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This week the IRS issued Revenue Procedure 2022-34, which significantly decreases the affordability threshold for ACA employer mandate purposes to 9.12% for plan years beginning in 2023. The new 9.12% level marks by far the lowest affordability percentage to date, as well as the first time the threshold has dropped below the initial 9.5% standard set by the ACA.

The affordability percentage decrease is based on the ACA’s index inflation metric, which is the rate of premium growth for the preceding year over the rate of CPI growth for the preceding year. The affordability percentages apply for plan years beginning in the listed year. A calendar plan year will therefore have the 9.12% affordability threshold for the plan year beginning January 1, 2023.

The ACA employer mandate rules apply to employers that are “Applicable Large Employers,” or “ALEs.” In general, an employer is an ALE if it (along with any members in its controlled group) employed an average of at least 50 full-time employees, including full-time equivalent employees, on business days during the preceding calendar year.

There are two potential ACA employer mandate penalties that can impact ALEs:

a) IRC §4980H(a)—The “A Penalty”

The first is the §4980H(a) penalty—frequently referred to as the “A Penalty” or the “Sledge Hammer Penalty.” This penalty applies where the ALE fails to offer minimum essential coverage to at least 95% of its full-time employees in any given calendar month.

The 2022 A Penalty is $229.17/month ($2,750 annualized) multiplied by all full-time employees (reduced by the first 30). It is triggered by at least one full-time employee who was not offered minimum essential coverage enrolling in subsidized coverage on the Exchange. Note: The IRS has not yet released the 2023 A Penalty increase.

The “A Penalty” liability is focused on whether the employer offered a major medical plan to a sufficient percentage of full-time employees—not whether that offer was affordable (or provided minimum value).

b) IRC §4980H(b)—The “B Penalty”

The second is the §4980H(b) penalty—frequently referred to as the “B Penalty or the “Tack Hammer Penalty.” This penalty applies where the ALE is not subject to the A Penalty (i.e., the ALE offers coverage to at least 95% of full-time employees).

The B Penalty applies for each full-time employee who was:

  1. not offered minimum essential coverage,
  2. offered unaffordable coverage, or
  3. offered coverage that did not provide minimum value.

Only those full-time employees who enroll in subsidized coverage on the Exchange will trigger the B Penalty. Unlike the A Penalty, the B Penalty is not multiplied by all full-time employees.

In other words, an ALE who offers minimum essential coverage to a full-time employee will be subject to the B Penalty if:

  1. the coverage does not provide minimum value or is not affordable (more below); and
  2. the full-time employee declines the offer of coverage and instead enrolls in subsidized coverage on the Exchange.

The 2022 B Penalty is $343.33/month ($4,120 annualized) per full-time employee receiving subsidized coverage on the Exchange.  Note: The IRS has not yet released the 2023 B Penalty increase.

On July 22, 2019, the IRS announced that the ACA affordability percentage for the 2020 calendar year will decrease to 9.78%. The current rate for the 2019 calendar year is 9.86%.

As a reminder, under the Affordable Care Act’s employer mandate, an applicable large employer is generally required to offer at least one health plan that provides affordable, minimum value coverage to its full-time employees (and minimum essential coverage to their dependents) or pay a penalty. For this purpose, “affordable” means the premium for self-only coverage cannot be greater than a specified percentage of the employee’s household income. Based on this recent guidance, that percentage will be 9.78% for the 2020 calendar year.

Employers now have the tools to evaluate the affordability of their plans for 2020. Unfortunately, for some employers, a reduction in the affordability percentage will mean that they will have to reduce what employees pay for employee only coverage, if they want their plans to be affordable in 2020.

For example, in 2019 an employer using the hourly rate of pay safe harbor to determine affordability can charge an employee earning $12 per hour up to $153.81 ($12 X 130= 1560 X 9.86%) per month for employee-only coverage. However in 2020, that same employer can only charge an employee earning $12 per hour $152.56 ($12 X 130= 1560 X 9.78%) per month for employee-only coverage, and still use that safe harbor. A reduction in the affordability percentage presents challenges especially for plans with non-calendar year renewals, as those employers that are subject to the ACA employer mandate may need to change their contribution percentage in the middle of their benefit plan year to meet the new affordability percentage. For this reason, we recommend that employers re-evaluate what changes, if any, they should make to their employee contributions to ensure their plans remain affordable under the ACA.

