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EEOC Discusses Health Insurance Incentive Programs

by David W. Eckhardt, posted Tuesday, February 09, 2016

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As a follow-up from WHD’s previous blog post regarding wellness programs, this post will address informal comments made by the EEOC regarding wellness programs.
 
The American Bar Association Joint Committee on Employee Benefits met with EEOC staff on May 7, 2015. In that meeting, staff members stated that a program that only measures a participant's waistline would not be subject to ADA rules because measuring a waistline is not a disability-related question or medical examination. However, staff reiterated that incentives tied to answering disability-related questions or underdoing a medical examination cannot exceed 30% of the total cost of self-only coverage.
 
For example, an employer informed an employee and his spouse that the spouse must participate in the program to avoid a reduction in coverage level. EEOC staff indicated that this reduction in coverage would violate both the HIPAA nondiscrimination rules and the similar ADA provision.  

Staff confirmed that a voluntary “Biggest Loser” challenge is not considered a workplace wellness program subject to the proposed ADA wellness rules when it is provided through a third-party vendor. The program is also not part of an employer’s group health plan and does not involve incentives related to the group health plan.
 
These comments provide helpful insight into how the EEOC views these types of wellness programs. With the issuance of regulations under the ACA, ADA and GINA, employers will need to navigate the various laws based on their programs’ specifics.

For more information, please contact David Eckhardt at (414) 978-5414 or deckhardt@whdlaw.com, or another member of the Employee Benefits Team.

 

Federal Court Decision Provides New Guidance for Employers Considering Wellness Programs

by Erik K. Eisenmann and Laura L. Ferrari, posted Monday, January 25, 2016

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On Dec. 30, 2015, Judge Barbara Crabb from the U. S. District Court for the Western District of Wisconsin issued a decision in EEOC v. Flambeau, Inc., a case that clarifies employers’ rights under the Americans with Disabilities Act (ADA) to utilize workplace wellness programs. With employee wellness programs gaining popularity, this decision offers some much-needed guidance as to how this provision applies to the programs and what program features are essential in ensuring employers maintain compliance with the ADA.

   
Key Language in the ADA

2 U.S.C. § 12112(d)(4)(A) generally prohibits employers from requiring a medical examination or making inquiries as to the existence, nature or severity of a disability unless doing so is job-related and consistent with business necessity. There is, however, an exception to this rule that allows employers to conduct voluntary medical exams that are a part of a workplace health program.  
 
Section 12201(c)(2) of the ADA also outlines a safe harbor provision that allows employers to engage in activities to establish the “terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks." 
 
The Employer’s Wellness Program
 
In Flambeau, the employer offered its employees the ability to participate in its self-funded, self-insured insurance plan. Participation was voluntary, and employees were not required to join as a condition of their employment. To be eligible for the insurance plan, however, employees were required to participate in a wellness program, which was comprised of a health risk assessment (including a questionnaire about diet, medical history, etc.), and a biometric test, which was similar to a routine physical exam. With the exception of information about tobacco use, the information associated with individual employees was not used; only aggregate information from all participating employees was used to identify any common health risks and allowed the employer to estimate the cost of insurance, set premiums and adjust co-pays. An employee who lost his coverage due to non-completion of the wellness program requirements sued his employer, claiming that the requirements violated the prohibition in the ADA on mandatory medical exams. The employer, however, maintained that these requirements were terms of the plan, thereby bringing the plan and its prerequisites within the safe harbor provision. Read more...

 

Recent ACA Guidance

by David W. Eckhardt, posted Friday, January 15, 2016

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This post is the first in a series that will address recent guidance issued by the U.S. Treasury Department, Internal Revenue Service (IRS) and U.S. Department of Labor regarding various aspects of group health plans and the Affordable Care Act (ACA). This blog will supplement Employee Benefit Special Reports and provide more informal and frequent posts on employee benefits matters.
 
 
 
 
IRS Notice 2015-87  
 
While everyone was enjoying the holidays, IRS Notice 2015-87 was issued together with 26 frequently asked questions (FAQs) that covered the following topics:
  • Information reporting penalty relief;
  • Application of ACA reforms to various health care arrangements, such as health reimbursement arrangements and employer payment plans;
  • Application of the employer mandate provisions relating to contributions under HRAs, FSAs, and opt-out payments;
  • The impact of employer contributions on affordability for employees; and
  • COBRA rules related to FSAs.   
As the FAQs are very lengthy, detailed and cover a lot of ground, each topic will be covered in the Employee Benefits blog and Special Reports.

 
Penalty Relief and Reporting Deadlines

 
Starting with some good news for the new year, the Notice reiterates the relief provided for in the preamble to the final regulations under IRC §6056 that the IRS will not impose penalties on employers who can show they have made a good faith effort to comply with the information reporting requirements in 2016 for coverage offered in 2015. However, employers must still timely report to be eligible for the relief.
 
With regard to timing of reporting, the IRS released IRS Notice 2016-4, which delays the due dates for ACA information reporting both for furnishing to individuals and filing with the IRS. The notice delays the due date to furnish reports to individuals from Feb. 1, 2016, until March 31, 2016. The notice delays the filing with the IRS from Feb. 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016, if filing electronically. Employers receive this extension automatically and are not required to submit any further documentation with the IRS.
 
Stay tuned for further blog posts regarding the ACA guidance issued under Notice 2015-87.
 
For more information, please contact David Eckhardt at (414) 978-5414 or deckhardt@whdlaw.com, Michael Taibleson at (414) 978-5514 or mtaibleson@whdlaw.com, or another member of the Employee Benefits Team.