee-only coverage (or if spouses, or spouses and
dependent children may participate, then 30% of the total
cost of the coverage in which an employee and any
dependents are enrolled).
The 30% is increased by an additional 20% to the extent that
the additional percentage is in connection with a program
designed to prevent or reduce tobacco use.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Additional Requirements for both kinds of health-contingent
wellness programs (activity-only & outcome-based):
 Individuals must have the opportunity to qualify at least once
per year.
 The program must be designed to promote health or prevent
disease, not be overly burdensome, and not be a subterfuge.
 The program must allow a reasonable alternative standard
where it is either unreasonably difficult or medically
inadvisable for the individual to either engage in the activity
or attempt to attain the standard.
 The program must disclose that a reasonable alternative
standard is available, that a doctor’s recommendations will be
accommodated, and provide contact information for further
discussion.
MRA Employment Law Update
Compliance Issue #1:
HHS Wellness Regulations
Additional requirement for outcome-based wellness
programs:
 Where the individual fails to achieve the required
health standard (ex. cholesterol below 200), then such
individuals are afforded the opportunity to attain a
reasonable alternative standard without having to
establish that attempting to attain the standard is
unreasonably difficult or medically inadvisable.
MRA Employment Law Update
Compliance Issue #2:
ADA, Congress says . . .
 The Americans with Disabilities Act became effective in
1992 and prohibits discrimination on the basis of
disability.
 An entity subject to ADA:
 “Shall not require a medical examination and shall not
make inquiries of an employee as to whether such
employee is an individual with a disability or as to the
nature and severity of the disability, unless such
examination or inquiry is shown to be job-related and
consistent with business necessity”.
MRA Employment Law Update
Compliance Issue #2:
ADA (Existing Guidance)
The ADA makes an exception for certain
wellness programs:
Voluntary medical exams / inquiries . . .
 Are acceptable as long as:
 Medical records are kept confidential
 Employer neither requires participation nor
penalizes employees who do not participate
No ADA regulations concerning wellness programs
was issued by the EEOC for 23 years . . .
MRA Employment Law Update
Compliance Issue #2: ADA
 Seff v. Broward County, 778 F. Supp. 2d 1370
(U.S. Dist. Ct., S.D. Fla, 2/11/2011)
 The employer imposed a $10/week charge for
declining to participate in an HRA including
biometric screening. For identified disease states
including asthma, hypertension, diabetes, congestive
heart failure, or kidney disease, individuals were
given the opportunity to participate in a coaching
program, after which they received co-pay waivers
for certain medications.
MRA Employment Law Update
Compliance Issue #2: ADA
 Seff v. Broward County (continued)
 District Court: The ADA does not prohibit or
restrict a covered entity from establishing, . . . or
administering the terms of a bona fide benefit plan
that are based on underwriting risks, classifying
risks, or administering such risks that are based on
or not inconsistent with state law. 42 U.S.C.
§12201(c); (ADA §501(c)).
 Appealed to 11th Circuit, U.S. Court of Appeals,
Affirmed.
MRA Employment Law Update
Compliance Issue #2:ADA (2014-15-16)
 In 2014/15, the ADA landscape began to change.
 EEOC v. Orion Energy Systems, Inc. (E.D. Wis.)
 EEOC alleged employees were required to submit to medical
examinations that were not job-related or consistent with
business necessity and was terminated for objecting.
 The wellness program required employees to complete a
health risk assessment disclosing medical history and blood
work.
 Employee declined to participate in the program. She was
required to pay the entire premium cost for single coverage,
plus an additional $50 per month for failing to partake in the
fitness component of the program.
MRA Employment Law Update
Compliance Issue #2: ADA (2014-15-16)
 Changing landscape (cont.)
 EEOC v. Flambeau, Inc. (W.D. Wis.)
 EEOC alleged the wellness questions were not job-related or
consistent with business necessity.
 Employees were required to complete a health risk
assessment disclosing medical history and permitting blood
work.
 EEOC alleges the employee was not able to complete the
biometric testing/assessment because he was on medical
leave and that he was not permitted to take the test upon
return.
 Failure to complete the test resulted in the loss of coverage
and the loss of employer contributions toward the cost of
coverage.
MRA Employment Law Update
The EEOC and Wellness Programs
 Changing landscape (cont.)
 EEOC v. Honeywell, Inc. (D. Min.)
 Employees and spouses required to undergo biometric testing.
 If the employee declined, he or she would incur an annual
$500 surcharge (no charge if the spouse declined).
 A $1,000 annual tobacco surcharge would apply to
employees and also to spouses who declined to undergo
biometric testing.
 The employer would not pay up to $1500 in annual HSA
contributions where the employee declined to undergo
biometric testing.
 The EEOC had sought a TRO, which the court denied.
MRA Employment Law Update
Compliance Issue #2: EEOC Prop. Regs.
 On April 20, 2015, EEOC issued proposed
regulations to address the vagueness of its
“guidance”
 Definition of “voluntary”
 Addressed incentive levels that can be provided
and comply with the ADA
 Notice requirements
MRA Employment Law Update
Compliance Issue #2: EEOC Prop. Regs.
