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Benefits Law Advisor

Look Beyond the ACA Wellness Regulations When Designing Your Program, EEOC Sues Employer Over Its Program

The EEOC could sue my company over the wellness program that is part of our medical plan?

Yes, that agency recently sued an employer in Wisconsin claiming the penalty the employer imposed for nonparticpation in its program was too significant, causing the medical inquiries under the program to be involuntary for purposes of the Americans with Disabilities Act (ADA). EEOC v. Orion Energy Systems, E.D. WI, filed August 20, 2014). Our Disability, Leave & Health Management Blog looks more closely at the EEOC’s theories for liability. It is also important to remember the Affordable Care Act (ACA) rules for wellness programs.

Many employers are in the process of reviewing their medical plans in preparation for the upcoming open enrollment season for 2015. The focus is largely on ACA compliance, in particular the employer shared responsibility penalties. But, as wellness programs have increasingly become a feature of medical plans, employers need to also be reviewing the ACA wellness program regulations, as well as the other laws that may affect their wellness program design and administration, such as the ADA.

Features of the wellness program challenged by the EEOC. According to the EEOC’s complaint, the employer paid 100% of the health insurance premiums for employees who participated in its “voluntary” wellness program. If the employee chose not to participate, the employee paid 100% of the premiums. The program had two components: (i) employees completed a Health Risk Assessment (HRA), which seems to have included having blood work done, and (ii) a “fitness” component involved completing a medical history questionnaire and then using the employer’s range of motion machines. The complaint also alleges that there was a $50 “penalty” for not participating in the fitness component of the wellness program.

ACA Issues. Enforcement of the ACA regulations is outside the EEOC’s jurisdiction, but it is important to remember some key provisions of the ACA regulations that became effective this year for wellness programs:

  • The new regulations raise the maximum permissible reward offered in connection with a health-contingent wellness program to 30 percent. This amount is raised to 50 percent for programs that seek to reduce tobacco use.
  • Health contingent programs can come in two forms: “outcome based” and “activity-only.”
  • Outcome-based wellness programs, in general, reward employees for meeting certain goals, such as lowering their body mass index or cholesterol, or quitting smoking. A reasonable alternative standard must be provided for all individuals who do not meet the outcome-based standard, to ensure that the program is reasonably designed to improve health and is not a subterfuge for underwriting or reducing benefits based on health status.
  • Activity-only wellness programs require individuals to perform or complete an activity related to a health factor in order to obtain a reward, although a particular outcome is not required. Activity-only programs require that a reasonable alternative standard for obtaining the reward be provided to individuals for whom it would be unreasonably difficult due to a medical condition or medically inadvisable to meet the existing standard.
  • Program descriptions must describe the availability of the reasonable alternatives available.

For more information about these rules, including a free 90-minute webinar, go to our wellness program resource center.

Affordable Care Act Employer Penalties – Another Reason to Make Sure Workers are Properly Classified as Employees or Independent Contractors

Written By Monique Warren

Beginning next year, an applicable large employer that does not offer affordable minimum value group health coverage to its fulltime employees (and their children up to age 26) will be vulnerable to employer shared responsibility penalties under Internal Revenue Code §4980H.  Whether an employer is an “applicable large employer” depends on its number of fulltime (and fulltime equivalent) employees in 2014.  The amount of penalties to which an applicable large employer is vulnerable also depends substantially on the number of fulltime employees it has and how many of those employees obtain subsidized Exchange coverage.  Thus, an employer cannot begin to consider its penalty vulnerability, much less strategize on how to avoid or minimize that penalty vulnerability, without knowing how many employees it has and who they are.

That an employer should know how many employees it has, and who they are, may seem obvious.  But what’s not so obvious, in many cases, is whether a worker is properly identified as an employee.  Many employers have workers who perform services under individual or third party contract arrangements (written or otherwise).  Employers frequently refer to these workers as contract workers, temporaries, independent contractors, consultants, contingent workers, and the like.  They may or may not be on the employer’s payroll.  They may or may not receive a Form W-2 from the employer.  They may or may not be offered coverage under the employer’s benefit plans.  And they may or may not be employees.

