A Check Up for Employer Sponsored Wellness Programs

Transcription

1 A Check Up for Employer Sponsored Wellness Programs ACC CLE September 9, 2015 Moderator: Sarah Bassler Millar Drinker Biddle & Reath (312) Panelists: Kendra Allaband Presence Health (312) Joe Rippin Allstate Insurance Company (847)

2 Panel Overview How do employers incentivize participation in wellness programs without running into legal issues? Introduction to Wellness Programs Key Legal Rules Panel Discussion of Case Studies Concluding Remarks & Audience Questions ACC CLE: A Check Up for Employer Sponsored Wellness Programs 2

3 Spectrum of Wellness Programs Spectrum of Wellness Programs Education Materials Fitness Challenge/Weight Loss Program Access to HRA Reward (Require) HRA Voluntary Mandatory Access to Fitness Center Flu Shots Free Biometric Screenings Smoking Cessation Reward (Require) Biometric Screenings ACC CLE: A Check Up for Employer Sponsored Wellness Programs 3 3

4 There are Lots of Legal Issues ADA GINA (I & II) ACC CLE: A Check Up for Employer Sponsored Wellness Programs 4

5 Key Legal Rules Is the program an ERISA group health plan? Many (but not all) wellness programs will be considered ERISA group health plans (our case studies assume yes) If ERISA applies, all ERISA compliance obligations apply: Plan document & SPD Claims procedure 5500/SAR HIPAA (nondiscrimination & privacy) GINA (Title I) COBRA Regardless of ERISA status, may have ADA considerations Group health plan status may be advantageous - Incentives excluded from taxable income - Avoid GINA Title II - More clarity on permitted incentive amount under proposed ADA rules ACC CLE: A Check Up for Employer Sponsored Wellness Programs 5

6 Key Legal Rules (Continued) HIPAA Nondiscrimination Group health plans cannot vary eligibility, benefits or contributions (premiums) based on a health factor (e.g., medical condition, claims experience, receipt of care, etc.) Exception for programs that are designed to promote health and prevent disease ( wellness programs ) and meet specific requirements financial incentives permitted HIPAA rules do not apply if program is participatory only (not required to satisfy a standard related to a health factor as a condition for obtaining a reward) If program is health contingent, different requirements apply depending on whether activity-only or outcomebased ACC CLE: A Check Up for Employer Sponsored Wellness Programs 6

7 Key Legal Rules (Continued) HIPAA Nondiscrimination (Continued) Requirements for wellness program to be considered nondiscriminatory: - Opportunity to qualify at least once per year - Amount of reward limited to 30% of total cost of coverage (increased to 50% if program includes tobacco cessation) - Reasonable design (facts and circumstances determination) - Uniform availability and reasonable alternative standards ( RAS ) Activity-only: offer RAS if individual has a medical condition; ok to require verification of condition (e.g., physician statement) Outcome-based: must offer RAS to anyone who does not meet initial standard set; cannot require verification of a medical condition as a condition for providing RAS Look at facts and circumstances to determine whether RAS is reasonable - Notice of availability of reasonable alternative standards ACC CLE: A Check Up for Employer Sponsored Wellness Programs 7

8 Key Legal Rules (Continued) Genetic Information Nondiscrimination Act (GINA) Title I Group Health Plans cannot collect genetic information (including family medical history) for underwriting purposes or prior to or in connection with enrollment - Impacts use of health risk assessments Title II - Employers may not request, require, or purchase genetic information of an individual or family member - Exception for voluntary programs if employee gives prior, knowing, voluntary written authorization and certain confidentiality requirements satisfied - What does voluntary mean? Cannot require the information or penalize for not providing it. If offer financial inducement, must always provide. ACC CLE: A Check Up for Employer Sponsored Wellness Programs 8

