Congress Looks to Provide Clarity on Employee Wellness Programs

By Ilyse Wolens Schuman and Michael J. Lotito

As promised during a Senate hearing conducted earlier this year, members of the House and Senate have introduced a bill seeking to reduce the legal uncertainly in administering employee wellness programs.

The Preserving Employee Wellness Programs Act (H.R. 1189, S. 620) would:

  • Explicitly permit wellness programs to offer a financial incentive to participate;
  • Allow an employee’s spouse to participate; and,
  • Give employees up to 180 days to request and complete an alternative wellness program if it is medically inadvisable or unreasonable to complete the employer’s current wellness program.

At least half of employers offer a wellness program

Many companies offer various types of wellness programs to improve employee health and decrease health care costs.

  • “Participation-only” wellness programs provide a reward — usually in the form of a healthcare cost discount — to employees who attend periodic wellness seminars or complete health risk assessment questionnaires.
  • “Outcome-based” wellness programs condition the reward on the employee meeting a certain health-related benchmark, such an appropriate body mass index (BMI) or blood cholesterol level, or remaining tobacco-free. Biometric screenings are a common part of these wellness and health promotion programs.

According to a study conducted by RAND Health and commissioned by the U.S. Departments of Labor and Health and Human Services, more than half of U.S. employers offer some type of wellness program.

While the Affordable Care Act included provisions designed to promote the use of wellness programs, the Equal Employment Opportunity Commission has recently taken action at odds with this objective. The ACA codified and built upon regulations under the Health Insurance Portability and Protection Act (HIPAA), which provided that a wellness program conditioning a financial incentive on the participant meeting a standard related to a health factor is acceptable so long as it met certain criteria.

Congress is acting because of EEOC lawsuits

Among other stipulations, the regulations specified that the value of the wellness plan incentive could not exceed 20 percent of the cost of coverage. The ACA endorsed the use of financial incentives for health factor-based wellness programs, and increased the incentive limit from 20 to 30 percent of the cost of coverage. The ACA’s regulations also authorize an increase in this maximum amount of up to 50 percent for tobacco cessation programs.

The bill comes in response to lawsuits the EEOC has filed in the past year against employers on the grounds that their programs violate the Americans with Disabilities Act (ADA) and/or the Genetic Information Nondiscrimination Act (GINA).

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In EEOC v. Honeywell International Inc., the EEOC tried to enjoin the employer from implementing its program, claiming it violated both the ADA and GINA by penalizing employees for not participating in biometric screenings. The federal district court rejected the EEOC’s request, noting that “great uncertainty persists in regard to how the ACA, ADA and other federal statutes, such as [GINA] are intended to interact.” The EEOC filed similar lawsuits in August and October of 2014.

According to the sponsors of the Preserving Employee Wellness Programs Act, Sen. Lamar Alexander, R-TN, and Rep. John Kline, R-MN, the bill will reaffirm existing law. The legislation does not limit the EEOC’s authority to investigate and litigate complaints of employment discrimination.

Helping employees choose “health lifestyle choices”

The EEOC plans to issue regulations clarifying the interplay among the ACA, ADA, and GINA, but has yet to do so. In the meantime, employers are left in legal limbo.

In a press release, Sen. Mike Enzi, R-WY, one of the Senate bill’s co-sponsors, said:

With so many employers taking advantage of the benefits that come with offering workplace wellness programs, it is important that Congress acts to clear any legal uncertainty or confusion … By reaffirming existing law, Congress is ensuring that employees can continue to benefit financially when they choose to make healthy lifestyle choices.”

Other co-sponsors of the legislation include Senators Johnny Isakson, R-GA, Tim Scott, R-SC, Orrin Hatch, R-UT, Pat Roberts, R-KS, and Rep. Tim Walberg, R-MI.

Ilyse W. Schuman is a shareholder in the Washington, D.C. office of Littler Mendelson. She provides strategic counsel and representation to clients on a broad array of workplace issues and developments in Congress and executive branch federal agencies.

She is a member of the firm's Government Affairs practice and works with employers in multiple industries, including trade associations. She also leads the firm's Legislative and Regulatory practice.

A former top congressional staffer and policy advisor, Ilyse worked on the Senate Committee on Health, Education, Labor and Pensions from 2001 to 2008, serving as minority staff director and chief counsel. She began her work in the Senate as chief labor counsel for Senator Mike Enzi on the Subcommittee on Employment, Safety and Training, where she led legislative and oversight activities.

After leaving the Senate, Schuman joined a leading trade association of electro-industry manufacturers as vice president, where she served as managing director of the Medical Imaging and Technology Alliance, the collective voice of medical imaging equipment manufacturers. Additionally, she served as in-house counsel at a manufacturer and market and technology leader, where she advised the company on human resource matters. In law school, she was a member of the Journal of Law and Policy in International Business.