Workplace Wellness Programs under the ACA: Drawing the Line between Effective Health Incentives and Employer-Imposed Infringements

By: Patrick Tyler, Albany Government Law Review

As part of the new requirements for employer-provided health plans, the Affordable Care Act (hereinafter, “ACA”) allows employers to offer employees incentives worth up to thirty percent of their health plan costs, a ceiling that the government may increase to fifty percent under select circumstances.[1] In order to receive these incentives, employees must participate in workplace wellness programs, which often involve extensive testing and may require employees to meet certain benchmarks in improving their health such as attaining a target bodyweight.[2] These programs appear to be keeping with the general spirit of the new healthcare law, as a major theme in the ACA is an increased reliance on outpatient wellness programs and data-driven care.[3]

However, these programs are also the object of growing scrutiny and criticism. The Equal Opportunity Commission (hereinafter, “EEOC”) argues that these plans have the potential to be used as a vehicle to discriminate against workers with disabilities.[4] Critics also allege that these plans appear to be a way for employers to shift the financial burdens of health care expenses onto the backs of their employees.[5] Therefore, in order for these plans to be successful in the long term, it must be clear that they are both effective in achieving their stated employee health goals and have adequate legal safeguards in place to protect against discriminatory practices on the part of employers.

I. Civil Rights Challenges

In August 2014, the EEOC filed a lawsuit against the Orion Energy Company for violating the Americans with Disabilities Act (hereinafter, “ADA”) through the misuse of its wellness plan.[6] The EEOC alleged that the company fired one of its employees for failure to participate in its plan.[7] Orion’s wellness plan, according to the EEOC, involved an examination that made impermissible disability-related inquiries that were unrelated to business necessity.[8]

However, the extent to which the EEOC has the ability to sanction misuse of wellness programs and define their contours may be limited. Recently a federal district court in Minnesota rejected the EEOC’s request for an injunction against Honeywell International based on the agency’s contention that the company’s healthcare plan violated the ADA as well as the Genetic Information Nondiscrimination Act (hereinafter, “GINA”).[9] Honeywell’s healthcare plan conditions its contributions to its employees’ health savings account (hereinafter, “HSA”) on participation in the company’s wellness program.[10] The central feature of the program requires participants to undergo biometric testing which screens health indicators such as blood pressure and cholesterol in order “to inform participants about their health status, encourage improvement of specific health goals and ultimately reduce claim costs.”[11] Employees can choose to opt out of the program, but this would result in significant financial loss with regard to their HSA accounts.[12] The court’s rejection of the injunction signals that deference to the EEOC in matters of ADA discrimination in employer wellness plans may be limited.[13] This rejection also suggests there may be an inherent conflict over these plans between the EEOC and Health and Human Services (“HHS”) with regard to the extent to which employment and labor law protections can trump the objectives of the ACA.[14] This conflict may become more prominent as new challenges to workplace wellness programs arise, and courts are compelled to draw the line between incentives for a healthier lifestyle and discrimination based on health-related, but protect factors such as age and disability.[15]

The ultimate outcomes of the cases against Orion and Honeywell, and ADA claims brought under similar theories, will depend upon of a few factors. First, whether the surcharges and lost contributions in an employer’s plan are significant enough to render it involuntary.[16] Second, whether the nature and scope of the testing is limited to information necessary to make actuarial decisions for the purpose of underwriting or administering the risks of a “bona fide benefit plan,” thereby placing the wellness program under the ADA’s health insurance safe harbor, which allows for health testing that would otherwise impermissible under the ADA.[17] So far, the stance of the Minnesota District Court appears to favor Honeywell’s argument that their program falls under the ADA’s safe harbor in light of the ACA’s expanded permissiveness with regard to what defines a bona fide benefit plan.[18]

In addition to disputes over whether participation in an employer’s health program is involuntary or impermissibly invasive, conflicts may arise over the question of whether obesity is a protected trait.[19] The Americans with Disabilities Amendments Act (hereinafter, “ADAA”) of 2008 broadened the definition of what constitutes a disability under the ADA, making it easier for overweight employees to bring discrimination claims.[20]

Should workplace wellness programs continue to expand in number and scope, claims could potentially arise from participating employees who experienced a denial or decline of health savings account contributions for failure to meet weight loss benchmarks.[21] This type of litigation would pit the outlook of the EEOC and those civil rights advocates pushing to establish obesity as a non-transitory trait for the purposes of the ADA[22] against the underlying public health philosophy of the ACA, which seeks to create a public perception of weight loss as the attainable result of lifestyle changes.[23]

