Affordable Care Act / Healthcare / Politics

Employer Wellness Programs: ADA and ACA

The rising cost of health benefits and prevalence of chronic diseases has increased the significance of employer wellness programs. These programs encourage healthier lifestyles and may help reduce health care costs, with numerous large firms suggesting that the programs save the average employer $3.27 for every dollar spent on them.

The Senate Health, Education, Labor, and Pensions (HELP) committee held a hearing on January 29 to discuss how well the programs work in promoting health and lowering costs. Many of the witnesses voiced their support for them, as they not only provide significant potential but they also find bipartisan support in Congress. Despite this, the discussion was largely shrouded by uncertainty regarding the Health Insurance Portability and Accountability Act (HIPAA) and the Americans with Disabilities Act (ADA) regulations as they play out against the Affordable Care Act (ACA) and where the Equal Employment Opportunity Commission (EEOC) stands with respect to the expansion of the programs.

Federal regulations require that employer wellness plans must be “reasonably” designed to promote health, with employees eligible for a reward not to exceed twenty percent of the cost of employee-only coverage under the plan at least once a year. The ACA increased the cost of coverage from twenty percent to thirty percent and further gave the Department of Labor (DOL), Health and Human Services (HHS) and Treasury the authority to increase this to fifty percent. The program must have a reasonable alternative or waiver for those who cannot satisfy the original standards due to a medical condition.

But does compliance with these regulations and the ACA constitute compliance with the ADA and provisions in HIPAA?

The ADA mandates that such programs be considered “voluntary,” but there is little guidance from the EEOC or the courts in terms of what that means. How can employers encourage participation or penalize non-participation without violating the ADA?

In 2009, the EEOC agreed that incentives up to twenty percent of the total cost of coverage under HIPAA did not constitute a violation, though the requirement of health risk assessments as a condition for health plans could not be considered “voluntary.” But the EEOC rescinded endorsement of the HIPAA standard and has not taken a formal position since.

Undoubtedly, we cannot accomplish the nation’s public health objectives without the role that employers play in health policy. Employers establish a wide variety of wellness programs both by design and execution. Given this, employers shouldn’t have to face legal uncertainty exacerbated by the EEOC’s seeming negligence in providing clarity.

Both the ADA and ACA can coexist, but without action by the EEOC to clarify, employers may face a legal threat notwithstanding full compliance with the ACA. As it stands, any confusion knotted up in the ADA, HIPAA and the ACA may discourage employers from implementing wellness programs. And if the EEOC cannot articulate a public position on compliance with the ADA or define what the statute means by “voluntary,” an alternative solution lies in Congress enacting legislation.

There is no doubt that employer wellness programs can be useful, though concerns about wellness programs and possible discrimination of those with disabilities must be addressed so that we can shift the focus to the impact of the programs and how we can improve them.