17 GOP Lawmakers Call on EEOC to Make Significant Changes to Proposed Rule on Workplace Wellness Programs

Posted on June 23, 2015

Say proposed rule at odds with “the bipartisan intent of Congress”

WASHINGTON, June 23 – Seventeen Republican lawmakers last week called on the Equal Employment Opportunity Commission (EEOC) to make significant changes to the agency’s proposed rule on workplace wellness programs to ensure the agency does not create any further confusion for employers who want to offer these programs to lower their employees’ health insurance costs.

On Friday, the lawmakers submitted comments to the agency, writing that the proposed rule on workplace wellness programs “is inconsistent with both current law and the bipartisan intent of Congress” and requested changes around seven important issues before agency’s proposed rule is finalized. 

"Congress was clear in its support of workplace wellness programs in the health care law—just about the only provision in the law with bipartisan support. The Departments of Health and Human Services, Labor, and Treasury were clear in their regulations implementing the law.” said Senate health and labor committee Chairman Alexander, who led the lawmakers in submitting the comments. “Unfortunately, the EEOC continues to cause confusion for employers who want to offer these programs that reward employees for making healthy lifestyle choices. Even the White House has expressed concern about this confusion. The agency should listen to Congress before taking any action on its proposed rule, so employers won’t be discouraged from helping employees lower their insurance costs and lead longer, healthier lives."

The lawmakers requested changes and clarifications to the proposed rule regarding: the cap on premium reward for wellness programs; the cap on premium reward for tobacco cessation; the definition of “reward”; employee-only coverage; the affordability standard; the Americans with Disabilities Act’s safe harbor provision for insurance plans; and the final rule’s effective date.

The lawmakers who submitted the comments are: Sen. Lamar Alexander (R-Tenn.), Sen. John Barrasso (R-Wyo.), Sen. Roy Blunt (R-Mo.), Sen. Tom Cotton (R-Ark.), Sen. Mike Enzi (R-Wyo.), Sen. Orrin Hatch (R-Utah), Sen. Johnny Isakson (R-Ga.), Sen. Lisa Murkowski (R-Alaska), Sen. David Perdue (R-Ga.), Sen. Pat Roberts (R-Kansas), Sen. John Thune (R-S.D.), Rep. Mike Bishop (R-Mich.), Rep. Joe Heck (R-N.Y.), Rep. John Kline (R-Minn.), Rep. Phil Roe (R-Tenn.), Rep. Todd Rokita (R-Ind.) and Rep. Tim Walberg (R-Mich.).

The workplace wellness programs provision was one of the only provisions in the new health care law that had bipartisan support.

The full text of the comments submitted to the EEOC is below and online here.  

June 19, 2015

Bernadette B. Wilson Active Executive Officer Executive Secretariat

U.S. Equal Employment Opportunity Commission 131 M Street, NE

Washington, DC  20507

Submitted Electronically via http://Regulations.gov Re:  RIN 3046-ABO 1

Proposed Rule on Amendments to Regulations under the Americans with Disabilities Act

Dear Ms. Wilson:

We respectfully submit these comments in response to the Notice of Proposed Rulemaking ("NPRM," "proposed rule") regarding Amendments to Regulations under the Americans with Disabilities Act ("ADA"), as published in the Federal Register on April 20, 2015. 1 As Members of Congress, we write to express our concern with the Equal Employment Opportunity Commission's ("EEOC") disregard for current law in this most recent proposal to revise ADA regulations to address workplace wellness programs.

Prior to the passage of the Patient Protection and Affordable Care Act ("PPACA") in 2010, employers were able to provide a discount to employees of up to 20 percent off their health insurance premiums for making healthy lifestyle choices under the Health Insurance Portability and Accountability Act ("HIPAA").  After companies saw success with these programs, Congress increased the discount and provided reinforced statutory authority for premium discount wellness programs in PPACA-one of the few bipartisan provisions in the law.