 “Voluntary”
 If the wellness program contains disability-related
inquiries or medical examinations (including such
inquiries as part of a health risk assessment), the
program sponsor must not:
 Require employees to participate;
 Deny coverage under any group health plan or limit
the extent of benefits [within limits] for those who do
not participate;
 Take adverse employment action or retaliate against
(etc.) the employee; or
 Fail to provide employees with adequate notice.
 Confidentiality obligation also attaches.
MRA Employment Law Update
Compliance Issue #2: EEOC Prop. Regs.
 Limits on Benefits
 The benefit/incentive under the program(s) cannot
exceed 30% of the total cost of employee-only
coverage.
 Aggregate all wellness programs offered as part of
a group health plan;
 In-kind incentives must be valued and factored in.
 Time-off, reduced prices, other items of value
MRA Employment Law Update
Compliance Issue #2: EEOC Prop. Regs.
 Notice Requirements
 Must be written so the employee is likely to understand;
 Must describe the type of medical information that will be
obtained and the specific purposes for which the medical
information will be used;
 Must describe the restrictions on the disclosure of the medical
information, with whom the information will be shared, and
the methods of protection the covered entity uses to ensure
against improper disclosure of the medical information.
 May require a representation that the measures used comply
with HIPAA.
 Prop. Regs. do not address notice timing.
MRA Employment Law Update
Compliance Issue #2: EEOC Prop. Regs.
 Smoking cessation programs
 Certain tobacco incentives will be limited if the prop.
regs. are finalized; however, it depends upon the
manner of policing:
 Submission to blood draw for detection of tobacco
(likely an issue)
 Submission of answer to question, “Do you use
tobacco?” (likely fine) and permits increasing the
incentive to 50%.
 Why?
 Do employers have to return to the role of being
tobacco police?
 Again, does it have to be this complicated?
MRA Employment Law Update
Compliance Issue 2 ½: Reconciling ACA
and HIPAA Wellness Regulations
 When do we anticipate EEOC will issue final regulations
and when do we anticipate they will be effective?
 What are employers doing as they approach open
enrollment for 2016 calendar year programs?
 Will final regulations be enforceable in 2016? Will noncompliance with proposed regulations be viewed by the
EEOC to be in violation of the ADA?
 Will the EEOC’s Chicago office sue more employers?
MRA Employment Law Update
Compliance Issue 2 ½: Reconciling HHS
and EEOC Wellness Regulations
 What does a “fully-compliant” program look like?
 Maximum non-tobacco incentive is 30% of lowest
employee-only coverage premium.
 Tobacco-related?
 What if a health score takes tobacco into account?
 Likely subject to the 30% limit, as opposed to
calculating “how much” tobacco is taken into account.
 Should tobacco be split into separate incentive?
MRA Employment Law Update
Compliance Issue 2 ¾: On-site Clinics
Many employers are recognizing the problems high
deductible health plans are causing with employees and are
establishing or enhancing on-site health care arrangements.
Advantages include:
 Offering basic low-cost care, valued by employees
 Immediate attention to the problem
 Integration with wellness program and occupational
health
 Likely enhances productivity
MRA Employment Law Update
Compliance Issue 2 ¾: On-site Clinics
Disadvantages of on-site clinics include uncertainty in legal
and tax treatment:
 Is it a health care provider providing primary care?
 Is it a plan?
 Will it be subject to the Cadillac Tax?
 Is it HIPAA compliant; what is “Protected Health
Information?
 Is it available to non-participants in the group health
plan?
 Should the employer charge something for use? How?
MRA Employment Law Update
Compliance Issue #3: GINA
The Genetic Information Nondiscrimination Act (GINA)
prohibits discrimination on the basis of genetic information
in plan coverage and specifically prohibits group health
plans and health insurance issuers from:
1. increasing the group premium or contribution
amounts based on "genetic information,"
2. requesting or requiring an individual or family
member to undergo a "genetic test," and
3. requesting, requiring, or purchasing genetic
information prior to or in connection with enrollment,
or at any time for "underwriting purposes."
MRA Employment Law Update
Compliance Issue #3: GINA
“Genetic information” is defined very broadly and I
includes:
 the individual’s "genetic tests,"
 the "genetic tests" of family members,
 the "manifestation of a disease or disorder in family
members," or
 any request for, or receipt of, genetic services or
participation in certain clinical research.
MRA Employment Law Update
Compliance Issue #3: GINA
A group health plan cannot collect genetic information
for underwriting purposes. Underwriting includes:
 Determination of cost-sharing mechanisms in return for
activities such as completing an HRA or participating in
a wellness program;
 The computation of premium or contribution amounts including discounts, rebates, or other premium
differential mechanisms in return for activities such as
completing an HRA or participating in a wellness
program;
MRA Employment Law Update
Compliance Issue #3: GINA
Scenario: A plan provides a premium reduction to
an enrollee who completes an HRA after
enrollment. The HRA includes questions about the
individual’s family medical history. This request for
family medical history will be for "underwriting"
purposes because completion of the HRA provides
the enrollee with a premium reduction.
