One of the nation’s most powerful lobbyist groups sued the government on Monday for enabling employers to impose heavy financial penalties on their employees who do not complete health risk assessments.
AARP’s lawsuit against the Equal Employment Opportunity Commission argues that wellness programs are no longer a voluntary benefit if employees feel they are forced to disclose medical information. The advocacy group for older Americans also notes in the lawsuit that non-participating employees’ health insurance costs could double or triple.
“If wellness programs are genuinely voluntary, then employees are making the choice to take advantage of the benefits the programs may offer, such as disease management,” Dara Smith, a lawyer with the AARP Foundation, which is affiliated with AARP, said in a statement. “It's when financial penalties make employees feel forced to participate that the law’s protections — and AARP’s concerns — kick in.”
Those laws — the Americans with Disabilities and the Genetic Information Nondiscrimination Act —generally forbid employers to ask employees about personal and family health information.
AARP’s contention with the EEOC is rooted in changes the federal entity made to wellness program regulation earlier this year.
See also: EEOC re-evaluates wellness rewards
The EEOC’s decision to set a cap at 30% of the cost of individual coverage on all rewards was intended to keep incentives from being “coercive and render participation in the program involuntary,” according to the final ruling. The cap also applies to plan beneficiaries.
A spokeswoman for the EEOC declined to comment.
In the past, the 30% cap was only applicable to rewards that affected the health plan or were tied to a health standard, says Norbert F. Kugele, attorney with Warner Norcross & Judd. Any rewards that employees received for simply participating in a wellness program were exempt from the cap as well.
James Gelfand, senior vice president for health policy for ERISA Industry Committee, an employers’ advocacy trade group, is critical of the lawsuit.
“We’re left in this quandary,” he says. “If we ask people to participate in a wellness program and don’t include financial incentives, they don’t participate. It’s either we have financial incentives or we waste money on wellness programs.”
AARP’s lawsuit states that “the rules leave vulnerable employees open to employment discrimination and workplace stigma” by providing medical information, which could affect possible hiring, firing and promoting in the workplace.
In practice, Gelfand says, employees aren’t filling out risk assessments and handing it to HR or their employer; the information goes to a vendor, who deidentifies and aggregates it into a report.
That medical information is then used by the employer to look at workplace trends and determine the needs of their population. This data, for example, is used by employers to carve out a self-insurance model or a pharmacy plan for their employees.
He described the suggestion of discrimination as “alarmism,” saying that employees “are wrongly going to think that employers are looking at their medical records.”
Despite national attention from the lawsuit, Gelfand says it is highly unlikely that the longstanding wellness policy, protected under HIPAA, will be reversed.
See also: Employer sued over wellness program
Although the court hasn’t made any decision, the defense will most likely point to a recent opinion from EEOC v. Orion Energy Systems. In that case, the judge ruled in favor of the employer, noting that “even a strong incentive is still no more than an incentive; it is not compulsion.”
“My assumption is that most employers are going to ignore this lawsuit because AARP is going to lose,” Gelfand says. “You don’t get the prize if you don’t play.”
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