25 Oct AARP Targets EEOC in Lawsuit Concerning Wellness Programs

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By Jim Pshock, Bravo Founder and CEO

This week, the American Association of Retired Persons (AARP) sued the Equal Employment Opportunity Commission (EEOC) because it felt the new ADA and GINA wellness regulations allow employers too much room to “force” employees to divulge personal health information.

See related story here: http://nyti.ms/2f4YnC2.

So much for thinking that 2017 would be the first time we start a year with no questions in the market about regulations or lawsuits…!

While it caught me off guard, and I’ve yet to finish reading the full complaint, I’m not surprised that a group like AARP has taken issue with the EEOC regulations. At least as far as the “non-health participant” element of the 30 percent is concerned.

Prior to the new EEOC regulations, the ACA and HIPAA allowed a safe harbor that let plans use up to 30 percent of premium (50 percent with tobacco) in the form of health plan contribution adjustments or plan design differentials (deductibles, HSA deposits, etc.) for health plan participants. I think there was a strong argument for the “voluntariness” of these programs, given the fact that enrolling in the health plan was itself a voluntary choice, and the incentive or penalty to participate (or not) was impacting the benefit design or the cost that you as an employee chose by selecting a certain plan offered to you.

The biggest complaint from patient advocacy groups about the ACA and HIPAA maximums was that they only pertained to “health-contingent” incentives. This allowed employers to tie up to 100 percent of premium to one’s choice to participate in a wellness program, complete a health risk assessment, attend a screening, etc. Because this was at the heart of the lawsuits filed in late 2014, we expected that the EEOC was going to expand the calculation of the 30 percent to include any activities related to a disability related inquiry, or to any type of health exam. But I and many others were surprised to see the ADA and GINA regulations extend the 30 percent maximum to individuals outside of the health plan. The EEOC rules made it clear that employers could use cash, even in the event they don’t offer a health plan or a person doesn’t enroll in the plan. Furthermore, the EEOC said you could use a penalty or an incentive of up to 30 percent of the lowest cost plan a person could have chosen. Now, the 30 percent isn’t “out of your benefit plan,” it could be “out of your paycheck.” The health plan could just be a reference point that determined how much money an employer could use to induce one to participate. In fact, as written, it appears they could even dock wages if a person failed to participate or if an employee’s spouse who isn’t covered by the health plan admitted to be a tobacco user.

I was personally very surprised the EEOC allowed this and I’m not surprised that groups like the AARP have an issue with it. To be clear, I don’t know of a single employer using financial penalties like this outside of the health plan. The ADA and GINA rules do seem, however, to leave the door open for this which what I suspect may be addressed through this new lawsuit. As always, Bravo will help employers comply with all known rules and regulations, and steer you away from questionable practices. We will keep you posted on the latest developments.