By Megan Hladilek and Jennifer Haskin Will of Faegre & Benson LLP
In order to control health care costs, employers continue to introduce various wellness programs, including health risk assessments. Some employers have considered requiring employees to participate in risk assessments in order to be eligible for employer-sponsored health insurance. In the past, it has been unclear whether such an eligibility requirement was permissible, particularly under the Americans with Disabilities Act (ADA). Recently, the Equal Employment Opportunity Commission (EEOC), the agency responsible for enforcing the employment provisions of the ADA and the Genetic Information Nondiscrimination Act (GINA), issued an informal opinion letter to an employer stating that requiring employees to participate in a health risk assessment in order to be eligible for health insurance would violate the ADA.
Involuntary vs. Voluntary Information Disclosure
Health risk assessments generally require employees to provide individual health information, typically eliciting disability-related information and genetic information by means of questions or medical examinations. Under the ADA, employers may make disability-related inquiries or require medical examinations of employees if the inquiries or examinations are job-related and consistent with business necessity. In addition, the ADA and GINA allow employers to offer "voluntary" wellness programs but prohibit employers from requiring involuntary disclosure of disability-related information and genetic information. A wellness program is voluntary if employees are neither required to participate nor penalized for nonparticipation.
Lawfulness of Eligibility Requirements
In its opinion letter of March 6, 2009, the EEOC stated that the employer's health risk assessment would violate the ADA because employees who refused to participate would be denied a benefit of employment—health insurance coverage—that would be available to employees who participated. The EEOC concluded that the employer's health risk assessment was not a voluntary wellness program because employees were penalized for nonparticipation. Also, the employer did not offer any suggestion that the risk assessment was job related and consistent with business necessity, which may allow for disability-related questions and medical examinations.
Notably, the EEOC letter was limited to the lawfulness of eligibility requirements based on health risk assessment participation. In a January 2009 opinion letter, the EEOC had suggested that financial incentives of less than 20 percent of the cost of insurance were voluntary and compliant with the ADA—the same standard required for the Health Insurance Portability and Accountability Act (HIPAA) anti-discrimination provisions for wellness programs that offer financial incentives. The March 2009 EEOC letter rescinded that suggestion, leaving open the issue of whether financial incentives for health risk assessment participation are permissible under the ADA.
EEOC opinion letters are informal, nonbinding guidance, and to date the EEOC has not addressed officially the issue of whether offering financial incentives tied to health risk assessment participation violate the ADA.
It is possible that formal EEOC guidance on a similar issue might be issued soon in the form of final employment regulations under GINA that address the standard for voluntary wellness programs. Several public comments to the proposed regulations have suggested that the existing HIPAA standards for wellness programs be adopted as the standard for voluntary wellness programs under GINA. However, the EEOC has not given a clear indication that it would adopt the existing HIPAA standards for either GINA or the ADA.
Considerations for Employers
Until formal guidance is published, employers would be well advised not to limit eligibility for health insurance on participation in a health risk assessment. Employers wishing to encourage participation in a risk assessment may consider financial incentives, such as premium discounts, but employers should keep in mind that the 20 percent premium discount standard has been approved only under HIPAA. Because it is still unclear whether financial incentives are voluntary wellness programs, employers might want to wait for formal EEOC guidance.
Megan Hladilek, an employee benefits attorney at Faegre & Benson LLP, advises employers on design and administration of retirement and welfare employee benefit plans. Jennifer Haskin Will, an attorney in the firm's employment law group, focuses on employment law counseling and advising.
© 2009 Faegre & Benson LLP. All Rights Reserved.
This article should not be construed as legal advice.
Best Practices Shared for Lower Health Care Costs, Improved Health, SHRM Online Benefits Discipline, April 2009
To Promote Health, 'Carrots' vs. 'Sticks', SHRM Online Benefits Discipline, August 2007
Employers Pursue 'Not-So-Voluntary' Wellness Programs, HR News, April 2007
Health Risk Assessments, Better-Health Incentives Help Lower Costs, SHRM Online Benefits Discipline, April 2005
SHRM Online Benefits Discipline