EPLI: Clarification Sought Over Employee Wellness Plans

EPLI: EEOC Seeks to Clarify Confusion Over Employee Wellness Plans

Over the last several months, we have discussed the confusion over whether employee wellness plans encouraged under the Affordable Care Act (ACA) could end up being in violation of the Americans for Disability Act (ADA). The problem has been that the Equal Employment Opportunity Commission (EEOC) up until last week had yet to set new guidance to help employers devise wellness programs that avoid potential disability discrimination. In fact, the agency has already filed a few lawsuits alleging potential violations by companies with regard to their wellness programs, claiming that some of provisions under the ACA regarding wellness plans may be illegal, such as benefit rules that impose financial penalties unless employees and spouses take medical tests.

On Friday under pressure by businesses and lawmakers, the EEOC voted to send a Notice of Proposed Rulemaking (NPRM) on the interplay of the Americans with Disabilities Act (ADA) and the Affordable Care Act (ACA) with respect to wellness programs to the White House Office of Management and Budget (OMB) for clearance. The proposed rule would amend provisions of Title I of the Americans with Disabilities Act that clash with provisions of the Patient Protection and Affordable Care Act regarding employers’ use of monetary rewards and penalties to motivate employees to complete wellness activities or achieve certain measurable health outcomes, the EEOC said in a statement.

With the Office of Management and Budget’s approval, the proposed rule will be added to the Federal Register for a 60-day public review and comment period.

Pressure was mounting for the EEOC to do something about the confusion over wellness programs. Earlier this month, Republicans in the House and Senate introduced legislation to protect these programs. According to “The Hill,” Republicans, including the chairmen of the Senate Finance and Health committees, say their bill would clarify the legality of the programs and “eliminate confusion” caused by the EEOC lawsuits. “At a time when Obamacare is creating uncertainty for employers and employees, this act will provide legal certainty to employers offering workplace wellness programs,” Senate Finance Committee Chairman Orrin Hatch (R-Utah) wrote in a statement.

Lawsuits Filed

The EEOC to date has filed three lawsuits: The first was against Wisconsin-based manufacturer Flambeau for allegedly informing employees that they could lose contributions to their company health insurance – and face unspecified “disciplinary action” – if they refused to answer health screening questions. Another lawsuit involved Wisconsin company, Orion Energy Systems, for allegedly firing an employee who declined to participate in its workplace program. The third involves Honeywell International, which was hit with a lawsuit for a program that could cost employees who don’t participate as much as $2,000 more for healthcare, with more money riding on participation in tobacco testing.

While this issue is still pending clarification, it’s important for employers to review their wellness programs with professionals to help mitigate the potential for an employment practices liability suit. It’s also imperative that companies review their Employment Practices Liability Insurance (EPLI) to make sure the coverage form addresses the various employee-related exposures a firm faces. At Caitlin Morgan, we assist with securing EPLI insurance for your clients. Just give us a call at 877.226.1027.