 II. Are Wellness Plans Effective?

A recent study by the Rand Corporation, commissioned by the Department of Labor, undertook a comprehensive analysis of healthcare plans at various companies.[24] The study found that many of the features of wellness plans, including onsite exercise facilities and access to organic food, were often well-received by employees, although satisfaction varied depending on the employer and differences in occupation.[25] Additionally, some requirements of plans were perceived as being overly intrusive or unfairly burdensome to some employees as opposed to others.[26] Furthermore, with regard to issues such as weight loss or smoking cessation, the incentives programs put in place by employers only seemed to have, at best, a modest impact on the health-related behavior of employees.[27] The study recommended that companies take more comprehensive steps to communicate both the availability and benefits of their wellness programs.[28] Furthermore, it emphasized that companies must make greater strides to promote acceptance of the plans among management and to make sure that there are proper accommodations in place to ensure access to the plans for all employees regardless of scheduling conflicts or other logistical obstacles.[29] Although the measurable benefits have been limited so far, proponents of workplace wellness programs highlight the need to look beyond their short-term effectiveness and look and at the long-term goals of engagement and the benefits of a gradual shift toward a healthier workplace culture.[30]

III. Impending Clashes between Personal Freedom and Public Health

Although debates around the ACA often focus on its expansion of Medicaid and the intricacies of the state and federal insurance exchanges, another, almost equally important aspect of the law is its emphasis on finding ways to improve the health of the American public outside of the hospital and doctor’s office.[31] Public health measures, such as requiring restaurants to provide detailed nutrition labeling in their menus[32], have been controversial.[33] In National Federation of Independent Businesses v. Sebelius, the ACA’s individual mandate was compared, by way of analogy, to the government requiring the average citizen to purchase a certain quantity of broccoli.[34] This analogy was, for the purposes of the case, targeted at the discussion of the ACA’s scope under the commerce clause. However, the ‘broccoli’ themed argument also seems to reflect a larger uneasiness the American public has with the underlying philosophy of the law.[35]

A reoccurring feature of the healthcare reform discourse is the unfavorable comparison between the United States and other industrialized countries across a broad range of health outcomes and measurements.[36] However, what is often overlooked are the fundamental lifestyle differences, namely exercise and diet, between the average American citizen and people living in western European countries such as Scandinavia or France[37] which have a very significant impact on basic health measures and life expectancy, regardless of clinical healthcare access or quality.[38] Nevertheless, despite the massive problems the United States has with regard to issues such as poor diet, sedentary lifestyles, and obesity, there will likely continue to be resistance to any attempts by the government to directly influence the choices the average American makes in their personal lives with regard to their health.[39] Whether subtle, incentive-based approaches, like workplace wellness programs, can weather this resistance and slowly reshape the cultural landscape remains to be seen.

There is also the question of how these broad wellness policies put forward by the ACA will interact with legal protections within grey area of disabilities that are arguably the result of lifestyle choices. Will, for example, individuals with alcohol dependency receive protection under the ADA[40] within the novel context of wellness programs that collect employee biometric data and seek to eliminate alcohol-related health problems such as high blood pressure and heart disease? The answers are unclear, but the emerging debate will likely involve clashes between those advocating for employment protection and public health law interests and its resolution will likely require a paradigm shift in the legal and cultural landscape of the United States.

[1] Soeren Mattke et al., RAND Health, Workplace Wellness Programs Study: Final Report xx (2013), available at http://www.dol.gov/ebsa/pdf/workplacewellnessstudyfinal.pdf; Fact Sheet: The Affordable Care Act and Wellness Programs, U.S. Dep’t of Labor, available at http://www.dol.gov/ebsa/newsroom/fswellnessprogram.html.

[2] Michael Hiltzik, Does your Employer Really Care About your ‘Wellness’? Maybe not, LA Times, Nov. 4, 2014, http://www.latimes.com/business/hiltzik/la-fi-mh-wellness-not-especially-20141104-column.html.

[3] See, e.g., Gene Marcial, Obamacare Focuses On Prevention and Wellness by Spending More on Medical Tests, Forbes, Aug. 9, 2013, http://www.forbes.com/sites/genemarcial/2013/08/09/obamacare-focuses-on-prevention-and-wellness-by-spending-more-on-medical-tests/ (noting that the ACA seeks to provide widespread tests and health data collection in order to “identify areas where early treatment would avoid diseases that would require costly medical specialists or hospital stays.”); Health Res. and Serv. Admin., The Affordable Care Act and Health Centers, http://www.hrsa.gov/about/news/2012tables/healthcentersacafactsheet.pdf (last visited Apr. 13, 2015) (“The health center model also overcomes geographic, cultural, linguistic and other barriers through a team‐based approach to care that includes physicians, nurse practitioners, physician assistants, nurses, dental providers, midwives, behavioral health care providers, social workers, health educators, and many others.”).

