BRAVO’S TAKE & BEST PRACTICES
The Equal Employment Opportunity Commission’s (EEOC) spring Regulatory Agenda indicated that the EEOC intends to issue two proposed rules in the coming months. Here is what we know and how you can avoid having to make a change.
Communicate Rewards, Not Penalties
Although we can’t predict the future, past cases and comments from the EEOC lead us to believe that employers offering incentives are less likely to be a concern than those offering penalties. The ACA clearly allows for either the use of an incentive or penalty and focuses (appropriately) on the financial difference between the person who pays the most for healthcare and the person who pays the least. Historically, the EEOC has been more focused on avoiding anything that could be construed as negative or a penalty based on an employee’s wellness screening results.
Consider this Example: Employer A is charged $500 per month by their carrier for health insurance and funds 90% of the premium ($450 of the total fee), charging employees $50 per month to join the plan. They implement a $25 per month penalty for tobacco users who do not complete a tobacco cessation program, changing the split to $425 from the employer and $75 from the tobacco-using employee.
Employer B is also charged $500 per month by their carrier but they only pay 70% of the total premium ($350 of the total fee), charging employees $150 per month to join the plan. Instead of implementing a $25 per month penalty for smokers, they changed their contribution so they only funded $325 of the $500 total premium. Additionally, they offer a $25 per month incentive to non-tobacco users and to smokers who completed a cessation program. Even though Employer A has a much richer overall benefit to the employees, the fact that they are “penalizing” employees who smoke instead of offering them an incentive has been frowned upon by the EEOC. To date they have seemed less concerned with the math than with the message.
Don’t Condition Eligibility on a Wellness Screening
The current ACA regulations provide a cap of 30% (50% with tobacco) of total premium that can be used to apply to an outcomes-based wellness incentive. There is not a cap within the ACA on the value that can be associated with participation-based wellness incentives, as long as the lack of incentive doesn’t cause a plan to be deemed unaffordable. The American’s With Disabilities Act (ADA) however indicates that an employer may only make a health-related inquiry if it is “voluntary” for the employee to respond. The crux of the ADA concern today is that there is no clear guidance to determine if a higher premium contribution would automatically make a plan “involuntary” and therefore an ADA violation (Note: many think this is a moot point as there is a safe harbor for health plan underwriting but that too is not crystal clear). Most attorneys and advisors we interact with think that the EEOC will adopt the same thresholds as the ACA. Numerous advocacy groups also heavily suggest this approach. The difference, however, may be that the 30%/50% limit will be the cap for both outcomes-based and participation-based wellness incentives. We encounter plans that actually make participation in a blood draw and completion of a health assessment a pre-requisite to eligibility to enroll in a health plan. We believe that this is unlikely to be viewed as “voluntary,” and very likely to be considered a violation when additional regulations are provided.
Avoid “Linking” Rewards Among Participants
Between GINA and the ADA concerns, we believe that the EEOC will not want the actions or inactions of one person to impact the incentives or premium contributions of another person. The most frequent example of this in wellness plans today is what is referred to as a “gatekeeper” design, whereby an employee cannot qualify for any of their wellness rewards until their spouse completes a health assessment and/or a screening. We also see many plans that combine the tobacco-free incentive and require both the employee and their spouse (or in some cases their entire household) to be tobacco free before anyone earns an incentive. These types of designs have been highly questioned because of privacy and fairness concerns and we think they are best to avoid. Instead, have separate incentives and let each person complete alternatives to qualify for greater rewards.
Although the final guidance is still to be provided, in the meantime we wanted to share what we have adopted as best practices based on the recurring themes and topics. If you have any questions, please don’t hesitate to contact your Account Manager. Bravo Wellness is committed to remaining the industry leader in practically interpreting, applying and administering regulations and best-practices as they emerge.