07 Jan Wellness Programs Feeling the Heat as the EEOC Increases Its Efforts – Part 1

Source: United Benefit Advisors, LLC

While wellness programs have increased in popularity, according to the 2014 UBA Health Plan Survey, actual wellness program adoption has been in a holding pattern. As one might expect, the highest percentage (58.8%) of plans offering wellness benefits came from employers with 1,000 or more employees and the lowest percentage (8%) of plans offering wellness benefits came from employers with fewer than 25 employees. On average, wellness programs are down slightly by 1.3%. It’s no wonder given all the pending litigation and regulation surrounding these programs, including the fact that the health of an employee population is no longer a rating factor for smaller employers.

On the other hand, corporate wellness programs do have many positives. From a global perspective, wellness programs combat the rising costs of health care. Employers also benefit from wellness programs by creating healthier workforces. Healthier employees are more productive and have less absenteeism. Moreover, employees who participate in wellness programs enjoy the extrinsic reward provided by their employer (or the spouse’s employer), and they also realize the intrinsic value of changing their lives through healthier living. Regardless of the motive and intent of employers who establish corporate wellness programs, they just may find themselves in hot water – I mean, court – with the EEOC or on the other side of the aisle from a grieved employee.

What makes wellness programs particularly complicated is the numerous rules and regulations, many of which are discordant with other regulatory provisions. Employers should take due diligence to ensure that they are not sponsoring a wellness program that is ripe for litigation. The programs should be analyzed under the Americans with Disabilities Act (ADA)/Americans With Disabilities Act Amendments Act (ADAAA), the Genetic Information Nondiscrimination Act (GINA), the Employee Retirement Income Security Act (ERISA), Internal Revenue Code (IRC), the Patient Protection and Affordable Care Act (PPACA), the Health Insurance Portability and Accountability Act (HIPAA), Title VII and other EEOC regulations, and state law, being mindful that adherence to one regulation, e.g., PPACA, does not guarantee compliance with another,e.g., ADA or GINA.

The last three months have seen as many complaints filed by the EEOC against wellness programs. On August 20, 2014, the EEOC brought its first direct challenge of a wellness program under Title I of the ADA against Orion Energy Systems, Inc. (Orion suit). On September 30, 2014, the EEOC initiated its second ADA action against Flambeau, Inc.’s wellness program (Flambeau suit). The latest suit was filed on October 27, 2014, against Honeywell International, Inc.’s wellness program (Honeywell suit), and it included counts under both the ADA and GINA.

In the following days, I will briefly review the various statutory and regulatory language governing wellness programs, outline the employers’ wellness programs that are the center of current litigation, address the EEOC’s concerns, and discuss what employers should do to guard against running afoul.

For more data on wellness programs and other plan design trends, download the 2014 Health Plan Executive Summary. This survey – which has been conducted every year since 2005 – is the nation’s largest health plan survey and provides more accurate benchmarking data than any other source in the industry.