As we have written about previously, employers will sometimes use the Federal Poverty Level (FPL) safe harbor to determine affordability. While we won’t know the 2020 FPL until sometime in early 2020, employers are allowed to use the FPL in effect at least six months before the beginning of their plan year. This means employers can use the 2019 FPL number as a benchmark for determining affordability for 2020 now that they know what the affordability percentage is for 2020.

New Rule Will Let Employees Use HRAs to Buy Health Insurance in 2020

June 14 - Posted at 4:33 PM Tagged: , , , , , , , , , ,

Advocates claim a newly issued regulation could transform how employers pay for employee health care coverage.

On June 13, the U.S. Departments of Health and Human Services, Labor and the Treasury issued a final rule allowing employers of all sizes that do not offer a group coverage plan to fund a new kind of health reimbursement arrangement (HRA), known as an individual coverage HRA (ICHRA). The departments also posted FAQs on the new rule.

Starting Jan. 1, 2020, employees will be able to use employer-funded ICHRAs to buy individual-market insurance, including insurance purchased on the public exchanges formed under the Affordable Care Act (ACA).

Under IRS guidance from the Obama administration (IRS Notice 2013-54), employers were effectively prevented from offering stand-alone HRAs that allow employees to purchase coverage on the individual market.

“Using an individual coverage HRA, employers will be able to provide their workers and their workers’ families with tax-preferred funds to pay all or a portion of the cost of coverage that workers purchase in the individual market,” said Joe Grogan, director of the White House Domestic Policy Council. “The departments estimate that once employers fully adjust to the new rules, roughly 800,000 employers will offer individual coverage HRAs to pay for insurance for more than 11 million employees and their family members, providing them with more options for selecting health insurance coverage that better meets their needs.”

The new rule “is primarily about increasing employer flexibility and worker choice of coverage,” said Brian Blase, special assistant to the president for health care policy. “We expect this rule to particularly benefit small employers and make it easier for them to compete with larger businesses by creating another option for financing worker health insurance coverage.”

The final rule is in response to the Trump administration’s October 2017 executive order on health care choice and competition, which resulted in an earlier final rule on association health plans that is now being challenged in the courts, and a final rule allowing low-cost short-term insurance that provides less coverage than a standard ACA plan.

New Types of HRAs

Existing HRAs are employer-funded accounts that employees can use to pay out-of-pocket health care expenses but may not use to pay insurance premiums. Unlike health savings accounts (HSAs), all HRAs, including the new ICHRA, are exclusively employer-funded, and, when employees leave the organization, their HRA funds go back to the employer. This differs from HSAs, which are employee-owned and portable when employees leave.

The proposed regulations keep the kinds of HRAs currently permitted (such as HRAs integrated with group health plans and retiree-only HRAs) and would recognize two new types of HRAs:

  • Individual coverage HRAs. Employers would be allowed to fund ICHRAs only for employees not offered a group health plan. 
  • Excepted-benefit HRAs. These would be limited to paying premiums for vision and dental coverage or similar benefits exempt from ACA and other legal requirements. These HRAs are only permitted if employees are offered coverage under a group health plan sponsored by the employer.

What ICHRAs Can Do

Under the new HRA rule:

  • Employers may either offer an ICHRA or a traditional group health plan but may not offer employees a choice between the two.
  • Employers can create classes of employees around certain employment distinctions, such as salaried workers versus hourly workers, full-time workers versus part-time workers, and workers in certain geographic areas, and then offer an ICHRA on a class by class basis.
  • Employers that offer an ICHRA must do so on the same terms for all employees in a class of employees, but they may increase the ICHRA amount for older workers and for workers with more dependents.
  • Employers can maintain their traditional group health plan for existing enrollees, with new hires offered only an ICHRA.