Despite the clear authority in statute to provide premium rewards for wellness programs, EEOC's interpretation and enforcement of workplace wellness programs has been inconsistent and, at times, contrary to existing law and regulation.  On January 6, 2009, EEOC's Office of Legal Counsel stated, "employers may offer inducements to encourage voluntary participation in wellness programs . . . so long as any financial inducements do not exceed the 20 percent limit set forth in the final regulations implementing [HIPAA]."  On March 6, 2009, this guidance was rescinded. Five years later on October 27, 2014, and without any subsequent guidance, EEOC filed suit against an employer that was operating lawfully under PPACA and offering financial rewards to employees and their spouses or dependents for making healthy lifestyle choices.3 EEOC sent a confusing message to employers reliance on PPACA's authorization of wellness programs does not mean employers are safe from EEOC's litigation.

We appreciate that EEOC responded to Congress and employers by issuing this proposed rule, intended to provide clarity to employers about how EEOC believes the ADA applies to employee wellness programs.  However, the proposed rule is inconsistent with both current law and the bipartisan intent of Congress and fails to clarify important issues.

Cap on Premium Reward for Wellness Programs

EEOC has no statutory or jurisdictional authority to propose to cap the maximum premium award.  In the NPRM, EEOC attempts to limit the premium reward an employer may offer an employee to 30 percent of the cost of the premium.  EEOC asserts its authority to regulate workplace wellness programs is provided pursuant to the ADA, specifically whether employee medical examinations and inquiries for a workplace wellness program are "voluntary." However, the statutory language of PPACA is explicit:  employers may use workplace wellness programs to incentivize employees to make healthy lifestyle choices by offering a 30 percent premium reward and the Secretaries of Labor, Health and Human Services, and the Treasury ("tri-agency Secretaries") have the authority to increase the premium reward to 50 percent.  The tri-agency Secretaries exercised this authority and increased the maximum premium reward amount for tobacco cessation programs to 50 percent in regulation.

In January 2009, EEOC addressed the issue of whether premium rewards render wellness programs involuntary, and adopted the HIPAA premium reward level because, "[b]orrowing from the HIPAA rule is appropriate because the ADA lacks specific standards on financial inducements, and because it will help increase consistency in the implementation of wellness programs."  We agree with EEOC's January 2009 interpretation of the ADA.  In the future, if the tri-agency Secretaries exercise their authority to increase the maximum reward percent allowed, employers would again find themselves in a legally confusing bind-remain under the cap required by EEOC or comply with PPACA and risk litigation from EEOC.

Instead of setting a cap of a 30 percent maximum reward in its proposed rule, EEOC should tie the maximum permissible premium reward to the percentage set by the tri-agency regulations-the regulators with statutory authority to make these adjustments.

Cap on Premium Reward for Tobacco Cessation

The proposed rule's maximum premium reward amount of 30 percent for tobacco-related wellness programs that include a tobacco test is inconsistent with current law. The proposed rule limits to 30 percent the incentive an employer may provide an employee for a wellness program where there is a "disability-related inquiry" or "medical examination"-including tobacco testing. The proposed rule allows a 50 percent incentive if the wellness program only requires self-attestation, without a related exam or medical confirmation. However, currently the tri¬ agency regulations extend the maximum premium reward amount to 50 percent "for health¬ contingent wellness programs designed to prevent or reduce tobacco use." A health-contingent wellness program is defined as "a program that requires an individual to satisfy a standard related to a health factor to obtain a reward . . . .”  Accordingly, a health-contingent wellness program could require the employee to complete a tobacco test before being eligible for the premium reward.

Employers have reason to test employees for tobacco use and not simply rely on good faith.  Several studies have found individuals significantly underreport their tobacco use when asked to self-attest.  For example, in 2014, anonymous national surveys show 18 percent of the adult population in Iowa smokes cigarettes, but Wellmark BlueCross BlueShield, a company that sells more than 75 percent of the individual health insurance policies in Iowa, stated only seven percent of their customers admitted to smoking.8   In another national survey conducted by a nonprofit health organization, one in 10 smokers admitted to lying about their tobacco use to their physicians.