A serious problem arises when the Internal Revenue Service (“IRS”) disagrees with the employer’s classification of a worker as an independent contractor rather than an employee.  An employee, for employer shared responsibility penalty purposes (as for other purposes considered by the IRS), means a “common law employee” of the employer as explained under Treasury Regulation § 31.3401(c)-1(b).  A common law employment relationship exists “when the person [entity] for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished.”  Whether a common law employment relationship exists obviously turns on a subjective “facts and circumstances” test and the IRS gets to decide whether the relationship passes or fails that test.  The IRS considers whether the employer has behavioral and financial control as well as the nature of the relationship.   Important among the facts and circumstances the IRS considers is whether the employer has the right to hire and fire the worker.  The IRS also considers things like whether the employer gives the worker the tools, equipment and place to work, among other facts and circumstances.  The IRS does not consider as relevant how the employer refers to the worker (e.g., independent contractor, consultant, etc.).  For employers that have misclassified workers as independent contractors who should have been treated as employees, the IRS’ Voluntary Worker Classification Settlement Program remains open, enabling those employers to reclassify workers as employees who’ve been misclassified as independent contractors in prior years for a fraction of the cost (in penalties) that otherwise could be incurred.

An individual paid by a staffing firm, but working under the direction and control of another entity is the common law employee of the entity for whom the individual performs the work.  Thus, using a staffing firm to hire workers will not reduce the number of employees an employer has.  However, for purposes of avoiding employer shared responsibility penalties, the employer will be treated as offering affordable minimum value coverage to those workers if the staffing firm offers such coverage to the workers and the employer pays a higher fee for those workers who enroll in coverage than for those who don’t.

For an employer that has not already done so, it is imperative that the employer make sure it has properly identified all of its common law employees as employees (using the IRS’ Voluntary Classification Settlement Program, if appropriate).  And, an applicable large employer that uses a staffing firm should determine whether the staffing firm will offer affordable minimum value group health coverage to fulltime employees and charge the employer a higher fee for those who enroll.

 

 

Employer Action Item – Health Care Reform

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Under the Patient Protection and Affordable Care Act, beginning in 2015, certain large employers who do not offer affordable health insurance that provides minimum value to their full-time employees may be subject to significant penalties. Please refer to our article titled “Health Care Reform: Employers Should Prepare Now for 2015 to Avoid Penalties” for information about these penalties and what employers should be thinking about now.

IRS GUIDANCE: EMPLOYEE INCOME TAX CORRECTION FOR SAME-SEX SPOUSAL HEALTH COVERAGE AFTER UNITED STATES V. WINDSOR

 

Written by Stephanie Zorn

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On June 27, 2014, the IRS released Information Letter 2014-0012, which contains guidance for employees who have had the value of same-sex spousal coverage under employer health plans — which until recently was required to be included in gross income — reported on their Forms W-2.

BACKGROUND

Historically, the employer cost of opposite-sex spousal coverage under employer-provided health plans was tax free, see Treas. Reg. section 1.106-1, while the employer cost of same-sex spousal coverage resulted in taxable income to the employee.  Further, the employee cost of opposite-sex spousal coverage could be paid for on a pre-tax basis through a cafeteria plan, see I.R.C. section 125, while same-sex spousal coverage could only be paid for with after-tax dollars.

 In United States v. Windsor, 570 U.S. ___, 133 S. Ct. 2675 (2013), the U.S. Supreme Court declared Section 3 of the Defense of Marriage Act (“DOMA”) — which had prohibited the recognition of same-sex couples as spouses for federal tax law purposes — unconstitutional.  Thereafter, the IRS issued guidance providing that same-sex spouses who were lawfully married under the law of any state — regardless of where those same-sex spouses resided — would be treated the same as opposite-sex spouses for federal tax purposes.  See Revenue Ruling 2013-17.  Subsequent IRS guidance clarified the tax treatment of the employer cost and the employee cost of same-sex spousal coverage:  the former would not result in taxable income to the employee and the later could be paid on a pre-tax basis through a cafeteria plan.  See Notice 2014-1.

 

INFORMATION LETTER 2014-0012 

Information Letter 2014-0012 outlines two possible correction methods for an employee who has had the value of same-sex spousal health coverage reflected on a Form W-2.   

Option One:  The employee can ask the employer for a corrected Form W-2 — that does not include the value of any excludable spousal health coverage in taxable wages — and use the corrected Form W-2 when filing the employee’s tax return. 

Option Two:  If the employer does not issue a corrected Form W-2, the employee can complete Form 4852 (Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.) pursuant to the instructions contained the Information Letter and file it with a completed Form 1040 and the uncorrected Form W-2. 

