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How “Healthy” is Your Wellness Program?

The Equal Employment Opportunity Commission (“EEOC”) recently brought suit for violations of the Americans with Disabilities Act (ADA) against a Wisconsin based company for requiring an employee to submit to a medical exam as part of a “wellness program,” and then terminating the employee when she objected to the program.  This suit is the first from the EEOC that directly challenges a wellness program under the ADA.

In general, a wellness program offers employees who participate the option of reduced health insurance premiums, or some other related financial incentive, if they engage in healthy activities or abstain from unhealthy activities.  Such programs are regulated by various federal statutes, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Earned Retirement Income Security Act of 1974 (ERISA) and the Patient Protection and Affordable Care Act (ACA).   In recent years wellness programs have become hugely popular with 94% of employers with over 200 workers, and 63% of smaller ones implementing them in one form or another.  According to rules set forth in the ACA there are two types of wellness programs:  outcome based programs which reward employees for attaining or maintaining a specific health outcome, for example reduced BMI, or abstaining from smoking; and activity-only wellness programs which require participants to undertake some sort of activity such as diet or exercise to obtain the reward.

The federal government promotes the use of these programs as they promote good health and thus reduce the overall burden on the healthcare system.  However, it is essential that employers understand that to avoid violations of federal law the wellness program must be voluntary.  The ADA prohibits employment discrimination based on disability.  Further the ADA forbids employers from requiring employees to submit to medical examinations, including physical exams, or to answer medical inquiries, unless there is a bona fide job related reason.  Voluntary medical examinations as part of a wellness program are permitted.  The medical examination must not only be voluntary under a permissible wellness program, but the information obtained must be kept confidential, and it may not be used to discriminate against the employee.

Thus, employers must ensure that the wellness program as a whole, and the medical examination in particular, are voluntary, and that they do not result in any job related consequence that are punitive in nature.  This is the issue in the EEOC’s suit.  The company, Orion Energy Systems, instituted a wellness program in which it would pay 100% of the employee’s healthcare premiums for participants.  When an employee refused to submit to a medical examination, the company removed her from the program, and subsequently terminated the employee.  According to the EEOC neither the wellness program nor the medical exam were voluntary, thus the company violated the ADA.

John Hendrickson, regional attorney for the EEOC Chicago district said that, “Employers certainly may have voluntary wellness programs, there’s no dispute about that, and many see such programs as a positive development.  But they have to actually be voluntary.  They can’t compel participation by imposing enormous penalties such as shifting 100 percent of the premium cost for health benefits onto the back of the employee or by just firing the employee who chooses not to participate.  Having to choose between responding to medical exams and inquiries, which are not job related, in a wellness program, on the one hand, or being fired, on the other hand, is no choice at all.”

Employers should thus take caution in establishing and maintaining a wellness program.  Such programs are a valuable means to reduce health insurance premiums, and to promote the overall wellbeing of employees.  However, if not properly administered, a company can find itself in violation of not only the ADA, but of other federal laws including the ACA.  Thus, all employers who have, or plan to establish, a wellness program, should consult with an HR professional or employment attorney to ensure they are in compliance with all applicable laws and regulations.

This article is intended for general information only and should not be construed as legal advice.


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