This arrangement violates GINA.
MRA Employment Law Update
Compliance Issue #3: GINA
 The EEOC issued proposed regulations on the
interaction between wellness programs and
GINA in October 2015.
 An employer’s providing incentives for
information on an HRA about a spouse’s
current or past health status could result in
GINA liability.
MRA Employment Law Update
Compliance Issue #3: GINA
 Where both employee and spouse are
included in the wellness program, the total
incentive cannot exceed 30% of the total cost
of the coverage, the employee’s incentive is
capped at 30% of the cost of self-only
coverage and the spouse can receive the
balance, up to the maximum total incentive.
MRA Employment Law Update
Compliance Issue #3: GINA
 A spouse must provide prior, knowing, written, and
voluntary authorization for the employer to collect
the spouse’s health status information, just as the
employee must do, and authorization forms must
describe the confidentiality protections and
restrictions on the disclosure of genetic information
 Employers may not require employees (or spouses or
dependents covered by the employee’s health plan)
to agree to the sale, or waive the confidentiality, of
their genetic information as a condition for receiving
an incentive.
MRA Employment Law Update
Compliance Issue #3: GINA
Solutions:
 Modify the HRA to provide for no reward (or penalty)
for completing it (or failing to complete it) so that it
would not be for “underwriting purposes.”
or
 Split it into two HRAs, one that asks for family
medical history (with no reward or penalty) and one
that does not (with reward/penalty).
or
 Modify the HRA to not seek family medical history.
MRA Employment Law Update
Compliance Issue #4:
Wisconsin Fair Employment Act
 An employer may not make hiring or firing
decisions, or otherwise discriminate against an
individual, on the basis of the individual’s “use or
nonuse of lawful product off the employer’s
premises during nonworking hours.”
 Intended application: cigarettes, alcohol,
pharmaceuticals prescribed by a doctor for the
person taking them, etc.
MRA Employment Law Update
Compliance Issue #4:
Wisconsin Fair Employment Act
Exception for life, health, or disability insurance coverage:
An employer may not charge employees using lawful
products different rates for coverage unless:
 The difference between the premium rates charged to a
person who uses that lawful product and one who does not
reflects the difference in cost between providing the
coverage to the individuals who use the lawful product and
those who do not
 The employer provides each individual who is charged a
different premium rate based on the use or nonuse of
lawful products with a written statement specifying the
premium rate differential used by the insurance carrier
MRA Employment Law Update
Compliance Issue #5:
Wisconsin Fair Employment Act
Are the benefit provisions preempted by ERISA?
The Employee Retirement Income Security Act
preempts “any and all State laws insofar as they may
now or hereafter relate to any employee benefit
plan….” ERISA §514(a) (some exceptions apply)
 Insured plans?
 Self-funded plans?
MRA Employment Law Update
Other States Protecting Tobacco Use
 18 jurisdictions have enacted protecting use of "tobacco
only.” These include: Connecticut, District of Columbia,
Indiana, Kentucky, Louisiana, Maine, Mississippi, New
Hampshire, New Jersey, New Mexico, Oklahoma, Oregon,
Rhode Island, South Carolina, South Dakota, Virginia, West
Virginia, and Wyoming.
 8 states protect the use of lawful products. These are
Illinois, Minnesota, Missouri, Montana, Nevada, North
Carolina, Tennessee, and Wisconsin.
 4 states offer statutory protection for employees who
engage in lawful activities. These are California, Colorado,
New York, and North Dakota.
MRA Employment Law Update
Scenario #1
ABC Company offers employees and spouses a
$75 cash gift for taking a Health Risk Assessment,
including biometric screenings offered by a 3rd
party vendor.
Issues?
How would the analysis change if ABC Company
requires an employee to take a Health Risk
Assessment as a condition of eligibility for
coverage in the Company’s group health plan?
MRA Employment Law Update
Scenario #2
DEF Company discounts employee contributions
toward the cost of coverage by $25 per pay
period for employees who attain a particular
favorable score on a wellness factor scoring
matrix, which considers, body mass index,
several cholesterol factors, blood pressure, and
nicotine use.
Issues?
MRA Employment Law Update
Scenario #3
GHI Company charges smokers $50 more in monthly
premium contributions.
Issues?
What if GHI Company refuses to provide any
coverage for smokers, and not even if the individual
would pay 100% of the cost.
MRA Employment Law Update
Scenario #4
XYZ Company maintains a self-funded health plan. In
addition to its robust wellness program, the health plan
includes a robust disease management plan. If the
individual is identified as having various disease factors,
various co-pays will be waived if the individual engages in
health coaching as to the disease.
Issues?
What if XYZ Company denies or limits coverage if an
individual does not comply with disease management
recommendations?
Can XYZ Company pay an individual to drop the health plan?
MRA Employment Law Update
Thank you!
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