The rule also includes a disclosure provision to help ensure that employees understand the type of HRA being offered by their employer and how the ICHRA offer may make them ineligible for a premium tax credit or subsidy when buying an ACA exchange-based plan. To help satisfy the notice requirements, the IRS issued an Individual Coverage HRA Model Notice.

QSEHRAs and ICHRAs

Currently, qualified small-employer HRAs (QSEHRAs), created by Congress in December 2016, allow small businesses with fewer than 50 full-time employees to use pretax dollars to reimburse employees who buy nongroup health coverage. The new rule goes farther and:

  • Allows all employers, regardless of size, to pay premiums for individual policies through a premium-reimbursement ICHRA.
  • Clarifies that when employers fund an ICHRA or a QSEHRA paired with individual-market insurance, this will not cause the individual-market coverage to become part of an Employee Retirement Income Security Act (ERISA) plan if certain requirements are met (for instance, employers may not select or endorse a particular individual-market plan).
  • Creates a special enrollment period in the ACA’s individual market for those who gain access to an ICHRA or a QSEHRA to purchase individual-market health insurance coverage.

The legislation creating QSEHRAs set a maximum annual contribution limit with inflation-based adjustments. In 2019, annual employer contributions to QSEHRAs are capped at $5,150 for a single employee and $10,450 for an employee with a family.

The new rule, however, doesn’t cap contributions for ICHRAs.

As a result, employers with fewer than 50 full-time employees will have two choices—QSEHRAs or ICHRAs—with some regulatory differences between the two. For example:

  • QSEHRA participants who obtain health insurance from an ACA exchange and who are eligible for a tax credit/subsidy must report to the exchange that they are participants in a QSEHRA. The amount of the tax credit/subsidy is reduced by the available QSEHRA benefit.
  • ICHRA participants, however, will not be able to receive any premium tax credit/subsidy for exchange-based coverage.

“QSEHRAs have a special rule that allows employees to qualify for both their employer’s subsidy and the difference between that amount and any premium tax credit for which they’re eligible,” said John Barkett, director of policy affairs at consultancy Willis Towers Watson.

While the ability of employees to couple QSEHRAs with a premium tax credit is appealing, the downside is QSEHRA’s annual contribution limits, Barkett said. “QSEHRA’s are limited in their ability to fully subsidize coverage for older employees and employees with families, because employers could run through those caps fairly quickly,” he noted.

For older employees, the least expensive plan available on the individual market could easily cost $700 a month or $8,400 a year, Barkett pointed out, and “with a QSEHRA, an employer could only put in around $429 per month to stay under the $5,150 annual limit for self-only coverage.”

Similarly, for employees with many dependents, premiums could easily exceed the QSEHRA’s family coverage maximum of $10,450, whereas “all those dollars could be contributed pretax through an ICHRA,” Barkett said.

An Excepted-Benefit HRA

In addition to allowing ICHRAs, the final rule creates a new excepted-benefit HRA that lets employers that offer traditional group health plans provide an additional pretax $1,800 per year (indexed to inflation after 2020) to reimburse employees for certain qualified medical expenses, including premiums for vision, dental, and short-term, limited-duration insurance.

The new excepted-benefit HRAs can be used by employees whether or not they enroll in a traditional group health plan, and can be used to reimburse employees’ COBRA continuation coverage premiums and short-term insurance coverage plan premiums.

Safe Harbor Coming

With ICHRAs, employers still must satisfy the ACA’s affordability and minimum value requirements, just as they must do when offering a group health plan. However, “the IRS has signaled it will come out with a safe harbor that should make it straightforward for employers to determine whether their ICHRA offering would comply with ACA coverage requirements,” Barkett said.

Last year, the IRS issued Notice 2018-88, which outlined proposed safe harbor methods for determining whether individual coverage HRAs meet the ACA’s affordability threshold for employees, and which stated that ICHRAs that meet the affordability standard will be deemed to offer at least minimum value.

The IRS indicated that further rulemaking on these safe harbor methods is on its agenda for later this year.

