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A Victory for Wellness Plans

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On December 30, 2015, the EEOC lost a Wisconsin federal court case (EEOC v. Flambeau, Inc.) that determined group health plan eligibility on certain wellness plan participation. Since it is a federal case, it has significance beyond just Wisconsin. While this could be considered a groundbreaking case regarding wellness plans, employers should proceed with caution. 

2016 looks to be an important year for regulations related to wellness programs since the EEOC has now lost two important cases and it will soon publish final wellness regulations. Program features like health risk assessments (HRAs) and biometric screenings have already become popular components of employer-sponsored health plans. Employers often incentivize employees to participate in these programs by offering health plan premium discounts, reductions in cost-sharing, increased employer contributions or other inducements. 

The Flambeau Wellness Plan

These types of incentives typically pass EEOC scrutiny. But in the Flambeau case, Flambeau, Inc. altered its self-funded plan to be available only to those employees who participated in a HRA and biometric screenings (regardless of the results). Initially, Flambeau, Inc. provided a $600 credit to employees enrolled in its health plan who participated in the HRA and biometric screenings. The credit was later eliminated, and eligibility for the group health plan was conditioned on participation in the HRA and biometric screenings. 

The EEOC challenged this plan eligibility feature and argued that Flambeau's wellness program violated the American's With Disabilities Act (ADA) because it required employees to complete medical examinations in order to enroll in its medical plan. The EEOC insisted that the ADA prohibits an employer from requiring a medical examination unless such examination is shown to be job-related and consistent with business necessity. 

What did the EEOC Argue?

Flambeau argued that such programs are protected by the ADA's "safe harbor" for insurance benefit plans. This section protects employers from liability for acts that would otherwise violate the ADA if such acts were in the course of establishing or administering the terms of a true wellness plan. The company asserted that it was using aggregate information obtained from the wellness program to establish premium contributions, assess the need for stop-loss insurance, adjust co-pays, and sponsor other programs designed to address the risks identified in the wellness program data. The company did not review or access test information on an individual basis. 

Reasons for the Final Decision

The court found support for its position in another case that the EEOC lost, Seff v. Broward County, an Eleventh Circuit decision, in which the "safe harbor" was applied to uphold a similar program in which an employer imposed a $20 bi-weekly surcharge for employees who did not participate in its wellness program requiring biometric testing and completion of a HRA. 

 

Takeaways from EEOC v. Flambeau, Inc.

  • As of this case holding, the current legal position is that self-funded employers can limit participation in a group health plan to those individuals who participate in health risk assessments and biometric screenings. In other words, employers can force employees to participate in HRAs and health screenings by limiting eligibility for the group health plan to those who participate in HRAs and/or health screenings. A plan will pass scrutiny under the "safe harbor" requirements as long as the employer does not receive any specific results about any individual employees. Rather, results must be reported to the employer in the aggregate, allowing the company to estimate insurance costs and set premium levels. Employers cannot condition employment on participation in these wellness initiatives; they can limit only participation in the group health plan. 
  • The EEOC will likely appeal the decision, and is still working on final wellness program regulations. You can be certain that the EEOC will address this issue in greater detail and/or modify the current safe harbor rule before it issues final regulations.
  • If you implement these changes or requirements for your group health plan, be aware that any such restrictions may have to be modified in the future if there is additional litigation that produces a different result, or if the EEOC publishes the final regulations that change the "safe harbor" requirements and the court finds such change(s) to be reasonable. 
  • When an employer intends a wellness program to be a part of its health plan, it should include the terms of the wellness program in its summary plan description (SPD). The EEOC raised this issue when challenging the application of the "safe harbor" because the employer's SPD did not have express terms related to the program. The court determined this was not dispositive, but it is recommended that the SPD contain wellness program terms, particularly where those terms affect the eligibility to participate in the plan. 

If you need assistance with designing, implementing or modifying your wellness program, please contact your HNI representative. 

 - ON-DEMAND WEBINAR & SLIDE DECK -  Building a  Driver Wellness Program  That Sticks