The Information Letter also advises employees that they may be entitled to a refund of federal employment taxes (social security and Medicare) paid on the value of excludable spousal health coverage and provides two possible refund methods:  an employer-sought refund and an employee-sought refund via Form 843 (Claim for Refund and Request for Abatement).     

 

Key Take Away:  Significantly, Information Letter 2014-0012 does not require employers to issue corrected Form W-2s or seek a refund of federal employment taxes.  Accordingly, considerations of payroll department workload and employee relations can determine whether issuance of a corrected Form W-2 or the seeking of a refund is appropriate.  Payroll departments who have not already done so should ensure their Form W-2 reporting and federal employment tax withholding aligns with Windsor and subsequent IRS guidance.        

 

 

Dueling Decisions in the 4th and D.C. Circuit Courts of Appeals Spell More ACA Uncertainty for Employers

written by Joy M. Napier-Joyce

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Just as employers are gearing up to prepare for compliance with the Shared Responsibility rules under the ACA, a pair of decisions from two federal appeals courts has thrown a curve ball into what was already a complicated assessment of risk for employers and raised new questions.

The U.S. Court of Appeals for the District of Columbia Circuit ruled yesterday in a 2-1 decision (Halbig vs. Burwell) that the plain language of the ACA does not authorize the federal government to provide subsidies to help individuals pay for health coverage through a federally run health exchange or marketplace (“Marketplace”).  Hours later, the U.S. Court of Appeals for the 4th Circuit (King vs. Burwell) reached the opposite conclusion with a unanimous ruling, finding that the text of the law is ambiguous as to whether subsidies are available for coverage through a federally run Marketplace, and requiring the court to give deference to the Administration’s position (established through IRS regulations) that subsidies are available for coverage obtained through both state and federal Marketplaces.  14 states and the District of Columbia run their own Marketplace where subsidies are clearly authorized.  Marketplaces in the other 36 states are run by the federal government.  Under the D.C. Circuit’s interpretation, subsidies would be unavailable for Marketplace coverage in these 36 states.  To date, 4.7 million individuals have enrolled in federally run Marketplaces and qualified for subsidies.

The most immediate impact of an outcome that recognizes that only state run Marketplaces can offer subsidized coverage is that far fewer individuals will have access to “affordable” health coverage and the Marketplaces may be less effective in expanding coverage.  While yesterday’s decisions, and most of the press surrounding the decisions, focus on an individual’s entitlement to subsidized Marketplace coverage, there are very important implications for the calculation of employer penalties under the “Shared Responsibility” or “Pay or Play” provisions of the Act.

By way of background, the ACA provides that applicable large employers, defined to be those with at least 50 full-time and/or full-time equivalent employees, may be subject to a penalty for either (1) the failure to offer minimum essential coverage to substantially all of its full-time employees and their dependents; or (2) the failure to offer affordable, minimum value coverage.  A penalty is only triggered, however, if a full-time employee obtains subsidized coverage through a Marketplace.  Generally speaking, an individual must have a limited household income and not be offered affordable, minimum essential coverage through their employer in order to be eligible for a subsidy.

If the D.C. Circuit’s interpretation survives an en banc appeal and/or likely review by the United States Supreme Court, the result would be that subsidies would only be available in the states that run their own Marketplace.  Applicable large employers operating in states with federally run Marketplaces could offer noncompliant health coverage, or no coverage, to employees in those states and not be subject to penalties under the employer Shared Responsibility requirements.  This would change the potential penalty exposure for employers dramatically.

Until the conflict is resolved, current IRS regulations provide that subsidies will be available in all Marketplaces, regardless of whether they are run by a state or the federal government.  For employers with 100 or more full-time or full-time equivalent employees, January 1, 2015 is the first day from which employer penalties could possibly be assessed (transition relief under the final regulations is discussed in our prior post).  Employers should therefore proceed with their compliance strategies on the basis that subsidies will be available for coverage in all Marketplaces.

As with many of the requirements under the ACA, employers will have to stay alert for further guidance and developments.

Getting Ready for 2015: How Government Contractors, Health Care Reform, and the Family Medical Leave Act Intersect

Written by Jewell Lim Esposito

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It’s summer now, mid-year 2014. Open enrollment for the 2015 health plan year is just around the corner. . .