Late last week, the IRS released Rev. Proc. 2018-34 which, among other items, set the affordability threshold for employers in 2019. In order to avoid a potential section 4980H(b) penalty (aka Pay or Play penalty), an employer must make sure one of its plans provides minimum value and is offered at an affordable price. An actuary will determine whether the minimum value threshold has been satisfied and this is generally not an issue for employers. However, an employer is in control as to whether the plan it is offering meets the affordability threshold.

A plan is considered affordable under the ACA if the employee’s contribution level for self-only coverage does not exceed 9.5 percent of the employee’s household income. This 9.5 percent threshold is indexed for years after 2014. In 2018 the affordability threshold decreased from 9.69 percent to 9.56 percent. However, similar to every other year, the affordability threshold is scheduled to increase in 2019. In 2019 the affordability threshold will be 9.86 percent. The significant increase compared to 2018 provides an employer who is toeing the line of the affordability threshold an opportunity to increase the price of its health insurance while continuing to provide affordable coverage.

An employer wishing to use one of the affordability safe harbors will use the 2019 affordability threshold of 9.86 percent when determining if the safe harbor has been satisfied. The first affordability safe harbor an employer may utilize is referred to as the form w-2 safe harbor. Under the form w-2 safe harbor, an employer’s offer will be deemed affordable if the employee’s required contribution for the employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.86 percent of that employee’s form w-2 wages (box 1 of the form w-2) from the employer for the calendar year.

The second affordability safe harbor is the rate of pay safe harbor. The rate of pay safe harbor can be broken into two tests, one test for hourly employees and another test for salaried employees. For hourly employee, an employer’s offer will be deemed affordable if the employee’s required contribution for the month for the employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.86 percent of the product of the employee’s hourly rate of pay and 130 hours. For salaried employees, an employer’s offer will be deemed affordable if the employee’s required contribution for the month for the employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.86 percent of the employee’s monthly salary.

The final affordability safe harbor is the federal poverty line safe harbor. Under the federal poverty line safe harbor, an employer’s offer will be deemed affordable if the employee’s required contribution for the employer’s lowest cost self-only coverage that provides minimum value does not exceed 9.86 percent of the monthly Federal Poverty Line (FPL) for a single individual. The annual federal poverty line amount to use for the United States mainland in 2019 is $12,140. Therefore, an employee’s monthly cost for self-only coverage cannot exceed $99.75 in order to satisfy the federal poverty line safe harbor.

When planning for the 2019 plan year, every employer should check to make sure at least one of its plans that provides minimum value meets one of the affordability safe harbors discussed above for each of its full-time employees. Should you have any questions on determining the affordability of a plan or any other questions related to the Forms 1094-C and 1095-C, please don’t hesitate to contact us.

 

The Affordable Care Act will require Applicable Large Employers (i.e. large employers subject to the employer mandate) and employers sponsoring self-insured plans to comply with new annual IRS reporting requirements.  The first reporting deadline will be February 28, 2016 as to the data employers collect during the 2015 calendar year.  The reporting provides the IRS with information it needs to enforce the Individual Mandate (i.e. individuals are penalized for not having health coverage) and the Employer Mandate (i.e. large employers are penalized for not offering health coverage to full-time employees).  The IRS will also require employers who offer self-insured plans to report on covered individuals.

 

Large employers and coverage providers must also provide a written statement to each employee or responsible individual (i.e. one who enrolls one or more individuals) identifying the reported information.  The written statement can be a copy of the Form.

 

The IRS recently released draft Forms 1094-C and 1095-C and draft Forms 1094-B and 1095-B, along with draft instructions for each form.

 

Which Forms Do I File? 

 

  • Applicable Large Employer (ALE) Offering Fully Insured Coverage
    • Form 1094-C and 1095-C (except Part III)
  • Applicable Large Employer Sponsoring Self-Insured Coverage
    • Form 1094-C and 1095-C (including Part III)
  • Applicable Large Employer Offering Self-Insured Coverage to Non-Employees (i.e. retirees/COBRA/etc)
    • 1094-C and 1095-C (except Part III) as well as 1094-B and 1095-C
  • Small Employer (non-ALE) Sponsoring Self-Insured Coverage
    • 1094-B and 1095-C
  • Small Employer Offering Fully Insured Health Plans
    • Not Applicable

 

When?