As the proposed rule states, wellness programs are designed to "improve employees' health and reduce health care costs . . . ."  It may be difficult for an employer to help encourage employees to stop using tobacco products if employers are prohibited from confirming the accuracy of the employee's tobacco use if they offer a 50 percent premium reward to employees the very employees who would benefit from such a program.   EEOC should mirror the tri-agency regulations and allow employers to test for tobacco use even if they provide premium rewards that are greater than 30 percent.

Definition of Reward

The proposed rule would expand the statutorily-set definition of "reward" to include "in¬ kind" rewards-a definition inconsistent with current law and Congressional intent. Specifically, the NPRM discusses the premium reward in terms of "incentives," defining it to include "both financial and in-kind incentives, such as time-off awards, prizes, or other items of value."   PPACA allows employers to incentivize employees to make healthy lifestyle choices by providing a premium reward for participation in the workplace wellness program.  As defined in PPACA, "[a] reward may be in the form of a discount or rebate of the premium or contribution, a waiver of all or part of the cost-sharing mechanism . . . the absence of a surcharge, or the value of a benefit that would otherwise not be provided under the plan."

To require employers to calculate "in-kind" rewards in addition to premium rewards would be administratively burdensome on employers and could discourage them from offering employees access to wellness programs.  For example, if an employer offers what the Internal Revenue Service deems to be a de minimis, non-taxable reward (such as a t-shirt or a coffee mug), it is unclear if EEOC's proposed rule would still require employers to assess and attach a monetary value to that reward as compensation. Other rewards employers offer, such as an extra paid time off or a day in street clothes instead of the company uniform, may be even more difficult to assign value than de minimis rewards.  The difficulty assigning a monetary value to these benefits is one of the reasons Congress does not require employers to include anything but the premium reward, or surcharge, toward the maximum reward amount.  EEOC should not expand this definition.

During the Senate Committee on Health, Education, Labor, and Pensions ("HELP Committee") executive session on July 13, 2009, Senator Tom Harkin (D-IA) stated the wellness provision "allows employers to reward employees by as much as 30 percent of a premium discount, and then it allows the Secretary to increase this reward to 50 percent if deemed appropriate" (emphasis added).  During consideration of a similar provision in the Senate Committee on Finance, on September 30, 2009, the reward is discussed in the terms of a discount or surcharge of the premium several times by both Democrat and Republican Senators.   Congressional intent is clear:  the maximum reward amount is to apply only to a premium discount, or surcharge, and should not be applied to other so-called "in-kind" rewards. EEOC should use the statutory definition of "reward" in PPACA and strike any reference to "in¬ kind" incentives.

Employee-Only Coverage

The proposed rule significantly reduces the reward available to employees if a dependent or spouse participates in the wellness program by applying the 30 percent reward cap to the cost of the employee-only coverage and not extending it to the cost of dependent and spousal coverage. 15   PPACA allows an employer to reward an employee up to 30 percent of the cost of employee-only coverage or dependent or spousal coverage if the family members also participate in the wellness program.  Specifically, the law states, "[i]f . . . any class of dependents (such as spouses or spouses and dependent children) may participate fully in the wellness program, such reward shall not exceed 30 percent of the cost of the coverage in which an employee or individual and any dependents are enrolled."  This is further established in the tri-agency regulations.

We understand from discussions with EEOC that "employee-only" coverage was the only form of coverage contemplated in the proposed rule because it is the only form of coverage within the jurisdiction of the ADA.  However, as written, the proposed rule effectively eliminates employers' ability to extend the premium discount to family members who participate in the wellness program.  Requiring the employee reward be calculated on the cost of employee-only coverage is impractical for many employers because health insurance coverage for a family is sold as a single policy and not as individual policies for each member of the family.  It would be administratively and mathematically complex for employers to calculate the cost of individual health insurance plans for every employee, spouse, and child. Therefore, EEOC should make clear in the final rule that because the ADA does not have jurisdiction over dependent and spousal coverage, employers should follow the caps dictated in PPACA and the tri-agency regulations when the health insurance plan provides dependent and spousal coverage.

