Regulatory Guidance

EEOC Seeks to Clarify Wellness Programs, ADA

A proposed rule from the EEOC is intended to help clear up questions surrounding wellness programs and potential conflicts with the ADA.
By: | May 21, 2015 • 5 min read
Doctor measuring blood pressure

Employers seeking guidance on implementing workplace wellness programs without violating the law may get some help. The Equal Employment Opportunity Commission has issued a proposed rule on how Title I of the Americans with Disabilities Act applies to wellness programs that are part of group health plans. The agency is accepting public comments through June 19.

“The EEOC’s proposed rule makes clear that wellness programs are permitted under the ADA, but that they may not be used to discriminate based on disability,” according to a statement on the EEOC’s website. “The rule explains that under the ADA, companies may offer incentives of up to 30 percent of the total cost of employee-only coverage in connection with wellness programs. These programs can include medical examinations or questions about employees’ health (such as questions on a health risk assessment).”

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The rule says the programs must be voluntary and employers cannot deny health insurance, reduce health benefits, or discipline those who do not participate. Employers cannot interfere with the ADA rights of those who do not participate, and they must provide reasonable accommodation to disabled employees that allow them to participate in wellness programs and earn the incentives the employer is offering.

The programs “must have a reasonable chance of improving health or preventing disease in participating employees,” the EEOC said. “A program that collects information on a health risk assessment to provide feedback to employees about their health risks, or that uses aggregate information from health risk assessments to design programs aimed at particular medical conditions is reasonably designed. A program that collects information without providing feedback to employees or without using the information to design specific health programs is not.”

Finally, employers are only entitled to medical information collected for the wellness program in aggregate form. The employee’s identity must be kept confidential.

“I absolutely think this guidance is needed because employers were left in legal limbo with what to do,” said Ilyse Schuman, shareholder with Littler and cochair of the Workplace Policy Institute. “On one hand, the Affordable Care Act provisions are designed to promote [wellness programs]; at the same time, the EEOC had taken some recent enforcement action challenging the use of incentives in connection with wellness under the EEOC and the Genetic Information Nondiscrimination Act.”

In one case, the agency said an employer violated federal law by requiring an employee to “submit to medical exams and inquiries that were not job-related and consistent with business necessity as part of a so-called ‘wellness program,’ which was not voluntary, and then by firing the employee when she objected to the program,” according to court documents. It said the company’s wellness program “required medical examinations and made disability-related inquiries.”  When an employee declined to participate, the company “shifted responsibility for payment of the entire premium for her employee health benefits” to the worker and shortly thereafter fired her.

In a separate case, the agency said an employer threatened to penalize employees if they or their spouses did not submit to biometric tests. Employees said the testing was an unlawful medical exam and violated the ADA and GINA.

A bill recently introduced in Congress seeks to eliminate confusion for employers who offer rewards for participation in wellness programs.

“This is yet another example of the EEOC being out of step with employers and employees,” said Sen. Tim Walberg, R-Mich., chairman of the House Subcommittee on Workforce Protections before the proposed rule was issued. “Innovative approaches that empower employees to take more control of their personal health care decisions should be encouraged, not stymied by greater government overreach.”

Conflicting Messages

The proposed rule defines the incentives employers may use to encourage employee participation in wellness programs that include disability-related inquiries or medical exams. It says incentives are allowable as long as other parameters are met.

“As employers have increasingly turned to wellness programs to improve costs and health, they are faced with a quandary as to how to do that without running afoul of the ADA or GINA,” Schuman explained. “The conflicting messages coming from the administration on the one hand with respect to the ACA and its implementations and regulations, and the EEOC on the other, left employers in the crosshairs. I think [the rule] was a welcome development.”

Wellness programs. The EEOC defines wellness programs as those that “may include, for example: nutrition classes, onsite exercise facilities, weight loss and smoking cessation programs, and/or coaching to help employees meet health goals,” the agency said. “Wellness programs also may incorporate health risk assessments and biometric screenings that measure an employee’s health risk factors, such as body weight and cholesterol, blood glucose, and blood pressure levels.”

Incentives offered by employers typically are in the form of either rewards or penalties, such as prizes or cash, a reduction or increase in health care premiums, or cost sharing. Most employers that offer them use incentives totaling less than $500 per year, according to the EEOC.