9 Key Legal Rules (Continued) ADA (Americans with Disabilities Act) Restricts employer ability to request medical information from (or require a medical examination of) a current employee unless it is job related and consistent with business necessity Exception for voluntary wellness programs EEOC position historically: employer may not require participation nor penalize employees who do not participate Exception for bona fide benefit plans based on underwriting risks if not inconsistent with state law (Seff v. Broward County) ACC CLE: A Check Up for Employer Sponsored Wellness Programs 9

10 Recent EEOC Developments Fall 2014 EEOC Chicago Regional Lawsuits Followed by Public Outcry of Policy Making Through Litigation EEOC v. Orion Energy Systems Inc. - EEOC alleges employee terminated in retaliation for objecting to HRA, biometric screening, and Range of Motion Machine to assess physical fitness. Employee objected to program and declined participation and was required to pay full cost plus $50 penalty. EEOC v. Flambeau, Inc. - EEOC challenges employer program with HRA and biometric test; employee with cardiomyopathy and congestive heart failure had coverage cancelled (but could get COBRA at 102% of the cost) EEOC v. Honeywell International, Inc. - EEOC alleged biometric testing was unlawful medical exam under ADA and requirement for spousal testing and tobacco surcharge violates GINA Title II - Judge denied injunction, noting uncertainty of the rules ACC CLE: A Check Up for Employer Sponsored Wellness Programs 10

11 Recent EEOC Developments (Continued) EEOC Proposed ADA Rule (April 20, 2015) Wellness programs must: - Be reasonably designed to promote health or prevent disease - Be voluntary (note new guidance on incentives if program is a group health plan) - Keep employee medical information confidential - Provide reasonable accommodations (absent undue hardship) - Notify employees about how their medical information may be used (if program is a group health plan) Caution: while there is some overlap in the EEOC proposed ADA rule and the HIPAA Wellness Rules, compliance with one rule will not automatically mean compliance with the other ACC CLE: A Check Up for Employer Sponsored Wellness Programs 11

12 Recent EEOC Developments (Continued) What is Voluntary for ADA Purposes? Cannot deny coverage or limit benefits under a plan (includes limiting people to particular benefits packages) if employee does not participate Cannot take any adverse employment action or retaliate against employees (e.g., for refusing to participate in the program or for filing a charge with the EEOC concerning the program). If program is part of a group health plan, can offer incentive of up to 30% of total cost of employee self-only coverage ACC CLE: A Check Up for Employer Sponsored Wellness Programs 12

13 Case Study #1 Premium Reduction for Completion of HRA Program: Employer provides $20/pay period premium reduction if employee completes HRA within 30 days after enrollment in health plan; HRA does not ask about family medical history; nothing further required Potential Legal Issues: No HIPAA or GINA issues; perhaps ADA issue ACC CLE: A Check Up for Employer Sponsored Wellness Programs 13 13

14 Case Study #1 Key Legal Issues HIPAA Nondiscrimination Does not apply to participatory programs which do not require an individual to satisfy a standard related to a health factor to obtain a reward; no limit on incentive GINA Does not apply because no genetic information (no family medical history) ADA Does apply; proposed rule would permit incentive of up to 30% of total cost of coverage if proper notice given ACC CLE: A Check Up for Employer Sponsored Wellness Programs 14 14

15 Case Study #1 Key Legal Issues (Continued) ADA-Required Notice to Employees A wellness program that is part of a group health plan must provide notice to employees that: - Is written so employees can reasonably understand it; - Describes what type of medical information will be obtained and the specific purpose for which it will be used; and - Describes: the restrictions on the disclosure of the employee s medical information; the employer representatives or other parties with whom such medical information will be shared; and the methods the employer will use to ensure that medical information is not improperly disclosed (including whether the employer complies with HIPAA regulations) ACC CLE: A Check Up for Employer Sponsored Wellness Programs 15

16 Case Study #1 - Solution Premium Reduction for Completion of HRA Solution: Document the requirement is part of the health plan, ensure incentive limited to 30%, give proper notice, and accommodate requests by those with a condition preventing them from completing the HRA ACC CLE: A Check Up for Employer Sponsored Wellness Programs 16 16

