Dive Brief:
- Multiple federal agencies, including the U.S. Department of Labor, issued joint guidance on Wednesday in response to questions raised by the wave of class-action lawsuits challenging the tobacco surcharges employers add to group health programs.
- In the FAQ guidance, the agencies assured employers they had no intention of taking enforcement action against plans or issuers that do not retroactively provide a wellness award if an employee completes a reasonable alternative standard. They also addressed disclosure obligations.
- This guidance may provide more clarity around how HR can structure compliant group health plans.
Dive Insight:
The U.S. Department of Health and Human Services, Department of the Treasury, and Department of Labor’s Employee Benefits Security Administration collaborated on the guidance.
The practice of levying tobacco use surcharges was born out of the Health Insurance Portability and Accountability Act of 1996 and the Affordable Care Act. These laws allowed employers to reward workers for practicing healthy habits, such as addressing alcohol and drug use, working on nutrition, managing stress, losing weight and quitting tobacco.
The goal of this newly issued wellness program guidance is to ensure that “as long as [employers] are offering reasonably designed, and otherwise non-discriminatory wellness programs, they will not be penalized for wanting to help motivate the people they cover to make efforts to improve their health,” EBSA Assistant Secretary Daniel Aronowitz said on Wednesday.
Echoing the joint press release, Timothy Collins, partner at Duane Morris, noted the wave of recent lawsuits targeting wellness program surcharges — something he called “an example of employers being subject to pressure on all sides” in an email to HR Dive. “Areas that were viewed as ‘settled’ continue to be attacked as potentially violating ERISA’s fiduciary protections,” Collins said.
The FAQs issued this week give employers “helpful guidance as they structure their wellness program surcharges, specifically with respect to a reprieve on certain DOL enforcement actions,” he said.
Still, Collins said, while this guidance is helpful, employers must remember that the risks in this area largely came from workers picking apart wellness programs through class-action lawsuits. “The DOL guidance provides some arguments in rebutting those claims, but does not offer safety from such claims going forward,” Collins said.
