The U.S. Equal Employment Opportunity Commission

EEOC Office of Legal Counsel staff members wrote the following letter to respond to a request for public comment from a federal agency or department. This letter is an informal discussion of the noted issue and does not constitute an official opinion of the Commission.


Title VII / ADA: Health Insurance And Other Benefits

April 4, 2001

Re: Interim Final Rules for Nondiscrimination in Health Coverage in the Group Market

To Whom It May Concern:

This responds to your request for comments regarding interim final rules prohibiting discrimination in group health plans as published in the Federal Register on January 8, 2001. 66 Fed. Reg. 1377 - 1420 (Jan. 8, 2001). These interim final rules interpret the nondiscrimination provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. No. 104-191, 110 Stat. 1936, that prohibit group health plans and group health insurance issuers from discriminating against individual participants or beneficiaries based on any "health factor" of such individuals.

The Equal Employment Opportunity Commission (EEOC or Commission) enforces federal laws prohibiting discrimination in employment, including the employment provisions of the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. §§ 12101 et seq. The ADA bars employers and other covered entities from discriminating on the basis of disability in any aspect of employment. Thus, the ADA applies to and regulates health insurance plans that are provided by employers as a benefit of employment.

EEOC also enforces Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., which prohibits discrimination in any aspect of employment on several bases, including race, sex, and national origin (1). It, too, applies to and regulates health insurance plans that are provided by employers as a benefit of employment.

Pursuant to Executive Order 12067, EEOC provides Executive branch leadership on all employment-related nondiscrimination matters that pertain to race, sex, or disability, and is responsible for ensuring that there is neither conflict nor inconsistency among the various nondiscrimination regulations, policies, and practices of Executive branch agencies. See Executive Order 12067, 43 Fed. Reg. 28,967-69 (July 5, 1978). These comments are being provided pursuant to this leadership role.

ADA and Title VII Standards

Like HIPAA, the ADA requires that individuals with disabilities be given equal access to employer-provided group health insurance. In addition, the ADA prohibits the use of coverage limitations or exclusions that are "disability-based distinctions" unless it can be shown that certain criteria are met. Specifically, it must be shown that the insurance plan is within the protective ambit of § 501(c) of the statute in that it is a "bona fide" plan, that the disability-based distinction is justified by the risks or costs associated with the particular disability limited or excluded, and that all conditions with comparable risks and costs are treated in the same way. "Interim Enforcement Guidance on the application of the Americans with Disabilities Act of 1990 to disability-based distinctions in employer-provide health insurance," III EEOC Compl. Man. (BNA) (June 8, 1993) (Interim Guidance). See 42 U.S.C. § 12201(c); 29 C.F.R. § 1630.16(f). (2) A coverage distinction is disability-based if it singles out a particular disability, a discrete group of disabilities (e.g., kidney diseases, cancers), or disability in general. Interim Guidance at 7.

Title VII also applies both to insurance access and to the terms of employer-provided health insurance plans. Thus, benefit limitations or exclusions for specific diseases or conditions, or for specific treatments, that primarily affect a particular race (e.g., sickle cell anemia) or sex (e.g., breast or prostate cancer) would violate Title VII.

Although ADA, Title VII, and HIPAA all regulate insurance plans that are provided by employers as a benefit of employment, the standards of the three laws and the scope of their application to employer-provided insurance are not identical. HIPAA's nondiscrimination provisions do not prohibit discrimination that is based on race, sex, or any other Title VII basis. While HIPAA's nondiscrimination provisions do prohibit discrimination that is based on specified health factors, including disability, the interim final rules make clear that HIPAA's nondiscrimination provisions focus, primarily, on ensuring access to insurance. By contrast, the ADA and Title VII apply both to insurance access and to the content of the coverage of the insurance being provided.

ADA Concerns

Our ADA concerns are focused on section 2590.702(b)(2)(i) of the interim final rules (Application to benefits) which states that a group health plan is not required to provide coverage for "any particular benefit." 26 CFR § 54.9802-1(b)(2)(i); 29 CFR § 2590.702(b)(2)(i); 45 CFR § 146.121(b)(2)(i). Elaborating, section 2590.702(b)(2)(i)(B) states, in part, that a group health plan may limit or exclude benefits "in relation to a specific disease or condition," or "for certain types of treatments or drugs." 26 CFR § 54.9802-1T(b)(2)(i)(B); 29 CFR §2590.702(b)(2)(i)(B); 45 CFR § 146.121(b)(2)(i)(B). We are concerned that employers could conclude from this language that they may offer health insurance plans containing benefit limits or exclusions for specific disabilities or for disability-specific treatments or drugs, without violating federal nondiscrimination strictures, even though such limitations are disability-based distinctions that likely violate the ADA.