17 Case Study #2 HRA & Screenings Required to be Eligible Program: Employer requires that employees complete an HRA and biometric screening as a condition of being eligible to enroll in the health plan. The HRA asks whether employee or family members have been diagnosed with heart disease and certain other conditions. Potential Legal Issues: discrimination under GINA (family medical history is genetic information) and ADA (screening is prohibited medical exam) - Note: No HIPAA discrimination issue because participation only program ACC CLE: A Check Up for Employer Sponsored Wellness Programs 17 17

18 Case Study #2 Key Legal Issues GINA Title I Health plans may use a health risk assessment IF: - No genetic information questions (no family medical history) OR - No incentive OR - Two separate questionnaires AND - Use disclaimer to prevent incidental disclosures ADA EEOC proposed rule permits a financial incentive (e.g., premium reduction), but does not permit denial of coverage if employee does not participate in a wellness program ACC CLE: A Check Up for Employer Sponsored Wellness Programs 18 18

19 Case Study #2 - Solution HRA & Screenings Required to be Eligible Program: Employer requires that employees complete an HRA and biometric screening as a condition of being eligible to enroll in the health plan. The HRA asks whether employee or family members have been diagnosed with heart disease and certain other conditions. Potential Legal Issues: discrimination under GINA (family medical history is genetic information) and ADA (screening is prohibited medical exam) - Note: No HIPAA discrimination issue because participation only program Solutions: Provide a dollar reward (e.g., discount premiums) instead of restricting access to the plan; eliminate questions related to family medical history ACC CLE: A Check Up for Employer Sponsored Wellness Programs 19 19

20 Case Study #3 Employees Must Participate in Step Walking Program Program: All plan participants must participate in a walking program. Participants who achieve 30,000 steps per week are entered into a quarterly raffle to win an ipad. Potential Legal Issues: HIPAA nondiscrimination and ADA ACC CLE: A Check Up for Employer Sponsored Wellness Programs 20

21 Case Study #3 Key Legal Issues HIPAA Nondiscrimination Program must offer reasonable alternative standard, or waiver, if individual has a medical condition which makes it unreasonably difficult or medically inadvisable to participate Tax Considerations Incentives may be taxable income If it s part of a group health plan benefit, likely excluded If it s cash, gift card or other prize with a value that can be determined, likely need to report on W-2 ADA May need to make reasonable accommodation (walking program may not be appropriate for someone with a disability) ACC CLE: A Check Up for Employer Sponsored Wellness Programs 21

22 Case Study #3 - Solution Employees Must Participate in Step Program Program: All plan participants must participate in a walking program. Participants who achieve 30,000 steps per week are entered into a quarterly raffle to win an ipad Potential Legal Issues: HIPAA nondiscrimination and ADA Solutions: Waive walking program requirement for those who have a medical condition or disability (provide automatic raffle entry) ACC CLE: A Check Up for Employer Sponsored Wellness Programs 22 22

23 Case Study #4 Employees Required to Get Healthy Program: Following a biometric screening, $500 contribution to health savings account given to employees whose BMI and total cholesterol is within the specified healthy range Potential Legal Issues: HIPAA nondiscrimination and ADA ACC CLE: A Check Up for Employer Sponsored Wellness Programs 23

24 Case Study #4 Key Legal Issues HIPAA Nondiscrimination Program must be reasonably designed to promote health or prevent disease, based on all relevant facts and circumstances - Cannot be overly burdensome or subterfuge for discrimination - Guidance encourages evidence-based alternatives Program must be reasonably available, factors include: - Employer assistance in finding alternatives; time commitment must be reasonable; if diet program, employer must pay participation fee but not for cost of good; may require cycle of failure and renewed effort Could provide waiver instead (e.g., for pregnancy) ADA Proposed rule provides that ADA reasonable design standard intended to be aligned with HIPAA May need to make reasonable accommodation depending on RAS offered ACC CLE: A Check Up for Employer Sponsored Wellness Programs 24

