Finance News & Insights

Will common health plan feature now put you at risk for a lawsuit?

Heads up: A recent lawsuit puts employers in a very tricky spot regarding health plan compliance.

What’s worse, employers can’t even rely on guidance from the feds to protect themselves from illegal action.

That’s because of a recent move by a federal judge in AARP v. EEOC, a lawsuit claiming the government’s health plan incentive rules violate the ADA and GINA.

Illegal wellness incentives?

The above case hinged around the notion of a “voluntary” wellness program. Under the EEOC regs, employers can offer incentives of up to 30% of the total cost of coverage for self-only coverage for participation in company-sponsored wellness programs that include components like HRA and biometric screenings.

The AARP argued that such an incentive ran counter to the “voluntary” requirements of the ADA and GINA because employees who can’t afford to pay 30% more in premiums would essentially be forced to give up protected information they wouldn’t disclosed otherwise.

Essentially, a judge “vacated” the EEOC’s current incentive rules beginning Jan. 1, 2019, and the EEOC has the option of reworking those regs in the interim.

The problem for employers

So why is this so problematic for employers?

First, assuming the EEOC does draft new regs on wellness incentives with a lower incentive threshold, adjusting to the new regs is going to be an administrative hassle that involves reworking plan designs and documents for employers.

But the interim period – the time between now and Jan. 1, 2019 – poses the most issues.

Reason: Even though companies may be able to follow the current EEOC wellness regs during this period, that move is far from a safe legal bet for employers.

Lawsuits like the AARP’s essentially open the door for employees and their sue-happy attorneys to use to attack incentive-based wellness programs.

4 alternatives to risky incentives

If you’re not comfortable taking the risks associated with incentive-based medical exams and health risk assessments (HRAs), there are other options.

Bruce Gillis, Businessolver’s strategy practice leader of health, welfare and compliance, offers the following options for concerned employers:

Give workers more choices. One surefire way to make wellness program participation truly voluntary is by giving workers the option of earning the same incentive in a manner that doesn’t involve biometric screenings or HRAs.

Example: an incentive based on completing an education requirement.

Reduce the incentive. The judge in the AARP case essentially said the current 30% incentive maximum was too high.

Decreasing the amount of your incentives for biometric screenings and/or HRAs not only reduces your risk of being accused of not having a voluntary program, it also sets you up for the future. That’s because the EEOC is likely to reduce the maximum incentive under the
new regs.

Put incentives on hold. While employers wait for further EEOC guidance, the safest move is to fully eliminate wellness incentives.

If you do go this route, you may want to direct the incentive budget toward other benefits employees want – financial wellness, more flexible work arrangements, PTO, etc.

Switch the incentive structure. Finally, employers can restructure their incentives so that no rewards are specifically tied to biometric screenings or HRAs. Gillis uses the example of blood screenings that test for nicotine. Or, instead of using the exam, simply ask employees if they use tobacco and adjust premiums accordingly.

Note: This story was originally published on our sister website, HR Morning.

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