Statements to employees and responsible individuals are due annually by January 31.  The first statements are due January 31, 2016.

 

Forms 1094-B, 1095-B, 1094-C and 1095-C are due annually by February 28 (or by March 31, if filing electronically).  The first filing is due by February 28, 2016 (or March 31, 2016, if filing electronically). 

 

Even though the forms are not due until 2016, the annual reporting will be based on data from the prior year.  Employers need to plan ahead now to collect data for 2015.  Many employers have adopted the Look Back Measurement Method Safe Harbor (“Safe Harbor”) to identify full-time employees under the ACA.  The Safe Harbor allows employers to “look back” on the hours of service of its employees during 2014 or another measurement period.  There are specific legal restrictions regarding the timing and length of the periods under the Safe Harbor, so employers cannot just pick random dates.  Employers also must follow various rules to calculate hours of service under the Safe Harbor.  The hours of service during the measurement period (which is likely to include most of 2014) will determine whether a particular employee is full-time under the ACA during the 2015 stability period.  The stability period is the time during which the status of the employee, as full-time or non-full-time, is locked in.  In 2016, employers must report their employees’ full-time status during the calendar year of 2015.  Therefore, even though the IRS forms are not due until 2016, an employee’s hours of service in 2014 will determine how an employer reports that employee during each month of 2015.  Employers who have not adopted the Safe Harbor should consider doing so because it allows an employer to average hours of service over a 12-month period to determine the full-time status of an employee.  If an employer does not adopt the Safe Harbor, the IRS will require the employer to make a monthly determination, which is likely to increase an employer’s potential exposure to penalties.

 

What Must the Employer Report?

 

 

Form 1095-C

There are three parts to Form 1095-C.  An applicable large employer must file one Form 1095-C for each full-time employee.  If the applicable large employer sponsors self-insured health plans, it must also file Form 1095-C for any employee who enrolls in coverage regardless of the full-time status of that employee.

 

Form 1095-C requires the employer to identify the type of health coverage offered to a full-time employee for each calendar month, including whether that coverage offered minimum value and was affordable for that employee.  Employers must use a code to identify the type of health coverage offered and applicable transition relief.

 

Employers that offer self-insured health plans also must report information about each individual enrolled in the self-insured health plan, including any full-time employee, non-full-time employee, employee family members, and others. 

 

Form 1094-C

Applicable large employers use Form 1094-C as a transmittal to report employer summary information and transmit its Forms 1095-C to the IRS.  Form 1094-C requires employers to enter the name and contact information of the employer and the total number of Forms 1095-C it submits.  It also requires information about whether the employer offered minimum essential coverage under an eligible employer-sponsored plan to at least 95% of its full-time employees and their dependents for the entire calendar year, the number of full-time employees for each month, and the total number of employees (full-time or non-full-time) for each month.

 

Form 1095-B

Employers offering self-insured coverage use Form 1095-B to report information to the IRS about individuals who are covered by minimum essential coverage and therefore are not liable for the individual shared responsibility payment.  These employers must file a Form 1095-B for eachindividual who was covered for any part of the calendar year.  The employer must make reasonable efforts to collect social security numbers for covered individuals.

 

Form 1094-B

Employers who file Form 1095-B will use Form 1094-B as a transmittal form.  It asks for the name of the employer, the employer’s EIN, and the name, telephone number, and address of the employer’s contact person. 

 

Failure to Report – What Happens?

The IRS will impose penalties for failure to timely provide correct written statements to employees.  The IRS will also impose penalties for failure to timely file a correct return.  For the 2016 reporting on 2015 data, the IRS will not impose a penalty for good faith compliance.  However, the IRS specified that good faith compliance requires that employers provide the statements and file the returns. 

Starting in 2015, the Affordable Care Act (ACA) requires applicable large employers to offer affordable, minimum value health coverage to their full time employees (and dependents) or pay a penalty. The employer penalty rules are also known as the employer mandate or the “pay or play” rules.

 

Effective in 2014, affordability of health coverage is used to determine whether an individual is:

 

    • Eligible for a premium tax credit for a health plan purchased through an Exchange; and
    • Exempt from the penalty for not having minimum essential coverage

 

On July 24, 2014, the IRS released Revenue Procedure 2014-37 to index the ACA’s affordability percentages for 2015.