25 Case Study #4 - Solution Employees Required to Get Healthy Program: Following a biometric screening, $500 contribution to health savings account given to employees whose BMI and total cholesterol is within the specified healthy range Potential Legal Issues: HIPAA nondiscrimination and ADA Solutions: Offer alternative to employees whose cholesterol is out of range (e.g., participate in coaching program that includes monthly education regular exercise); must allow for input from individual s physician on what is appropriate for that individual ACC CLE: A Check Up for Employer Sponsored Wellness Programs 25 25

26 Case Study #5 Tobacco Cessation Program Program: Plan premium surcharge applies if participant uses tobacco; a separate surcharge applies if the participant s covered spouse uses tobacco Potential Legal Issues: HIPAA, ADA ACC CLE: A Check Up for Employer Sponsored Wellness Programs 26 26

27 Case Study #5 Key Legal Issues HIPAA Must limit the amount of reward to 50% of total cost of employee + spouse coverage (higher limit because it s tobacco cessation) Generally must provide full reward (no surcharge for entire year) if individual enrolls in the cessation program at the beginning of year, even if it takes a few months to complete the program; but, would be ok to impose partial surcharge if someone enrolls in cessation program mid-year ADA EEOC proposed rule permits a financial incentive of up to 30% of the total cost of employee-only coverage; does not increase to 50% for tobacco cessation programs, silent regarding spouses - If no nicotine screening, does ADA even apply? - ADA protects employees does that protection extend to spouses? ACC CLE: A Check Up for Employer Sponsored Wellness Programs 27 27

28 Case Study #5 Key Legal Issues Financial Incentives Penalty (surcharge) or Reward (discount) = Incentive (label doesn t matter) Total Cost includes employee portion and employer portion of the cost of coverage ACC CLE: A Check Up for Employer Sponsored Wellness Programs 28

29 Case Study #5 Key Legal Issues (Continued) Example of HIPAA Maximum Reward Type of Coverage Employer Pays Employee Pays Total Premium Total Non- Tobacco Reward Additional Tobacco Reward Total Maximum Reward Employee Only Employee + Spouse $2,700 $900 $3,600 $1,080 $720 $1,800 $1,080 $4,500 $4,500 $9,000 $2,700 $1,800 $4,500 ADA Rule: Maximum reward of 30% (no increase for tobacco; application to spouse?) 30 % 20 % 50 % ACC CLE: A Check Up for Employer Sponsored Wellness Programs 29

30 Case Study #5 - Solution Tobacco Cessation Program Program: Plan premium surcharge applies if participant uses tobacco; a separate surcharge applies if the participant s covered spouse uses tobacco Potential Legal Issues: HIPAA, ADA Solution: Provide opportunity to avoid surcharge if participant and spouse enroll in (and subsequently complete) a tobacco cessation educational program; note limits on total amount of the reward (see illustration above) ACC CLE: A Check Up for Employer Sponsored Wellness Programs 30 30

31 Consequences for Violations ERISA: Civil and criminal penalties, participant lawsuit, DOL enforcement action HIPAA and GINA Title I: $100/day/individual to whom the failure relates (affirmative reporting obligation) GINA Title II & ADA: EEOC charge >>> Equitable remedies (including injunctive relief and reinstatement with back pay), compensatory and punitive damages, attorneys fees Tax Code: Penalties and interest ACC CLE: A Check Up for Employer Sponsored Wellness Programs 31

32 What s Next? EEOC intends to issue guidance on how GINA Title II applies to wellness programs EEOC has stated that it is unlikely that a court or the EEOC would find that an employer violated the ADA if the employer complies with the EEOC ADA proposed rule until the final rule is issued Comment period for ADA proposed rule ended June 19, 2015 ACC CLE: A Check Up for Employer Sponsored Wellness Programs 32