By Han Jeong
Many United States employers have opted to provide risk-rated health insurance to employees, meaning premiums are determined by the employees’ preexisting conditions. This approach often results in higher costs to insure employees with disabilities compared to their non-disabled counterparts, leading to discrimination in business practices aimed at maximizing profits and minimizing costs and risks.
Congress intended to address this issue under the Americans with Disabilities Act (ADA), which aims to prohibit discrimination based on disabilities, but its attempt to address health coverage disparities remained unsuccessful until 2014. The high cost of employing individuals with disabilities led to indirect discrimination, with employers hesitant to hire or maintain certain people.
Effective Jan. 1, 2014, the federal Patient Protection and Affordable Care Act (ACA) requires health insurers to use a modified community rating system to mitigate previously ambiguous discrimination. This system prevents insurers from charging higher premiums within specific geographic areas based on age, gender, health status, or claims history.
The ACA mandates that premiums are primarily assessed based on an enrollee’s age. Although Congress has eliminated many ACA health insurance requirements, states have implemented individual mandates that align with the ACA’s goals, improving employment opportunities for Americans with disabilities.
The ADA oversees certain employment practices, especially where employers collect employee health information. Employers often seek this information to manage healthcare premiums, but the community rating system favored by the ACA is unlikely to restrict this practice. That is because only ACA-compliant major medical plans are subject to community ratings in the small group markets, while other plans in large group markets may still be risk-rated.
Moreover, the ADA explicitly prohibits discrimination against employees based on disabilities and sets strict limits on medical exams or inquiries about employees’ preexisting conditions or their disabilities. Although the regulations do not directly address the protection of employee medical privacy, Congress has restricted how much medical information employers can obtain—a measure intended to reduce the likelihood of discrimination based on disabilities.
Specifically, U.S. Code Title 42, section 12112, within the ADA, allows employers to inquire into an applicant’s ability to perform job-related functions but prohibits employers from asking whether the applicant has a disability, or the nature or severity of any disability. The legislation restricts inquiries about certain disabilities that might not be immediately visible but could carry a social stigma, including sexually transmitted infections like HIV.
Neither the ADA nor the ACA, however, limit the ability of healthcare institutions to offer wellness programs that collect substantial amounts of individual health information, such as lifestyle questions or activity trackers. Employers can use this information to reduce healthcare premiums and may offer incentives for participation. However, participation in the excepted wellness programs—and collection of employee health data—must be voluntary by the employee and must meet the “reasonably designed” criteria set by the ADA.
Wellness programs that meet federal standards aim to inform employees about health risks or to encourage healthful behaviors and disease prevention, ensuring that a basic assessment of risk factors does not simply shift costs from an employer to an employee based on individual health information.
In summary, the intersection of disabilities, insurance premiums, and employment practices has seen significant evolution due to the ADA and ACA. These laws aim to reduce discrimination and ensure a more equitable approach to insurance and employment for individuals with disabilities, marking a shift toward greater inclusivity and equal opportunities in the workplace.
Han Jeong (he/him) is currently a 2L at Arizona State University’s Sandra Day O’Connor College of Law. Before attending law school, Han served in the U.S. Army as a logistic manager and financial officer for a little less than five years. His legal interests include business law, commercial law, financial transactions, and social justice issues affecting marginalized communities. Outside of law school, Han enjoys playing golf and traveling to different worlds whenever possible, looking for a place to experience a diverse environment.
Law Journal for Social Justice 