 

For plan years beginning in 2015, an applicable large employer’s health coverage will be considered affordable under the pay or play rules if the employee’s requires contribution to the plan does not exceed 9.56 percent of the employee’s household income for the year. The current affordability percentage for 2014 is 9.5 percent.

 

Applicable large employers can use one of the IRS’ affordability safe harbors to determine whether their health plans will satisfy the 9.56 percent requirement for 2015 plan years, if requirements for the applicable safe harbor are met.

 

This adjusted affordability percentage will also be used to determine whether an individual is eligible for a premium tax credit for 2015. Individuals who are eligible for employer-sponsored coverage that is affordable and provides minimum value are not eligible for a premium tax credit in the Exchange.

 

Also, Revenue Procedure 2014-37 adjusts the affordability percentage for the exemption from the individual mandate for individuals who lack access to affordable minimum essential coverage. For plan years beginning in 2015, coverage is unaffordable for purposes of the individual mandate if it exceeds 8.05 percent of household income.

 

Employer Mandate

The pay or play rules apply only to applicable large employers. An “applicable large employer” is an employer with, on average, at least 50 full-time employees (including full-time equivalents) during the preceding calendar year. Many applicable large employers will be subject to the pay or play rules starting in 2015. However, applicable large employers with fewer than 100 full-time employees may qualify for an additional year, until 2016, to comply with the employer mandate.

 

Affordability Determination

The affordability of health coverage is a key point in determining whether an applicable large employers will be subject to a penalty.

 

For 2014, the ACA provides that an employer’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5 percent of the employee’s household income for the taxable year. The ACA provides that, for plan year beginning after 2014, the IRS must adjust the affordability percentage to reflect the excess of the rate of premium growth over the rate of income growth for the preceding calendar year.

 

As noted above, the IRS has adjusted the affordability percentage for plan years beginning in 2015 to 9.56 percent. The affordability text applies only to the portion of the annual premiums for self-only coverage and does not include any additional cost for family coverage. Also, if an employer offers multiple health coverage options, the affordability test applies to the lowest-cost option that also satisfies the minimum value requirement.

 

Affordability Safe Harbors

Because an employer generally will not know an employee’s household income, the IRS created three affordability safe harbors that employers may use to determine affordability based on information that is available to them.

 

The affordability safe  harbors are all optional. An employer may choose to use one or more of the affordability safe harbors for all its employees or for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category.

 

The affordability safe harbors are:

 

  • Form W-2 safe harbor (affordability determined based on Form W-2 wages from that employer)
  • The rate of pay safe harbor (affordability determined based on an employee’s rate of pay)
  • The federal poverty line (FPL) safe harbor (affordability determined based on FPL for a single individual)

 

Individual Mandate

Beginning in 2014, the ACA requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. This rule is often referred to as the “individual mandate”. Individual may be eligible for an exemption from the penalty in certain circumstances.

 

Under the ACA, individuals who lack access to affordable minimum essential coverage are exempt from the individual mandate. For purposes of this exemption, coverage is considered affordable for an employee in 2014 if the required contribution for the lowest-cost, self-only coverage  does not exceed 8 percent of household income. For family members, coverage is considered affordable in 2014 if the required contribution for the lowest-cost family coverage does not exceed 8 percent of household income. This percentage will be adjusted annually after 2014.

 

For plan years beginning in 2015, the IRS has increased this percentage from 8 percent to 8.05 percent.

 

Does your company currently use forms created more than three years ago that asks for information about an applicant or an employee’s family medical history?

 

Do your supervisors and managers know that if they are “friended” by an employee on a social media site and they see medical information relating to the individual or the individual’s family member, they have violated a federal law and subjected the company to liability?

 

Has your company failed to update Family Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), workers’ compensation, no-harassment, and other policies and procedures to comply with the Genetic Information Nondiscrimination Act (GINA)? 

 

If you answered yes to any of these questions,  you should review the impact of GINA so your company does not become the next GINA “headline.”

