Wellness Program LawfuI Under ADA's 'Safe Harbor,' Federal Court Rules
Author: Marta Moakley, XpertHR Legal Editor
January 6, 2016
The US District Court for the Western District of Wisconsin has ruled that wellness programs that are part of an insurance benefit plan may fall under the "safe harbor" exception to the Americans with Disabilities Act's (ADA) general prohibition that a covered employer require a medical examination, unless the examination is job-related and consistent with business necessity. In EEOC v. Flambeau, Inc., the Equal Employment Opportunity Commission (EEOC) had claimed that an employer's wellness program violated the ADA by requiring employees to submit to medical examinations because participation in the health insurance plan was conditioned on an employee completing a health risk assessment (HRA) and a biometric screening test.
The employer, a plastic products manufacturer with facilities in Wisconsin, had adopted a policy that offered company-subsidized health insurance benefits to only those employees who participated in a wellness program. However, participation in the wellness program was not a condition of continued employment.
The employer argued that its practice of conditioning enrollment in its benefit plan on an employee's completion of a wellness program is protected by the ADA's "safe harbor" provision (Section 12201(c)(2)). The ADA provides that an employer may establish or administer "the terms of a bona fide benefits plan that are based on underwriting risks, classifying risks or administering such risks." In this case, the employer used the information from the HRAs and tests to:
- Estimate the cost of providing insurance;
- Set participants' premiums;
- Evaluate the need for stop-loss insurance;
- Adjust the co-pays for preventive exams; and
- Adjust the co-pays for prescription drugs.
Although the 7th Circuit Court of Appeals has not addressed the applicability of the medical examination prohibition to the type of wellness program at issue in the case, the court concluded that the protections set forth in the ADA's "safe harbor" provision enabled "employers to design insurance benefit plans that require otherwise prohibited medical examinations as a condition of enrollment." Because the safe harbor applies, the court did not reach arguments set forth by the parties regarding the voluntariness of the assessments, the EEOC's efforts at conciliation or its request for punitive damages.
As displayed in this case, the EEOC has not been wholly successful in its attempts to regulate the voluntariness of wellness programs. However, rules elaborating on how the ADA applies to employer wellness programs, which may address the reach of the "safe harbor," are expected in the coming year.