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One of our clients has presented this question to us, their California company is being bought out by another company in NC. This is to become effective August 1, 2008. At that time they will be on the new company’s payroll and the new company’s medical benefits. However the new company is stating to the employees that in order to be eligible for medical benefits, the employees must have blood/lab work performed with 90 days of the coverage effective date. In addition, the employees must complete a Health Risk Assessment questionnaire within 90 days of the effective date. Aren’t companys that provide health/medical benefits to their employees under a group coverage plan? And wouldn’t they be exempt from something like this? And is this legal to do in California?

You are correct in your assumption. Under HIPAA, the federal Health Insurance Portability and Accountability Act, employers may not require physicals as a condition of coverage for group helath insurance. Companies can require that an individual have a health assessment. However, they cannot deny insurance based on that assessment.

 

This is a complex question that actually relates more to the laws regarding insurance and medicine, rather than to employment laws. The best bet is for you or your client to contact the proper regulatory agency in California.

 

California employment laws apply to all workers in the state, regardless of where the company headquarters is located. Health insurance provided through an insurance company is regulated through the California Department of Insurance. When a company is self-insured, it is regulated through the Department of Industrial Relations.

It’s possible that the client misunderstands the insurance policy, and that they simply take a very proactive approach to employee health care. In fact, when an insurance company requires a physical for coverage, it is almost always before coverage, not after the fact.

It’s seems from this question that the employer intends to cancel an employee’s health insurance coverage if the worker “fails” the Health Risk Assessment or doesn’t have the lab work within 90 days. That may very well be illegal discrimination in California.

Companies agree to Risk Assessment programs because they keep workers healthier, and reduces the cost of healthcare for all employees.

Suppose an employee took the Health Risk Assessment or initial lab work and found that he was at high risk for a heart attack. The employer then canceled the employee’s health insurance coverage. This would probably be illegal discrimination based on a disability (or perceived disability) under ADA, because the employer would be altering benefits for employees based on physical factors unrelated to performance.

An interesting question arises if the employee refuses to take the Health Risk Assessment or get the required blood work. At this point, although companies can strongly encourage employees to get annual physicals they probably cannot terminate an employee who refuses to do so – especially in California, which has the toughest employment laws in the nation. It’s not clear if the employer could even cancel the worker’s health insurance.

California anti-discrimination law prohibits employers from taking any adverse employment action based on an employee’s conduct outside of work, as long as that conduct is legal. Depriving an employee of health insurance (a benefit) or firing them is an adverse employment action. Not getting lab work, or not filling out the Health Risk Assessment is legal conduct. So on the surface, this would appear to violate the CA anti-discrimination laws.

That’s probably a case that would need to be tried in court.  

It’s also possible that the employer is saying, “You MUST have a physical and blood work within 90 days” when in fact the employer means, “We strongly recommend that you have a physical and blood work within 90 days” or “Failure to have lab work within 90 days may result in some pre-existing conditions not being covered.”