With the new year, many employers have new obligations under the Affordable Care Act (“ACA”). In order to keep you in compliance, Kelley Drye’s Employee Benefits group has published two advisories – one in December 2015 and an update on Tuesday – which, together, summarize some of the relevant rules and guidance, including some that became, or will become, effective in 16.

I hope you find both of these helpful. Please do not hesitate to contact me or Pam Kaplan in our Benefits group should you have any questions.

Yours truly, Barbara Hoey

In response to the ACA, some companies, including UPS, have decided to stop covering working spouses if they have access to coverage at their own jobs. Other employers offer incentives to get spouses off their plans. They may charge workers extra if a covered spouse has access to other insurance, or they may pay bonuses when spouses are not on the company policy. Reports that most companies are dropping health coverage for spouses to cut costs associated with the ACA are somewhat hyperbolic. Surveys show that only a minority of companies have implemented a spousal exclusion.

Under the ACA, an employer can choose to offer medical insurance benefits only to employees and their dependent children, not to employees’ spouses, but it must apply the rules consistently. An employer cannot discriminate by extending coverage to some employees' family members but not to others. If employers introduce a spousal exclusion, the employer must ensure that benefits plan decisions are nondiscriminatory, keeping in mind the adverse impact on protected groups and any unintentional discrimination that may result from those decisions. Like retirement benefits, health insurance benefits must be provided without regard to the race, color, sex, national origin, or religion of the insured.

Employers should beware that a spousal exclusion may be tricky to apply in a non-discriminatory fashion. Excluding spouses may impact protected classes more than non-protected classes. For example, a spousal carve out may impact an employers’ male employees more than an employers’ female employees, which could form the basis of a sex discrimination suit. Thus, employers implementing a spousal ban may be risking a possible lawsuit for a small amount of savings. Further, employers should be cautious about adding a spousal exclusion, as family coverage is a valued employee benefit, and employers may lose top-notch talent if they stop offering spousal coverage.

Near the end 2014, the EEOC filed complaints related to three employer wellness programs run by Honeywell International, Inc., Orion Energy Systems, Inc., and Flambeau, Inc. alleging that the programs were not voluntary. Each program required employees to submit to certain medical examinations including biometric testing, blood draw, and answering health-related questions. According to the EEOC complaints, employees who refused or failed to participate incurred a range of severe consequences, including canceled medical insurance, a directive to pay their full insurance premiums, discipline, or termination. The agency determined that such penalties rendered the programs involuntary, and therefore impermissible under the ADA.

The EEOC’s position on wellness programs poses substantial uncertainty for many employers. That uncertainty also stems from the fact that other laws, such as the Health Insurance Portability and Accountability Act (“HIPPA”) and the Affordable Care Act (“ACA”), expressly permit incentive based wellness programs. In March, in a move to stem the uncertainty, the agency sent proposed wellness plan rules to the Office of Management and Budget for review before publication for notice and comment in the near future.

In light of the EEOC’s recent actions, employers who maintain an incentive-based wellness program should heed the following advice. First, employers need to ensure their wellness program is voluntary, meaning an employer neither requires participation nor penalizes employees who do not participate. Because the EEOC is yet to rule on whether withholding a reward from non-participants constitutes a penalty, employers should expect the EEOC to take a case-by-case approach on scrutinizing workplace wellness programs. Second, even if an employer’s wellness program is ACA-compliant, an employer may still face an EEOC investigation and lawsuit. In light of the current legal landscape, employers should consult with counsel to tailor their wellness program in a way that will benefit their employees and avoid costly ligation.