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Remaining questions. The rule is only a proposal, Schuman noted. She is unsure about such things as the allowable incentives.

“There are questions about how that is determined because the proposed regulations refer to 30 percent of employee-only coverage,” she said, “but often times employees sign up for family coverage. So it doesn’t seem to make sense.”

There is also the matter of GINA. “It doesn’t address GINA at all. That’s still out there,” Schuman said. “Employers are still left with the uncertainty with respect to how wellness programs offering incentives for a spouse to complete a health risk assessment are treated under GINA. This is not the end of the story for direction from the EEOC.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]
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Risk Insider: Terri Rhodes

Ten Tips for Leave Management

By: | May 19, 2015 • 3 min read
Terri L. Rhodes is Executive Director of the Disability Management Employer Coalition (DMEC). Prior to returning to DMEC, Terri was an Absence and Disability Management Consultant for Mercer delivering strategic absence and disability management solutions to clients of all sizes, Director of Absence and Disability for Health Net and Corporate IDM Program Manager for Abbott Laboratories.

The environment for leave management has become increasingly complex—and potentially costly to those not in compliance with the growing number of leave laws and regulations. The Family Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), and the myriad of state and local laws have made managing leave, while remaining in legal and regulatory compliance, more difficult and complex.

Leave laws not only create risk. They also create opportunity.

There is good news. A large and growing number of conferences, webinars and other resources are available to help guide risk managers and others through the ever changing leave landscape. DMEC’s recent Compliance Conference addressed many of the issues surrounding leave management and the ever-changing landscape.

During the RIMS annual conference, Karen English of Spring Consulting Group and I offered the following leave management tips at one session.

One: Training is critical. Managers must understand the leave process and their responsibilities under it and the law and uniformly administer leave policies. We don’t expect them to be experts but they need to understand how an employee might evoke their rights under FMLA or ADAA.

Two: HR and other staff must be qualified. Appropriate leave and HR administrators need to be up to date on all absence management programs and be prepared to answer employee questions about their rights for leave and job accommodation.

Three: Collaboration across business units is key. Leave programs across organizational boundaries; HR, disability, legal and other departments need to work collaboratively. Removing barriers between disciplines creates efficiencies and limits liability.

Four: Implement clear and consistent processes and policies. FMLA and ADA policies should be as uniform and applied as consistently as possible across the organization regardless of size or geography, allowing for some flexibility. Stakeholders need to engage with consistent correspondence, tracking, management, decision-making and communication.

Five: Centralize administration of the leave function. Employees and managers should have one source for questions and answers.

Six: Evaluate your program. Inventory the system used, are you tracking or managing your program. If an organization has internal system to manage or track its leave program, it should be regularly evaluated for effectiveness. If you choose a software system or outsource administration make sure that your vendor has ongoing compliance support.

Seven: Outsource if necessary. Outsourcing has increased over the last three years, there are more options than ever, and the list continues to grow. But it doesn’t fit every culture or organization; choose what works best for your company.

Eight: Evaluate your vendor. Just because a company outsources leave management, it does not mean it outsources its legal responsibilities.   Even with outsourcing, an organization must establish a process to update its leave programs to meet its changing business and staff needs.

Nine: Measurement, tracking and reporting should be actionable. Key metrics like lost time, costs, return-to-work rates, abuse and productivity are useful to the degree they enable managers to change leave programs to better meet the needs of employees and the organization.

Ten: Create a culture of continual improvement. While legal and regulatory compliance is essential, it is not enough to ensure a leave program helps advance strategic business goals. That requires that managers—and executives–view leave programs as an arena for new investment and training to catalyze change to maximize returns.

Leave laws not only create risk. They also create opportunity.

Planned and implemented in a thoughtful and strategic way, effective leave management can be a competitive advantage in the battle for the best talent. Take advantage of the resources out there and become educated on both the risks and opportunities offered by the new world of employee leave.

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Sponsored Content by AIG

Preparing for and Navigating the Claims Process

Be clear on what your organization's policy does and does not cover before you need it.
By: | July 1, 2015 • 5 min read
SponsoredContent_AIG

All of a sudden – it happens.  The huge explosion in the plant.  The executive scandal that leads the evening news.  The discovery that one of your company’s leading products has led to multiple consumer deaths due to a previously undiscovered fault in its design.  Your business and its reputation, along with your own, are on the line.  You had hoped this day would never come, but it’s time to file a major claim.

