Employers Can Charge Employees For Not Joining Wellness Programs? Sure…

It might not be the healthy incentive you had in mind, exactly, but thanks to a recent federal court of appeals ruling, you might be able to start charging workers a fee when they don’t participate in your company’s wellness program.

The lawsuit involved a Broward County (Florida) employee who objected to paying $40 per month because he did not take part in the county’s wellness plan. Employment attorney Eric Athey (McNees Wallace & Nurick) explains:

“In Seff v. Broward County, the County implemented a wellness program that consisted of four components: 1) a biometric screening (i.e. finger stick for glucose and cholesterol); 2) disease management for five specified conditions; 3) an online [health risk assessment]; and 4) a $20 bi-weekly charge for employees who participated in the health plan but who did not participate in the wellness program.

Bradley Seff and a group of County employees filed a class action suit alleging that the County’s $20 charge to non-participants violated the ADA’s prohibition against non-job related medical examinations and inquiries.”

If a Plan is Mandatory, Important Restrictions Apply

What does the ADA say about wellness plans? Labor lawyer Robin Shea (Constangy, Brooks & Smith):

“[T]he general rule under the Americans with Disabilities Act is that employers cannot make ‘medical inquiries’ of current employees unless the inquiries are ‘job-related and consistent with business necessity.’ This means that an employer is normally not allowed to ask for medical information unless there is reason to believe that the employee’s medical condition is affecting safety, performance, or behavior on the job.

If this rule were applied without exception, then any wellness program would violate the ADA, right? That is why the ADA has an exception pertaining to voluntary wellness programs. An employer is allowed to ask for medical information from employees — even if the information is not ‘job-related and consistent with business necessity’ — if the information is obtained in connection with a voluntary wellness program.”

A key criteria for determining the whether a program is protected by the ADA’s safe harbor lies in its qualification as “mandatory” or “voluntary,” writes attorney Russell Chapman (Littler):

“[Federal] regulations do not place … restrictions on the incentive or disincentive that a wellness program may impose on a so-called ‘participation-only’ program. For example, HIPAA wellness regulations specifically sanction a program in which eligibility to participate in a group health plan is conditioned on an employee’s completion of a health risk assessment prior to enrollment. However, the EEOC has ruled that such a program would violate the ADA’s prohibitions on disability-related inquiries.”

The Program was Inseparable from the Health Plan

For Seff, the required fee made the county’s program mandatory, and as such not allowed under ADA rules. But for the court of appeals, writes law firm Sutherland Asbill & Brennan, that distinction did not matter because:

“…the wellness program was part of Broward County’s contract with Coventry Healthcare to provide a group health plan, the wellness program was only available to employees who enrolled in the group health plan, and it had been presented as part of the group health plan in at least two employee communications.”

In plain English: voluntary or involuntary, the wellness plan was an integral part of the county’s group health plan and as such included in the safe harbor.

The ruling should encourage employers seeking greater participation in wellness programs as part of a larger effort to improve employee health and manage health care costs. But it should be interpreted with caution, warns Athey:

“Although the Eleventh Circuit’s decision should come as welcome news for employers and wellness advocates, there are several reasons not to overstate the importance of the decision. First, the Eleventh Circuit has jurisdiction over only Alabama, Florida and Georgia; courts in other states may rule differently. Secondly, the Court based its decision on the fact that the County offered its wellness program as a term of its health plan; the County’s carrier sponsored the wellness program as part of its contract to provide coverage, and the program was only available to plan enrollees. The Court may have ruled differently if the County’s wellness program was offered independent of its group health plan. Finally, the EEOC may or may not agree with the Seff decision– employers outside of the Eleventh Circuit should continue to monitor the Commission’s position on this issue.”

Make Sure You Also Comply with GINA, HIPPA, and PPACA

Equally important, say employment and health care attorneys Clifford Schoner and Brian Pinheiro (Ballard Spahr):

“Employers should keep in mind that wellness programs need to comply not only with the ADA, but with requirements set forth in the Health Insurance Portability and Accountability Act (HIPAA), the Genetic Information Nondiscrimination Act (GINA), and, beginning in 2014, the Patient Protection and Affordable Care Act (PPACA).”

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