75th annual nhrma - nhrma 2014 conference

1 © 2013 Lane Powell PC

A Bridge to Tomorrow

75th Annual NHRMA

Conference & Tradeshow

Presented by


Can Employers Legally

Discriminate Against

Obese, Sick & Lazy People?

Katheryn Bradley

Craig A. Day Lane Powell PC

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Overview • Wellness Programs

–HIPAA Final Regulations

–EEOC Developments

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Final HIPAA Wellness Rules • HIPAA non-discrimination rules

prohibit discrimination against

individuals based on health status:

– Except benign discrimination in favor of

individual with adverse health status

– So long as HIPAA wellness rules are met

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Final HIPAA Wellness Rules

• Affordable Care Act codified most

HIPAA wellness program rules

• Proposed wellness rules issued

November 26, 2012

• Final rules issued June 3, 2013

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• Participatory:

–Reward not based on health factor

–HIPAA wellness rules do not apply

–Other laws may apply

–Examples

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• Health-contingent

–Reward based on health factor

–HIPAA wellness rules apply

–NEW: two subcategories: • Activity only

• Outcome based

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• Activity based – Individual required to complete

activity related to health factor but no required outcome

–E.g., walking, diet or exercise programs

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• Outcome based – Individual required to attain or

maintain specific health outcome to obtain reward

–E.g., reward for not smoking, certain result on biometric screening, or reward for favorable BMI

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• Health-Contingent Wellness Program

• Five requirements:

– Annual qualification

– Amount of reward/penalty

– Reasonable design

– Reasonable alternative

– Notice of reasonable alternative

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• Amount of reward – Old rule: rewards for all health-contingent programs

not to exceed 20% of single employee coverage

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• Amount of reward –New Rule:

• 30% limit for all health-based wellness programs

• Tobacco — reward may not exceed 50%

–Tobacco only — up to 50%

–Combined — other rewards limited to 30%; tobacco may provide additional 20% reward

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• Reasonable alternatives:

–Old Rule:

• Provide reasonable alternative to those who show it is unreasonably difficult due to medical condition or medically inadvisable to satisfy standard

• May require doctor’s note

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• Reasonable alternatives:

– New Rule:

• If education, employer must provide

• If diet, employer must pay for membership (not food)

• If time commitment, it must be reasonable

• If doctor says standard not “medically appropriate,” plan must accommodate doctor recommendations but may impose otherwise applicable cost sharing

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• New Reasonable Alternative Rules for activity-based standard:

– Medical reasonable alternative required if unreasonably difficult due to medical condition or medically inadvisable to satisfy standard

– Could be medical judgment decision ultimately subject to external review

– Can require doctor’s note if reasonable

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• Reasonable Alternative for

Outcome-based Standard

–Must give alternative to anyone who

fails test

–No medical reasonable alternative

–No doctor’s note can be required

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• Unlimited Alternatives? – If alternative is participatory, no further

alternatives required

– If alternative is activity-based, must give second alternative if individual medically incapable of satisfying

– If alternative is outcome-based, must give second alternative to anyone who fails AND two special rules apply

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• Special rules

– If alternative is outcome-based must give

second alternative to anyone who fails

PLUS

• If alternative is outcome-based, must allow

time to comply

• Must allow individual to work with personal

physician to craft tailored alternative

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• Reasonable alternative — payment of

reward

– Must pay same/full reward as someone who

met initial standard

– May need to pay reward retroactively or pro

rata going forward

– Must pay in same year in which earned (or

shortly thereafter)

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• Notice of reasonable alternative — new requirements:

– Must include contact information and statement that recommendations of personal physician will be accommodated

– Required where plan references premium differential based on wellness program

– For outcome based standards, required in notice that individual failed standard

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Genetic Information

Nondiscrimination Act of 2008

• GINA prohibits discrimination based on genetic information in terms and conditions of employment

• Genetic information means information about – Genetic tests or

– Any disease, disorder, or condition of an individual’s family members • i.e., family medical history

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EEOC’s GINA Rules

•Plan cannot offer incentive for completion of HSA that asks family history or collects genetic information

•Any HSA must make it clear that answering questions about family medical history is optional and employee will not be penalized for not answering

•Any HSA should include the GINA disclaimer

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Americans with

Disabilities Act

• ADA prohibits “medical examinations and inquiries” unless voluntary

• ADA requires medical information be kept in separate confidential file

• Early Guidance: Carrot okay, but “stick” illegal because not voluntary

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ADA’s Safe Harbor

ADA shall not be construed as prohibiting

a covered entity from establishing,

sponsoring, observing or administering

the terms of a bona fide benefit plan that

are based on underwriting risks,

classifying risks or administering such

risks that are based on or not inconsistent

with state law.

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ADA’s Safe Harbor

• Seff v. Broward County (11th Circ. 2012):

– Safe harbor provision exempted wellness

program from ADA prohibitions

– No other decisions yet

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EEOC and Wellness • EEOC: Compliance with GINA and HIPAA

wellness rules does not mean compliance with other non-discrimination laws enforced by the EEOC

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EEOC and Wellness

• January 2013

• EEOC Informal Discussion Letter – Implies that reward could constitute

penalties to non-participants, making the program “involuntary”

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EEOC and Wellness

• EEOC Informal Discussion Letter

– If wellness program is outcome-based or

requires participation in an activity to earn

reward, EEOC states employer must

provide reasonable accommodation to

those who cannot meet requirements

• Note: consistent with wellness rules under

HIPAA

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EEOC and Wellness

• Public Meeting (May 8, 2013)

– Penalties (or withholding reward) for failure to

meet certain health standards could be

subject to disparate impact challenge

– Advocates cited disparate impact on women,

racial minorities, disabled, older workers

– Failure to consider that individual has multiple

jobs/family responsibilities could lead to

caregiver discrimination

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EEOC and Wellness

• Public Meeting (May 8, 2013)

– EEOC commissioners acknowledge

guidance is needed so employers know

whether meeting other wellness rules will

be sufficient to comply with anti-

discrimination laws

– But no guidance issued so far….

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Wellness Programs:

Best Practices

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• Consider participatory programs not tied to

specific outcomes

• Use a separate vendor to meet confidentiality

requirements

• Avoid large incentives that may disadvantage

those with disabilities

• Comply with GINA and HIPAA rules


Katheryn Bradley

Craig A. Day Lane Powell PC

[email protected]

[email protected]

206.223.7000

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mailto:[email protected]

mailto:[email protected]

75th annual nhrma - nhrma 2014 conference

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