The U.S. Court of Appeals for the Eleventh Circuit (Alabama, Florida, and Georgia) has upheld a lower court ruling that an employer wellness program, which imposed a $20 per paycheck surcharge on health insurance premiums for employees declining to submit to a health risk assessment, is permissible under the Americans with Disabilities Act (ADA).
The ADA prohibits most medical examinations of employees unless the exams are “voluntary,” and an exam cannot be viewed as voluntary if there’s a penalty for not participating. Plaintiffs in the case had argued that the $20 per paycheck surcharge on those who declined to submit to the health risk assessment amounted to a penalty in violation of the ADA. But the trial court had ruled the wellness program fit within an ADA safe harbor for administering “the terms of a bona fide benefit plan” based on underwriting, classifying or administering risks. We discussed the trial court decision in our Alert dated April 14, 2011.
On appeal, the plaintiffs asserted the wellness program did not qualify for the safe harbor because it was not a “term” of the health insurance plan, and noted that the wellness program was not discussed within the health plan’s physical documents. But the appellate court held the employer’s wellness program was indeed a “term” of its health insurance plan because 1) it was available only to health plan enrollees, and 2) it was communicated to employees as a component of the health insurance plan.
Although the case is controlling law only in Alabama, Georgia and Florida, the result is clearly good news for employers who provide incentives for employees to participate in health risk assessments. The decision establishes federal precedent, at the appeals court level, for the notion that the ADA safe harbor may be available for a wellness program operating in conjunction with a health plan, even if the program is not literally reflected on the pages of the health plan document.
The facts in this case were in the employer’s favor: participation in the wellness program was not a condition for enrollment in the plan and the monetary incentive ($20 per paycheck) was not punitive. The appellate court might have reached a different conclusion with a more aggressive wellness program.
What if the employer had not described the wellness program as a component of the health plan (some employers offer wellness programs to employees without regard to whether the employee is enrolled in the health plan)? Perhaps the trial and appellate courts would have concluded that the wellness program was itself a “bona fide benefit plan.” But that question is left for another court to decide, on another day.