Workplace wellness programs have recently become very popular with both employers and employees. In a study sponsored by the U.S. Department of Labor, 92 percent of employers with 200 or more employees reportedly offered a wellness program in 2009. Wellness programs are designed to improve the health of employees and therefore lower the cost of health insurance for employers. Examples of wellness programs include no-tobacco policies, health incentive payments and gift cards, discounted or reimbursed gym memberships, and free health coaching. Certain wellness programs also provide for discounted insurance premiums based on meeting designated health standards. The same policies typically also apply surcharges for those who do not meet those standards. The hope, for employers, is that wellness programs will improve the overall health of their employees, which in turn brings down the overall cost of health care.
The debate between employer- and employee-advocates regarding whether wellness programs are helpful or hurtful to the health insurance market recently intensified. Participatory wellness programs, like discounted gym memberships, receive support from both sides of the issue. However, health-contingent wellness plans, where insurance premiums are based on health assessments, are vigorously debated. Employee advocates argue that health-contingent plans encourage discrimination based on health status, which can disproportionately affect minorities, women, and the aging population.
On May 3, 2013, the Internal Revenue Service (IRS) published a proposed rule regarding the Affordable Care Act (ACA) health insurance premium tax credit. Under the ACA, beginning in 2014, an employer must provide minimum health care coverage for its full-time employees. If it does not, the employer will pay an excise tax penalty. The proposed regulations tackle what qualifies as “minimum health care coverage” under the ACA. The proposed rule would not include wellness programs as part of the health care coverage package employers are required to provide. It does, however, create an exception for wellness programs that target smoking cessation. The proposed regulation would not address the potential for discrimination, but it would guarantee that employers are providing adequate health care coverage, outside of what is provided through the workplace wellness plan.
The IRS’s proposed regulation comes one week before the May 8, 2013 Equal Employment Opportunity Commission (EEOC) meeting on the treatment of wellness programs under federal law. The hearing focused on how wellness programs interact with the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act, and other relevant statutes the EEOC works with. The following witnesses testified on both sides of the issue:
- Christopher Kuczynski, Acting Associate Legal Counsel, EEOC
- Judith Lichtman, Senior Advisor, National Partnership for Women and Families
- Jennifer Mathis, Deputy Legal Director, Bazelon Center for Mental Health, on behalf of the Consortium for Citizens with Disabilities
- Amy Moore, Partner, Covington and Burling LLP, on behalf of the ERISA Industry Committee (ERIC)
- Karen Pollitz, Senior Fellow, Kaiser Family Foundation
- Leslie Silverman, Partner, Proskauer Rose, LLP
- Tami Simon, Managing Director, Knowledge Resource Center, Buck Consultants, on behalf of the American Benefits Council (ABC)
The new IRS rules are open to revision and comments, which are due by July 2, 2013. To submit a comment on the proposed rule online, visit here.
Lauren Khouri is a third-year law student at American University Washington College of Law.
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