We want to make sure that all employers are ready. We want to ensure, as well, that government contractors specifically understand the intersection of the Service Contract Act (SCA) with other federal laws.

To be spared penalties for 2015 under the Affordable Care Act (ACA), employers who have 100 or more full-time employees and equivalents (FTEs) should ensure they have identified all their over 30-hour employees and be prepared to offer essential health benefits.

Employers with 50-99 FTEs must confirm they are under 100 and claim the 2015 exemption by certification to the IRS.

In our experience, our client government contractors who perform work covered by the SCA might be confusing how they satisfy their health and welfare fringe benefit obligations (the $3.81 per hour, for ease of reference), in coordination with health care requirements under the ACA, no matter how many FTEs that government contractor might have. Here are just two examples; we find that we are confronting more and more problematic situations, as government contractors are examining their existing practices now and tweaking their health plans, in anticipation of open enrollment this coming Fall 2014, for the 2015 plan year.

Example 1.

For example, the government contractor GovK has 800 FTEs, 400 of whom are covered by SCA. As has been the practice in years past, in 2015 GovK wants to carve out SCA employees from its company health plan and thinks that simply paying the $3.81 cash to them to allow them to buy their own health insurance (but not offering the same health plan that GovK offers to its non-SCA employees, many of whom are highly compensated), is enough to satisfy ACA. While guidance is still forthcoming related to the ACA, GovK – under these facts — cannot provide health care only to those who are highly compensated (this is a test that the health plan must pass). Moreover, under ACA and tax rules, GovK must benefit generally 70 percent or more of all employees (another test).

Example 2.

In another example, GovK agrees to pay the employee share of the health care premium for both its SCA (so the $3.81 is accounted for through the provision of a benefit) and non-SCA workers. At its most basic, this practice is non-discriminatory under tax and health care rules, because everyone gets the same benefit of the company paying the employee share. However, when an SCA (non-exempt or exempt) employee goes out on unpaid leave, GovK stops providing the $3.81 benefit (the SCA employee isn’t working, so GovK isn’t offering the bona fide benefit). . . and GovK stops forwarding the employee share of the health care premium to the insurance carrier. In fact, GovK tries to collect the health premium from the SCA employee.

Yet, when a non-SCA (non-exempt or exempt) employee person goes on leave, GovK continues to pay the employee share of the health care premium; GovK won’t collect from the non-SCA employee. While we would have to examine the facts, it is likely that this practice will favor the more highly compensated employees (and therefore is discriminatory from a tax/health plan sense), who tend to be the non-SCA employees.

Further, without going into more, GovK’s unwillingness to pay the SCA employee’s health premium while that employee is out under Federal Medical Leave Act (FMLA) creates compliance issues under that federal law.

Department of Labor Has Started Investigations of Health Plans.

As we see with the brief examples above, compliance with one federal law does not guarantee compliance with (or insulation from) other federal laws.

To underscore the importance of compliance, we note that just last month a DOL investigator has started to evaluate the interplay of these federal laws. We urge government contractor clients to understand that, when dealing with the $3.81 fringe and designing a health plan, they should be mindful of what impacts their operations.

EEOC Pregnancy Discrimination Enforcement Guidance Implicates Contraception Coverage Concerns

Written by Stephanie Zorn

On July 14, 2014, the EEOC issued new Enforcement Guidance on Pregnancy Discrimination and Related Issues.  The immediately-effective Guidance sets forth the EEOC’s policies with regard to its enforcement of pregnancy-based employment discrimination prohibitions under Title VII — as clarified by the Pregnancy Discrimination Act of 1978 — and other federal laws.

With regard to contraception, the Guidance provides that employers violate Title VII by providing health insurance that excludes coverage for prescription contraceptives, whether the contraceptives are provided for birth control or medical purposes.   

The Guidance further explains that, in order to comply with Title VII, employer provided health plans must cover prescription contraceptives on the same basis as other prescription drugs, devices and services that are used to prevent the occurrence of medical conditions other than pregnancy:  if an employer provided health plan covers preventive care for vaccinations, physical examinations and prescription drugs to prevent high blood pressure or to lower cholesterol levels, then prescription contraceptives must also be covered.

The Guidance noted that Title VII makes it clear that employer provided health plans are not required to provide coverage for abortions except where the life of the mother would be endangered if the fetus were carried to term or where medical complications have arisen from an abortion. 

