Did you know that the American Association of Retired Persons (AARP) has initiated a lawsuit against the Equal Employment Opportunity Commission (EEOC)? If you’re not already in the know about this, it may seem like an unlikely event, given that the two organizations are typically on the same side in matters related to employee rights. Let’s take a look at what led up to this lawsuit.
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This quick recap is a simplification of the situation to highlight for employers what is changing with the EEOC ruling and why the AARP contends that it should not be implemented.
What Led to This?
First things first, let’s look at the groundwork that paved the way for this lawsuit to happen.
The start goes back a few years with the implementation of the Affordable Care Act (ACA). Part of the ACA includes regulations on how employers can implement employee wellness programs. In addition to the ACA, the implementation of wellness programs is actually regulated by several different laws:
- The Americans with Disabilities Act (ADA) is involved because of the provisions that prohibit employers from discriminating on the basis of an employee’s health status. It also prohibits employers from inquiring about that status.
- The Genetic Information Nondiscrimination Act (GINA) makes it illegal for employers to discriminate on the basis of genetic information (including family medical history), and, like the ADA, employers are not allowed to ask about such information.
- The Employee Retirement Income Security Act (ERISA) also has provisions that prohibit discrimination related to health status.
- The Health Insurance Portability and Accountability Act (HIPAA) prohibits health insurers from discriminating on the basis of health status but allows an exception in the form of rebates or discounts for participation in a wellness program. (These exceptions were codified as part of the ACA implementation.)
In essence, the administration of an employee wellness program—and the accompanying disclosure of employee medical information—is a bit of an exception to the above regulations. This exception has been allowed given the provision that participation (and disclosure of medical information as a result of such participation) normally must be voluntary. Incentives for participation were also allowed, within limits. The key here was the fact that it was meant to be purely voluntary, thus without penalty for choosing not to participate. Thus, employees who want to keep such information private may do so.
In May 2016, the EEOC issued an updated rule to clarify how employers can implement wellness programs and their accompanying incentives (and collection of medical information) while staying in compliance with all of the above regulations. This guidance primarily relates to how much of an incentive can be imposed as part of implementing a wellness program. The big question that the EEOC is trying to address is how much of an incentive can be offered while keeping the wellness program participation truly voluntary.
In this final rule, the EEOC guidance states that incentives of up to 30% of the cost of the “self-only” version of the employee’s health plan may be used to encourage participation. Up to 50% of that premium may be used to encourage participation in programs that aim to help individuals stop tobacco use.
The AARP lawsuit is proposing that this 30% incentive/penalty actually creates a situation in which wellness programs may end up violating some of the above laws. The argument is that by allowing such a high level of incentive related to participation in such a program—in some cases, significantly impacting the employee’s premium—it is in effect no longer voluntary due to the possibility of such a high financial cost for nonparticipation. (The EEOC guidance was looking to maintain that “voluntary” status, but the AARP contends it does not.) When the participation is no longer truly voluntary, that goes against the idea that an employer cannot request medical information. It erases privacy and introduces discrimination in benefit levels.
The AARP contention is that this situation is no longer in alignment with the ADA and GINA regulations that prohibit an employer from requesting medical or health information, as now employers will be able to have a stronger stance in pressuring employees to do so.
The opposite side of the coin is that participation is still voluntary despite the idea of financial incentives. There is no requirement of participation involved despite financial incentives for doing so.
The AARP lawsuit is seeking an injunction to the implementation of the new rule, which is set to go into effect January 2017.