Wellness Programs, the ADA and HIPAA
Employer wellness programs should be designed with the restrictions of the Americans with Disabilities Act (ADA) and the Health Insurance Portability and Accountability Act (HIPAA) in mind.
The purpose of the ADA is to protect individuals with disabilities against employment discrimination. The ADA limits the circumstances in which an employer may require physical exams or answers to disability-related inquiries. Unless otherwise exempt, such exams or inquiries must be job-related or subject to a business necessity exception to comply with the ADA.
Under the ADA, an inquiry is “disability-related” if an individual’s response to the inquiry could reasonably be expected to disclose the presence of a protected disability. This presents an interesting dilemma because health risk assessments, generalized medical exams, or health screens are typically part of an employer wellness program. Because these types of assessments do not focus on specific job functions of an individual employee, they are not deemed job-related or subject to business necessity under the ADA and, therefore, would be prohibited. The ADA, however, does permit generalized disability-related inquiries if they are completely voluntary.
The ADA also has safe harbors for bona fide employee benefit plans which exempt such plans from the restrictions of the ADA. Among these safe harbors is a statutory exemption that permits employers to establish plans based on underwriting, classifying risks or administering risks as long as the exemption is not used as a subterfuge to evade the purposes of the ADA.
The Health Insurance Portability and Accountability Act (HIPAA) also regulates wellness programs. HIPAA specifically allows wellness programs that condition eligibility to participate in the employer’s group health plan on an employee’s completion of a health risk assessment prior to enrollment.
The Equal Employment Opportunity Commission (EEOC) has muddied the waters by issuing and then later withdrawing an opinion letter stating that requiring a health risk assessment as a condition for enrollment meant that the wellness program could not be considered voluntary. The EEOC’s actions have added to employer uncertainty, and its ultimate position has not been further stated.
Meanwhile, the 11th Circuit Court of Appeals has weighed in on this question in an August, 2012 decision. This decision affirmed a district court ruling which held that a $20 per pay period decrease in the employee share of health insurance premium payments upon completion of a health risk assessment did not violate the ADA. Seff v. Broward County, Florida, No. 11-12217, (11th Cir. August 20, 2012). In this case, the employee claimed that the County’s wellness program violated the ADA’s prohibition on non-voluntary employee medical examinations and disability-related inquiries. The screening and assessment were intended to identify participants who had one or more of five medical conditions. Those who were identified as having one or more of the five conditions became eligible to participate in disease management programs or for additional benefits aimed at treating and managing those conditions.
The Eleventh Circuit Court of Appeals held that the wellness program was part of the County’s group health plan, making it exempt from the ADA’s restrictions under the ADA’s safe harbor for bona fide plans. For that reason, the question of voluntariness under the ADA was irrelevant.
The decision is helpful because it held that it is unnecessary to consider whether examinations or inquiries are voluntary when the bona fide plan safe harbor applies. Whether the EEOC or other courts will agree is unknown at this time.
To qualify for the exemption under the rationale of this case, employers will need to show that their wellness program is part of a bona fide plan. Whether or not the wellness program is provided under the same contract as the employer’s health insurance plan, the wellness program needs to be designed in such a way that it is considered part of the overall group health program. The wellness program should be described as constituting a part of the group health plan in all official communication and should be described in the summary plan description. Additionally, the wellness program should not be made available to persons who are not participants in the group health plan.
The Eleventh Circuit decision probably will not be the last word, and that fact that all that was involved was $20 per pay period also may be an important fact. An employment lawyer should be consulted in designing a wellness program to ensure that the design is compliant with the ADA.