 

What Is GINA?

 

The Genetic Information Nondiscrimination Act (GINA) has been an active federal law for five years now. However, many employers still know little about the law. Enacted in 2008, GINA generally prohibits employers from engaging in three types of conduct:

 

  • Prohibits employers with 15 or more employees from discriminating against an employee on the basis of the employee’s genetic information. “Genetic information” is rather broadly defined and includes information from genetic tests, the genetic tests of family members, and family medical history, but it does not include an individual’s race and ethnicity.

 

  • Prohibits employers from requesting an employee’s genetic information, subject to certain exceptions.

 

  • Prohibits employers from retaliating against an employee who has opposed a practice made unlawful by GINA.

 

Most attribute GINA’s enactment and requirements as a response to a trend in which employers sought to rely on genetic information in an attempt to screen out potentially unhealthy employees to help control their surging health care costs. 

 

Inadvertent Collection Of Genetic Information

Many employers today pay little attention to GINA on the mistaken assumption that they do not collect genetic information. But there are three very common situations in which an employer can unknowingly collect genetic information.
 

 

First, employers regularly request medical documentation to support a potentially disabled employee’s request for a reasonable accommodation.
 

 

Second, employers regularly request medical documentation to support an employee’s request for leave under FMLA.
 

 

Third, many employers require a medical examination upon hire and, as a result, receive medical information in that context.

 

In each of these situations, the employer might acquire genetic information (without intentionally requesting it) and would violate GINA as a result of doing so. Fortunately, GINA provides a “safe harbor” that can protect an employer in such situations.  

 

How To Avoid Noncompliance

 

When an employer requests medical information, it must warn the provider not to provide genetic information. When the employer makes such a warning, the “safe harbor” provision provides that any receipt of genetic information in response to their request will be deemed unintentional and not in violation of GINA.
  

As a result, it is imperative that employers include this specific warning any time that they request health-related information from a health care provider or an employee.
  

Of course, an employer could also obtain genetic information in a less formal situation. For example, a supervisor could obtain genetic information about an employee during a casual conversation, through email, or through social media. As long as the supervisor does not ask follow-up questions and does not take any employment-related action based on the accidentally acquired info, this information would be deemed unintentional. However, the use or disclosure of the accidentally acquired information would still violate GINA.

 

Does Your Wellness Program Violate GINA?

 

The federal regulations also make clear that an employer does not violate GINA if the employer requests genetic information as part of a “voluntary wellness program.”

 

For such a program to be deemed voluntary, the employer must show that:

  • The employer does not require employees to provide genetic information (or penalize them for not providing it)

 

  • The employee provided knowing, voluntary, and written authorization stating that the employee understands the type of genetic information to be obtained and how it will be used. Individually identifiable genetic information may be provided only to the health care professionals involved in providing the services.

 

Another reason that employers may be less knowledgeable about GINA (as compared to other federal laws) is that relatively few lawsuits have be filed since the law was enacted. According to EEOC statistics, there were just 280 charges of GINA-related discrimination filed in 2012, or around 0.3% of the overall charge filings for that year. However, the number of filed, GINA-related charges has increased by nearly 40% since the first year an individual could file under the statute.

 

Moreover, recent activity by the EEOC suggests that it would be best if employers begin reviewing their procedures now and taking the necessary steps to ensure they are GINA compliant.

Unknowing or unintentional violations of GINA are perhaps the most worrisome type of violations since they are the most likely to occur. This is particularly true for employers that rely on dated, pre-GINA human resources documents (including employment applications) or employment policies.
  

Employers should update existing nondiscrimination and anti-harassment policies and handbooks so that discrimination/harassment on the basis of genetic information is clearly prohibited. Similarly, employers should also update their Family Medical Leave Act (FMLA) and Americans with Disabilities Act (ADA) forms to include the requisite “safe harbor” language that warns employees and health care providers not to provide genetic information.
 

Employers also should ensure that an employee’s medical information is maintained separately from the employee’s personnel file, as required by the law.

 

For further information on GINA and its impact on your business or for assistance on insuring your company is GINA compliant, please do not hesitate to contact our office. 

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