News// November 2014

How Sick Is Your Wellness Program

The United States Equal Employment Opportunity Commission (EEOC) recently filed a lawsuit against Orion Energy Systems, a Wisconsin company, alleging that Orion's wellness program was not "voluntary" and that it discriminated against employees with disabilities. This suit has captured the attention of many legal analysts watching to see what parts of the company's wellness plan, if any, pass muster. The Orion plan allegedly required the employee submit to certain medical tests and made "disability-related inquiries," according to an EEOC press release. According to the EEOC, Orion's plan required the employee to pay 100% of her health insurance premium when she refused to participate in the plan.

Orion is not alone in looking for ways to reduce costs associated with health care. The Affordable Care Act (ACA) and the rising cost of health insurance have combined to cause many employers to consider wellness programs as a way of controlling costs. The Kaiser Family Foundation's 2012 Annual Employer Health Benefits Survey found that 94 percent of large firms (200 or more workers) and 63 percent of smaller firms (3-199 workers) offered a wellness benefit of some kind.

The ACA requires employers with 50 or more fulltime employees to either offer a health insurance plan to the employees or pay a penalty. Many health insurance plans offer premium discounts to employers who implement wellness plans, but some wellness plans base the discount on physical exams or medical testing, and are drawing EEOC's scrutiny. Employees with diabetes, obesity, or other chronic conditions may be "disabled" under the Americans with Disabilities Act (ADA). The ADA prohibits discrimination against disabled persons and mandates any employer required medical examination of employees to be "job related" and consistent with business necessity. "Voluntary" wellness programs are the exception to this rule but neither the ADA nor EEOC define "voluntary," which in part has led to some confusion about what employers can and can't do under the law.

The EEOC's apparent problem with Orion's plan is that it may not be truly "voluntary" and it allegedly uses outcome based incentives. The EEOC views such plans as discriminatory against disabled persons. Perhaps even worse in the eyes of the EEOC is a plan that causes employees to pay more based on certain medical conditions or test results, such as blood sugar tests or body mass.

An employer should carefully review and implement a wellness plan to ensure employee incentives based on medical conditions or the results of medical testing do not disparately impact people with disabilities. Not all wellness plans are bad, and plans that encourage healthy habits can be effective in controlling costs. But when the wellness plan discriminates against certain employees based on a person's certain medical condition, the EEOC may find fault with the plan and require the employer to find a "cure" for the wellness plan, and not the employee.