Is your company ready?  Do you know – for certain – how you would proceed, both internally with your own employees, and externally, with your insurance provider?  What data will you need to provide, and how quickly can you pull it together?  Do you know – and understand – the exacting wording of your policy?  Are you sure you are covered for this type of incident?  And even if you are a multinational with a global policy, how old is it, and is your coverage in concert with any recent changes in the laws of the country and local jurisdiction in which the incident occurred?

As should be clear from these few questions, if you organization is hit with a major event and you need to make a claim, just knowing that you are current with your premium payments is not enough.  Preparation before the event ever occurs, strong relationships with your insurance team, and a thorough understanding of what needs to happen throughout the claims process are all essential to reaching a satisfactory claim settlement quickly, so that a long business disruption and further damage are avoided.

Get Ready before Disaster Strikes

SponsoredContent_AIGThe Boy Scout motto, “Be prepared,” applies equally well to organizations that may suddenly be faced with the need to navigate the complexities of the claim process – especially for large claims following a major crisis.  Crises are by nature emotional events.  Taking the following steps ahead of time, before disaster strikes, will help avoid the sense of paralysis and tunnel vision that often follows in their wake.

Open up a dialogue with your insurer – today.

For risk managers and others who will be called upon to interface with your insurer in the event of a crisis, establishing open and honest lines of communication now will save trouble and time in the claims process.  Regular communication with your insurance team and keeping them up to date on recent developments in your organization, business and manufacturing processes, etc., will provide them with a better understanding of your risk profile and make it easier to explain what has happened, and why, in the event you ever have to file.  It will also help in the process of updating and refining the wording in existing policies to reflect important changes that may impact a future claim.

Conduct pre-loss workshops to stress-test your readiness to handle a major loss.

Firefighters conduct frequent drills to ensure their teams know what to do when confronted with different types of emergencies.  Commercial airline pilots do the same.  Your organization should be no different.  Thinking through potential loss scenarios and conducting workshops around them will help you identify where the gaps are – in personnel, reporting structures, contact lists, data maintenance, etc., before a real crisis occurs.  If at all possible, you should include your insurance team and broker (if you have one) in these workshops.  This will not only help cement important relationships, but it will also serve to further educate them about your organization and on what you will need from them in a crisis; and vice versa.  The value to your organization can be significant, because your risk management team will not be starting from zero when you have to make a claim.  Knowing what to do first, whom to call at your insurer, what data they will need to begin the claims process, etc. – all of this will save time and help get you on the road to a settlement much more quickly.

Know what your policy covers, before you need it.

SponsoredContent_AIGThis advice may sound obvious, but experience has shown that all too often, companies are not aware, in detail, of what their policies cover and don’t cover.  As Noona Barlow, AIG head of financial lines claims Europe has noted, particularly in the case of small to mid-size organizations, “it is amazing how often directors and risk managers don’t actually know what their policy covers them for.”   This can have dire consequences.  In the case of D & O insurance, for example, even a “global” policy many not cover all situations, because in some countries, companies are not allowed to indemnify their directors.  Obviously, these kinds of facts are important to know before rather than after an incident occurs.  So it is important to have an insurer with both a broad and deep understanding of local laws and regulations wherever you have exposure, in addition to an understanding of the technical details of working through the claims process.

Make sure your data management policies are in order.

Successful risk management depends on having consistent, high-quality data on all of your risk-sensitive operations (manufacturing, procurement, shipping, etc.), so that you can quantify where the greatest risks sit in the organization and take steps to reduce them.  Good data, complemented by strong analytics, will also help you to identify potential problems before they occur.  It will also help you to maximize the effectiveness of your insurance purchasing decisions.  Frequent, detailed conversations with your insurer will help you to identify any areas where additional data might be needed in the event of a crisis.

No one ever wants to find themselves in the midst of a crisis.  But if and when such an event does strike, if you have taken the steps above you will be much better positioned to work through the claims process – and reach an effective resolution – as quickly and as smoothly as possible.

For more information, please visit the AIG Knowledge and Insights Center.

This article was produced by AIG and not the Risk & Insurance® editorial team.



AIG is a leading international insurance organization serving customers in more than 100 countries.
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