Hobby Lobby

In Burwell v. Hobby Lobby Stores, Inc., owners of a closely-held for-profit corporation objected to including certain Affordable Care Act (ACA)-mandated contraception — including IUDs, Plan B and Ella — based on their view that those contraceptive methods caused very early term abortions, by precluding the fertilize egg from implanting in the uterus.  Abortion, in turn, violated the Hobby Lobby owners’ religious beliefs.  The Supreme Court ruled that the ACA contraception mandate violated the Religious Freedom Restoration Act (RFRA) as applied to closely-held for-profit corporations whose owners had religious objections to providing certain types of contraception. 

The EEOC’s Q & A concerning the Guidance contained the caveat that the Guidance did not address whether certain employers might be exempt from Title VII’s requirements under the RFRA or First Amendment of the Constitution.  Certainly, one can expect this question to be addressed by the courts.  Although there is no way of knowing, it is difficult to imagine how a court could distinguish Hobby Lobby in a challenge to the Guidance’s rules around contraception — especially contraceptive methods that an employer equates to abortion –, particularly in light of Title VII’s existing exception for abortion coverage.

In addition, the Guidance did not address the impact on other employers who are currently exempt from existing contraception requirements — such as those employers who maintain plans that are grandfathered under the ACA.

Key Take Away:  The Guidance would seem to open the door for employees to submit to the EEOC’s administrative review process complaints of Title VII discrimination based on an employer provided plan’s failure to include requisite contraceptive coverage.  How the Guidance will be applied to employers who are currently exempt from existing contraception requirements — and what the challenges to any such enforcement might be — remains to be seen.

Also, please see our Disability, Leave & Health Management blog for an employment law analysis of the Guidance.

New Regulations Permit the Purchase of Longevity Annuities by Qualified Retirement Plans

Written by Tyler Philippi

Under the directive of providing individuals with additional lifetime income options, the IRS issued final regulations on July 2, 2014, permitting the purchase of longevity annuity contracts.  The regulations apply to participants in certain types of retirement plans and IRA owners and allows them to purchase a “qualifying longevity annuity contract” (QLAC) with a portion of their account balance.  According to the regulations’ accompanying press release:

This change will make it easier for retirees to consider using lifetime income options:  instead of having to devote all of their account balance to annuities, retirees who wish to follow a combination strategy that uses a portion of their savings to purchase guaranteed income for life while retaining other savings in more liquid or flexible investments will be able to do so.

Prior to these regulations, the value of an annuity contract held under a defined contribution plan that had not been annuitized was treated as an individual account for purposes of the required minimum distribution (RMD) rules.  Generally, the minimum distribution rules state that distributions from a retirement plan must begin by the required beginning date (RBD) which is (i) age 70 ½, or (ii) retirement. 

Including non-annuitized amounts in the RMD calculation caused the RMD payments to be higher and individuals to draw from their account quicker than they might otherwise need.  Under the QLAC regulations, the value of a QLAC that has not been annuitized is not included in the account balance used to determine RMDs.

What types of retirement arrangements may maintain QLACs?

Defined contribution plans under Code § 401(a), Code § 403(b) plans, eligible deferred compensation plans under Code § 457(b), and Code § 408 IRAs are all permitted to use QLACs to defer distributions under their respective minimum distribution requirements.  QLACs are not available to participants in a defined benefit retirement plan.

What is a qualifying longevity annuity contract?

Although QLACs permit the deferral of distributions until later in life, the IRS has put in place limitations to prevent an indefinite deferral by requiring distributions to begin by age 85.  The deferral of distributions is also limited by allowing only a portion of the individual account balance to be used towards the payment of premiums – which is capped at the lesser of (i) $125,000, or (ii) 25% of the account balance.

As for the contract itself, it must expressly state that it is intended to be a QLAC.  These annuity contracts may not be a variable, indexed, or a similar type of annuity contract.  A QLAC also cannot provide any commutation benefit, cash surrender right, or other similar feature.  However, a return of premium feature is permitted so long as it is paid no later than the end of the calendar year following the year in which the employee, or surviving spouse, dies.

The QLAC regulations also place limitations on the benefits payable after the employee’s death.  Generally, however, life annuities are payable to the beneficiaries subject to limitations based upon whether the annuity start date occurred before or after the employees death and whether the surviving spouse is the sole beneficiary. 

What does this mean for retirement plan sponsors and administrators?