Affordability Standard

The proposed rule solicits input on whether EEOC should use PPACA's affordability standard to determine if a wellness plan reward renders participation involuntary for purposes of the ADA.  PPACA's affordability standard requires only that large employers offer full-time employees at least one affordable health insurance plan, or pay a penalty.  PPACA does not require that all plans offered to an employee cost less than 9.5 percent of an employee's household income, nor does PPACA require that an employee choose the most affordable plan.  Under EEOC's proposed rule, if an employee were to choose the more comprehensive (and more expensive) health insurance plan, and chose not to participate in the company's wellness plan to get a premium reward, the health insurance plan would still meet PPACA's affordability standard, but would violate the ADA.  Effectively, EEOC would require that all health insurance plans plus wellness plans an employer offers each employee meet the affordability standard-a standard that is far beyond the affordability standard contemplated in PPACA.

We believe it inappropriate for EEOC to regulate regarding PPACA's affordability standard.  If Congress had intended for the affordability standard to impact the premium reward an employer may offer an employee for making healthy lifestyle choices, that standard would also have been included in statute.  We are concerned that if EEOC implements an affordability standard it may chill employers from offering wellness plans, reduce employee choice of health plans, and make job-based health plans less generous.

ADA's Safe Harbor Provision for Insurance Plans

EEOC seeks to nullify the ADA's safe harbor provision for bona fide benefits plans via footnote in the preamble of the proposed rule.   The ADA explicitly does not prohibit or restrict a, "person or organization . . . from establishing, sponsoring , . . or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks . . . ."  Further, the U.S. Court of Appeals for the Eleventh Circuit held in 2012 that a wellness program may qualify as a "term[] of a bona fide benefit plan" for purposes of the insurance safe harbor.

The proposed rule dismisses the statutory safe harbor provided in the ADA, stating that its existence would render the voluntary requirement for wellness plans to be "superfluous." However, some wellness plans are designed as a bona fide benefit plan with terms based on underwriting, classifying, or administering risks, and some are not.  Put simply, EEOC should not rewrite statute and vacate court decisions through regulation.  This provision in the NPRM should not be included in the final rule.

Effective Date

We request EEOC include an effective date in the final rule no sooner than plan year 2018 to provide employers with time to come into compliance with the final rule.  Many employers have planned their health insurance and wellness plans for plan year 2016 and may have completed planning for the 2017 plan year by the time EEOC issues final rules under both ADA and the Genetic Information Nondiscrimination Act ("GINA").  Providing adequate time to employers to adjust their wellness programs to meet the new requirements under the ADA and GINA is essential to ensure a seamless transition and employer compliance.

Conclusion

EEOC's proposed interpretation of the ADA and workplace wellness programs is inconsistent with the bipartisan intent of Congress.  The ADA was enacted in 1990 and this year marks its 25th anniversary.  PPACA became law 20 years later in 2010.  If Congress believed the wellness provisions in PPACA to be discriminatory, or to violate the "voluntary" provision in ADA, it would have addressed these concerns in the statutory language.  In fact, Senator Tom Harkin (D-IA), the lead author of the ADA, stated during consideration of the workplace wellness provision in the HELP Committee on July 13, 2009, "it does include those provisions to make sure that discrimination does not occur."   The wellness plan language was carefully crafted and enjoyed significant bipartisan support, passing the Senate HELP Committee with a unanimous vote of approval.

In response to EEOC's wellness program litigation, on March 2, 2015, the Preserving Employee Wellness Programs Act (S. 620, H.R. 1189) was introduced in both chambers of Congress to reaffirm existing law and Congressional intent in PPACA.  The legislation would allow employers to offer employee wellness programs with a premium reward so long as it is within the levels set in statute by PPACA and in the tri-agency regulations, clarifying that an employee's spouse and dependents may participate in the program, and retaining EEOC's rightful authority to investigate and litigate complaints of employment discrimination.  We strongly urge EEOC to take the same measured approach and consider this legislation as a path forward when finalizing the proposed rule.

We respectfully request EEOC follow the clear intent of Congress in PPACA, the subsequent tri-agency regulations, and the White House's support for workplace wellness programs and ensure any final rule promulgated by EEOC is consistent with PPACA and does not create any further confusion for employees and employers.

Sincerely,

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