[4] Dan Cook, EEOC Reviewing Wellness Programs for ADA Violation, Benefitspro, Oct. 2, 2014, http://www.benefitspro.com/2014/10/02/eeoc-reviewing-wellness-programs-for-ada-violation.

[5] Hiltzik, supra note 2.

[6] Complaint and Demand for Jury Trial at 1, E.E.O.C. v. Orion Energy Systems, No. 14–1019 (E.D. Wis. Aug. 20, 2014), available at http://www.littler.com/files/Wellness.pdf.

[7] Id. at 1, 5.

[8] Id. at 1, 6.

[9] E.E.O.C. v. Honeywell Int’l, Inc., 2014 WL 5795481, 1–2, 5 (D. Minn. Nov. 6, 2014).

[10] Id., at 1.

[11] Id. at 1.

[12] Not only would they lose out on any potential contribution on the part of Honeywell, they would also be expected to pay a five hundred dollar surcharge as a result of their failure to participate and a one thousand dollar “tobacco surcharge” for both them and their spouse regardless of whether their refusal to participate was based on tobacco use. The EEOC estimated that there could be up to a four thousand dollar penalty in both “surcharges and lost HSA contributions” for refusal to participate. Petition for a Temporary Restraining Order and Preliminary Injunction at ¶¶14–15, EEOC. v. Honeywell Int’l, Inc., 2014 WL 5462363 (D.Minn. Oct. 27, 2014).

[13] See generally Honeywell Int’l, Inc., 2014 WL at 1.

[14] See id. at 5.

[15] Id.at 2–5 (“Recent lawsuits filed by the EEOC highlight the tension between the ACA and the ADA and signal the necessity for clarity in the law so that corporations are able to design lawful wellness programs and also to ensure that employees are aware of their rights under the law.”)

[16] See 42 U.S.C. § 12112(d)(4)(B) (2014).

[17] 42 U.S.C.A. § 12201(c)(2) (2014).

[18]See Honeywell Int’l, Inc., 2014 WL at 5 (Honeywell’s argument in favor of the legitimacy of their program was based on “Congresses’ express approval of surcharges used in conjunction with wellness programs, as expressed in the Affordable Care Act”).

[19] Jane Korn, Too Fat, 17 Va. J. Soc. Pol’y & L. 209, 250 (2010).

[20] The ADA defines a disability as an impairment that substantially limits a major life activity. The ADAA significantly expands the definition of a major life activity. Furthermore, as a result of the ADAA, if an employer discriminates on the basis of a perceived impairment, it is sufficient to establish liability regardless of whether the impairment actually limits or is perceived by the employer to limit a major life activity. 42 U.S.C. § 12102(1)–(2); see also Notice Concerning The Americans With Disabilities Act (ADA) Amendments Act of 2008, U.S. Equal Emp’t Opportunity Comm’n, available at http://www.eeoc.gov/laws/statutes/adaaa_notice.cfm (last visited Apr. 13, 2015).

[21] See 26 CFR § 54.9802-1(f) (The current regulations allow for nondiscriminatory progress-contingent incentives, including losing a certain percentage of bodyweight. The rules regarding outcome-based plans require employers to craft reasonable alternatives, such as completing an educational course, for employees who don’t achieve the initial health outcome goal. The sufficiency of an employer’s alternative would likely be a determinative factor in an ADA discrimination claim).

[22] Korn, supra note 19, at 250 (arguing for the recognition of obesity as a protected trait on the basis that “while obesity may be somewhat mutable, it is not in the same category as getting one’s teeth straightened or putting on makeup. Most experts would agree that significant weight loss and maintaining that weight loss are extremely difficult although not impossible.”).

[23] See Christine Fry et al., Healthy Reform, Healthy Cities: Using Law and Policy to Reduce Obesity Rates in Underserved Communities, 40 Fordham Urb. L.J. 1265, 1286 (2013).

[24] Soeren Mattke et al., supra note 1, at iii.

[25]Id. at 96–98.

[26] See generally id. at 97–98.

[27] Id. at 87 (“Regression results suggest that incentives are associated with improvements in smoking, BMI, and exercise but not in cholesterol levels. Although the relationship between incentive levels and the three behaviors/outcomes is statistically significant, the magnitude of the effect is small.”)