These regulations will make it easier for plan sponsors to offer annuity options in their retirement plans and will offer plan participants an additional type of investment option. If QLACs are added to a plan, plan language will need to be reviewed to ensure that there is no conflict between the plan’s distribution provisions and the QLAC distribution provisions.

SUPREME COURT RULES THAT ACA’S CONTRACEPTIVE MANDATE VIOLATES RELIGIOUS FREEDOM

 Written by Lisa M. deFilippis

Last week the Supreme Court ruled, 5-4, in Burwell v. Hobby Lobby Stores, Inc., et al., that closely held corporations cannot be required to provide contraceptive coverage as mandated by the Affordable Care Act (ACA) because the requirement violates the Religious Freedom Restoration Act of 1993 (RFRA).  At issue in the case were regulations promulgated by the Department of Health and Human Services under the ACA requiring group health plans to provide preventive care for women without cost-sharing.  The regulations specified 20 FDA approved contraceptive methods, including four methods  that may have the effect of preventing implantation of a fertilized egg.  The Hobby Lobby appellants, a Christian- owned arts and crafts chain store, and a wood specialty store owned by a Mennonite family, challenged the contraceptive mandate on the grounds that that the mandate violated their religious freedom under the RFRA by requiring them to pay for methods of contraception that they believe are morally objectionable.  The Court held, first, that closely held corporations are “persons” for purposes of the RFRA. The Court further held that the ACA’s significant penalties for failure to comply with the contraceptive mandate constituted a substantial burden on the employers, and that the government had failed to demonstrate that the contraceptive mandate was the least restrictive method of advancing its interest in guaranteeing access to contraceptive coverage without cost-sharing, as required by the RFRA.  The Court noted that HHS provided a regulatory accommodation for religious non-profits, but had provided no meaningful rationale for failing to extend the same accommodation to for-profit, closely held corporations that have religious objections to providing some or all methods of contraception. The regulatory accommodation provided in the HHS regulations provide that a religious non-profit (such as schools, hospitals, colleges) that self-certifies its objection to providing the coverage does not have to contract for or pay for contraceptive coverage – the coverage is then required to be provided by that employer’s insurer or third-party administrator.  See our article “Supreme Court Rules Closely Held Companies Not Subject to Contraceptive Coverage Mandate of Health Care Reform Law” for additional information.   

On July 3, in Wheaton College v. Burwell, Et al., the Supreme Court issued an emergency injunction to Wheaton College, a Christian college in Illinois, holding that the college could not be required to fill out the self-certification forms required by the HHS regulations to qualify for the religious non-profit accommodation pending full resolution of their lawsuit against the government. The Court noted that the insurer or third party administrator of an objecting religious non-profit was obligated to provide the contraceptive coverage regardless of whether the certification form was filed as provided in the regulations.  The ruling was sharply criticized by the three female Supreme Court justices in a dissent authored by Justice Sotomayor stating that the Wheaton College ruling “did not square” with the Hobby Lobby decision which endorsed the regulatory accommodation provided to religious non-profits and suggested that it could easily be extended to closely held for-profit corporations with religious objections.   

The Obama Administration is reported to be weighing options that would provide contraceptive coverage to all American women.  Jackson Lewis is closely tracking further developments around Hobby Lobby and Wheaton College and related ACA requirements. 

 

 

Wellness Program Update: EEOC is Planning to Issue Proposed Regulations to Address ADA, GINA Issues

In May, the Equal Employment Opportunity Commission (EEOC) announced that it intends to issue proposed regulations addressing health plan-based wellness programs. According to the EEOC’s announcement, the guidance is expected to address the following items:

  1. Does title I of the Americans with Disabilities Act (ADA) allow employers to offer financial inducements and/or impose financial penalties as part of wellness programs offered through their health plans? And, if so, to what extent may those inducements or penalties be offered or imposed, respectively?
  2. Are there other aspects of wellness programs that may be subject to the ADA’s nondiscrimination provisions?
  3. Does the Genetic Information Nondiscrimination Act allow employers to offer inducements to employees’ spouses or other family members who answer questions about their current medical conditions on a health risk assessment (HRA)?

Formal and informal guidance from the EEOC has rasied some questions concerning fairly common wellness program designs. As many employers are currently reviewing their health plan offerings for upcoming renewals, this guidance (even if in proposed form) may be helpful to provide some insight and clarity as to where this agency may be headed concerning wellness programs.