The EEOC has announced (here) the filing of another lawsuit challenging an employer’s wellness plan on the basis that it violates the ADA. Like a similar case filed in August (see coverage here), the EEOC alleges that the employer’s plan fails under the ADA because it is not a voluntary program.
Background. The wellness plan at issue in this case sounds fairly typical. Employees apparently were asked to submit to a biometric screening and complete a health risk assessment. So far, so good. But employees who declined to participate in the wellness plan are said to have had their health plan coverage canceled or to have been required to pay 100% of the cost of coverage under the employer's health plan. By comparison, employees who participated in the wellness plan were only required to pay 25% of the cost of coverage under the employer's health plan.
Something Doesn’t Add Up. The facts as stated by the EEOC aren’t totally consistent. First they say health-plan coverage was canceled when employees declined to participate in the wellness plan. Then they say higher health-plan costs were shifted to employees who declined to participate in the wellness plan. It can’t be both - at least not for the same employees. So we may not have a clear picture of the plan in question at this point.
Voluntariness. But whatever the facts may be, we can see that the EEOC is clearly focused on voluntariness. According to the press release: “Having to choose between complying with such medical exams and inquiries, on the one hand, or getting hit with cancelation or a penalty, on the other hand, is not voluntary and not a choice at all."
How Much Penalty Is Too Much? This case may begin to tell us something about an issue of great interest to employers: Can a penalty (e.g., a premium surcharge) be assessed against employees who decline to participate in a wellness program and, if so, how much can the penalty be?
We know from the HIPAA and ACA wellness-plan regulations that the reward or penalty in connection with a health-contingent wellness plan generally cannot exceed 30% of the premium (50% for tobacco-related plans). There is no limitation under those rules on a participation-only plan. But the EEOC seems to be saying in this case that a 75% penalty is too much.
We’ll be watching closely to see if the court in this case agrees with the EEOC’s view.