We are especially concerned by the sections' illustrative Example 2 contained in 2590.702(b)(2)(i)(D). See 26 CFR § 54.9802-1T(b)(2)(i)(D); 29 CFR § 2590.702(b)(2)(i)(D); 45 CFR § 146.121(b)(2)(i)(D). Example 2 features a group health plan that decides to adopt an AIDS-only lifetime benefit limit after a plan participant files a claim for the treatment of AIDS. The example concludes that the AIDS cap would violate the interim final rules. However, the finding is predicated solely on the cap's proximity to the date of the participant's AIDS claim, leaving the impression that the cap would be lawful if it were made effective the following plan year.

Regardless of its timing, however, such an AIDS cap is a disability-based distinction that violates the ADA, unless it is shown to fall under the protection of § 501(c). Indeed, the AIDS cap in the interim final HIPAA rules is similar to the AIDS-specific benefit cap hypothesized by the Commission in the Interim Guidance. Interim Guidance at 8. In this Guidance, the

Commission concluded that the cap is a disability-based distinction that violates the ADA, unless it can be shown to be justified pursuant to § 501(c). Id. (3)

Since the issuance of the Interim Guidance, the Commission has repeatedly challenged similar AIDS caps in numerous lawsuits against various employers and insurers. These filings have resulted in the removal of all of the challenged AIDS caps (4), and in the voluntary removal of AIDS caps from the insurance plans of many other employers and insurers.

We strongly urge the deletion of Example 2 from the final rules to avoid confusing or unintentionally misleading employers and insurers, With the same goal in mind, we also urge you to strengthen the language, in section 2590.702(b)(2)(i)(B), stating that compliance with the interim final rule "does not affect whether" a plan provision or practice "is permitted under any other provision of . . . . the Americans with Disabilities Act . . . ." This language should caution that the use of disability-based distinctions in group health plans, including disability-specific benefit limits and exclusions, may violate the ADA. Likewise, the passing reference to the ADA in section 2590.702(h) (No effect on other laws), 26 CFR § 9802-1T(h); 29 CFR § 2590.702(h); 45 CFR § 146.121(h), should be strengthened and clarified to state that the ADA prohibits discrimination on the basis of disability in group health plans that are provided or offered by employers to their employees.

Title VII Concerns

Because the interim final rules currently contain no mention of Title VII or its non-discrimination requirements, we are concerned that employers reading the rules might erroneously conclude that benefit limits that discriminate on the basis of race or sex are lawful. For example, an exclusion from coverage of prescription contraceptives, but not of other preventive treatments, would violate Title VII because prescription contraceptives are used exclusively by women. "Commission Decision on Coverage of Contraception," EEOC (Dec. 14, 2000).

To avoid such problems, and to ensure that employers and insurers are not confused, the Commission strongly urges that language be added to sections 54.9802-1T(b)(2)(i)(B) and 54.9802-1T(h) of the rules, stating that Title VII prohibits race, sex, and other kinds of discrimination, and that benefit limits or exclusions that discriminate on any of these bases may violate Title VII, even if permitted by the interim final rules.

If you have any questions or would like to discuss these comments, please contact me at (202) 663-4638 or Carol R. Miaskoff, Assistant Legal Counsel for Coordination, at (202) 663-4689.

Sincerely,

Peggy R. Mastroianni
Associate Legal Counsel


1. As amended by the Pregnancy Discrimination Act (PDA), discrimination based on sex includes discrimination "on the basis of pregnancy, childbirth, or related medical conditions." 42 U.S.C. § 2000e(k). Title VII also prohibits discrimination based on color, religion, or national origin. 42 U.S.C. § 2000e-2.

2. See also Letter from EEOC Associate Legal Counsel Peggy R. Mastroianni to HCFA, PWBA and IRS (July 7, 1997) (commenting on the ADA and interim HIPAA rules of April 8, 1997, concerning health insurance portability for group health plans).

3. Example 6 in this same section of the interim rules, which finds that a health plan may limit its prescription drug coverage to only those drugs that it chooses to cover, also may be vulnerable under the ADA. Employers reading it may conclude that it would be lawful to offer a health plan that excludes coverage for a disability-specific prescription drug, even though such an exclusion would constitute a disability-based distinction that may violate the ADA.

4. In appropriate cases, damages and any other relief due to Charging Parties harmed by the challenged AIDS caps has also been obtained.


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