[28] Id. at 97–98.

[29] Id.

[30] See Aetna, Creating an Effective Wellness Strategy: Plan Sponsor Wellness Guide, 3 (2008), http://www.aetna.com/employer/commMaterials/documents/Roadmap_to_Wellness/ps_wellness_guide.pd.

[31] See Fry et. al, supra note 23, at 1282–83.

[32] Food Labeling: Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments, Fed. Register, available at https://www.federalregister.gov/regulations/0910-AG57/food-labeling-nutrition-labeling-of-standard-menu-items-in-restaurants-and-similar-retail-food-estab (describing a proposed rule in the Federal Register to be codified as 21 CFR Parts 11 and 101).

[33] Bejamin Goad, Uproar Over ObamaCare’s Menu Rules, The Hill (Feb. 18, 2014), http://thehill.com/regulation/healthcare/198602-lawmakers-o-cares-menu-labeling-regs-go-too-far.

[34] See Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2591 (2012).

[35] See James B. Stewart, How Broccoli Landed on Supreme Court Menu, NY Times (June 13, 2012), http://www.nytimes.com/2012/06/14/business/how-broccoli-became-a-symbol-in-the-health-care-debate.html?_r=0 (“Before reaching the Supreme Court, vegetables were cited by a federal judge in Florida with a libertarian streak; in an Internet video financed by libertarian and ultraconservative backers; at a Congressional hearing by a Republican senator; and an op-ed column by David B. Rivkin Jr., a libertarian lawyer whose family emigrated from the former Soviet Union when he was 10.”); see also Daniel D. Duhame, What Does Broccoli Have to Do With Health Care? A Commerce Clause Justification, Brown Political Review (Dec. 20, 2012), http://www.brownpoliticalreview.org/2012/12/what-does-broccoli-have-to-do-with-health-care-a-commerce-clause-justification/.

[36] See, e.g., Lenny Bernstein, Once Again, U.S. Has Most Expensive, Least Effective Health Care System in Survey, Washington Post, (June 16, 2014), http://www.washingtonpost.com/news/to-your-health/wp/2014/06/16/once-again-u-s-has-most-expensive-least-effective-health-care-system-in-survey/ (citing a recent survey which found that compared to other developed western countries the U.S. had “inordinate levels of mortality from conditions that could have been controlled, such as high blood pressure; and lower healthy life expectancy at age 60.”).

[37] See Valerie Frankel, Secrets of the World’s Healthiest Women, CNN, (Jan. 13, 2012)

http://www.cnn.com/2012/01/13/health/secrets-worlds-healthiest-women/.

[38] “Americans, on average, have a higher body mass index (BMI) than people in many other comparatively wealthy countries. In 1998, the World Health Organization reported that 20% of American males and 25% of American females between twenty and seventy-four years of age were obese (identified as those with a BMI of 30 or higher). Contemporaneously, 15% of men and 17% of women in England were considered obese, and 5% of men and 9% of women in Sweden and 2% of men and 3% of women in Japan were categorized as obese.” Janet L. Dolgin & Katherine R. Dieteric, Weighing Status: Obesity, Class, and Health Reform, 89 Or. L. Rev. 1113, 1146–47 (2011).

[39] See Duhame, supra note 35 (describing how American healthcare consumers tend to make health decisions based on short-term, individualistic impulses rather than long term, utilitarian reasoning); see also New York Statewide Coal. of Hispanic Chambers of Commerce v. New York City Dep’t of Health & Mental Hygiene, 23 N.Y.3d 681, 698 (2014) (holding that New York City’s ban on large soft drink containers was an overreach of policy-making authority because it failed to consider non-health factors and attempted to limit the autonomy of citizens by influencing their choices and behavior).

[40] While the ADA’s protections for those with alcoholism do not currently extend to discrimination based on an employee’s consumption of alcohol at work or work misconduct committed while intoxicated, adverse employment action through workplace wellness programs on the basis of alcohol-related health problems accumulated outside of work could potentially form the basis of an ADA claim. See generally E.E.O.C. v. Exxon Corp., 967 F. Supp. 208, 209–12 (N.D. Tex. 1997), rev’d and remanded, 203 F.3d 871, 872–75 (5th Cir. 2000); Beth Hensley Orwick, “Bartender, I’ll Have a Beer and a Disability”; Alcoholism and the Americans With Disabilities Act: Affirming the Importance of the Individualized Inquiry in Determining the Definition of Disability, 20 St. Louis U. Pub. L. Rev. 195, 202–03 (2001).

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