Special Guest Author John Holmquist: Wellness plans waiting for the EEOC

The Patient Protection and Affordable Care Act will increase the incentive limit in outcome-based wellness programs from 20% to 30% of employee total health care premiums in 2014. Many employers believe that the road to more and better employee participation is greater incentives; after all, human nature and motivation are involved. But there is a catch–the EEOC has not made its position known on how incentives or penalties and “voluntary” participation are impacted by such programs.

In Seff v. Broward County, the 11th Circuit upheld the district court’s finding that the county’s wellness plan fell within the “bona fide plan” safe harbor of the ADA. The plan had two components: a bio-metric screening (finger prick) for glucose and cholesterol and an online questionnaire of health risks. The information identified employees who had asthma, congestive heart failure, hypertension, diabetes, or kidney disease. Employees identified as suffering from any of these diseases were given the opportunity to participate in a disease management coaching program. To promote participation, the county initially imposed a twenty dollar biweekly charge to employees who did not participate but suspended the charges approximately nine months later.

The district court concluded that the wellness plan fell within the safe harbor provisions of the ADA because the program constituted a “term” of the county’s group health plan. The appeals court noted that it was not aware of any authority that suggested a wellness plan must be explicitly identified in a benefit plan’s written documents to qualify as a “term” of the benefit plan within the meaning of the ADA’s safe harbor provision. The issue of whether the plan was voluntary was not raised and not considered in the case.

The EEOC has yet to give its opinion on financial incentives and wellness programs.  In an informal discussion letter dated June 24, 2011, the EEOC was asked to state that offering incentives as part of a wellness plan was not a violation either the ADA or GINA. With respect to allowing incentives under the ADA, the EEOC representative stated: As you know, the Commission has not taken a position on whether, and to what extent, Title I of the ADA permits an employer to offer financial incentives for employees to participate in wellness programs that include disability-related inquiries (such as questions about current health status asked as part of a health risk assessment) or medical examinations (such as blood pressure and cholesterol screening to determine whether an employee has achieved certain health outcomes). However, we will carefully consider your comments and the comments of other stakeholders that we have received on this important issue. With respect to the issue of incentives under GINA, the spokesperson stated: We are not in a position to offer an interpretation of the example in the GINA Title I regulations, since EEOC does not have responsibility for enforcing Title I. However, our goal in formulating the position on wellness program incentives and the examples in our Title II regulations was to be consistent with the positions taken by the Title I agencies (with which we coordinated extensively while developing our final GINA regulations).

What is the EEOC’s position on the applicability of the insurance safe harbor for wellness plans? What incentives, if any, does the EEOC consider to impact the issue of “voluntary” participation? Does the EEOC agree with the Seff decision?

The agency has held hearings on issues such as credit history and hiring; the impact of arrest and conviction records; and unemployed status and hiring. The issues of wellness plans and whether the agency has issues with the current usage by employers and the impact of the insurance safe harbor certainly merits time and consideration. Employers are entitled to know the EEOC’s position and should, at a minimum, be given a time frame by the agency for when it will address these issues.

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John Holmquist has represented private and public sector employers in all aspects of labor and employment law for over 35 years. He is a Fellow in the College of Labor and Employment Lawyers. He has been included in the Michigan Super Lawyers in the Employment and Labor practice area since 2006. John is the founding member of the Holmquist Employment Law Firm in Troy, Michigan.  The goal is to help clients avoid problems with their employees by understanding the issues that arise in the workplace and implement policies to address them. When a problem cannot be resolved, John works with the client to achieve the most satisfactory and cost effective result.  John can be reached at 248-519-2384, info@jholmlaw.com, or http://jholmlaw.com/