With the rising costs of healthcare and the implementation of the Affordable Care Act, more employers are offering or revamping wellness programs that that are aimed at incentivizing employees to adopt healthier lifestyles. These programs include things such as health questionnaires, tests and screening, reduced or free gym memberships, competitions, and educational programs. Employees are rewarded for participating in these programs with financial incentives like premium reductions or cash bonuses, and employers often benefit from these programs by lowering the costs they pay for group health insurance coverage. As with anything that involves employers implementing programs that relate to its employees’ medical information or physical capabilities, caution is necessary so that employers do not run afoul of anti-discrimination provisions in the Americans with Disabilities Act (“ADA”).
The ADA generally prohibits involuntary medical examinations or disability-related inquiries. Wellness programs, however, that are set up as part of an employer’s group health benefit plan can fall within the ADA’s safe harbor provision, which is designed to allow for collection of such information for underwriting and risk assessment.
In the past several months, however, the EEOC has filed two lawsuits against employers who took adverse action against employees for failing to submit to voluntary health screening tests under the companies’ wellness programs. In one suit, the employer terminated an employee shortly after the employee opted out of a voluntary wellness program. In the other suit, the employer cancelled the workers’ insurance and shifted the entire premium cost to the employee after the employee failed to complete a “voluntary” health screening and assessment.
If the wellness programs are part of a group health plan, it can be argued that it is not subject at all to the ADA’s prohibition on involuntary medical examinations. There is some case law out there that supports this theory, however, the case law is not definitively clear on this issue as of yet, so employers should still proceed with caution as to whether their programs are truly voluntary or not.
When making an assessment on whether a program is voluntary, the focus has been on whether an employer offers rewards or alternatively penalizes employees for participation or lack thereof in a program. Rewards have generally been viewed as acceptable, but in both of the programs recently challenged by the EEOC, the employer penalized the employee for not participating in a plan. Imposing adverse consequences (such as termination or increased premiums) will likely be met with opposition by the EEOC and could get your company sued for violating the ADA.
The key for employers is to avoid making participation effectively mandatory by penalizing employees for lack of participation. Employers that stick to providing favorable incentives to their employees that partake in wellness programs should be safe from EEOC scrutiny and minimize the risk of any ADA litigation.