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Guest Article

(From the May 12, 2008 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Prominent Provisions of the Genetic Nondiscrimination Act

The Genetic Information Nondiscrimination Act of 2008, H.R. 493 ("GINA") is headed to the White House where President Bush is expected to sign it into law. The salient provisions of the bill, which prohibits discrimination by group health plans and employers based on genetic information, are summarized below.

Nondiscrimination in Health Insurance

GINA amends the Employee Retirement Income Security Act ("ERISA") and the Public Health Service Act ("PHSA") to prohibit genetic discrimination in group health plans. Further, it amends PHSA to impose similar prohibitions on health insurance offered in the individual market.

ERISA Amendments

Effective for plan years beginning after the 1-year anniversary of GINA's enactment, group health plans are required to comply with the ERISA amendments. The Secretary of Labor is required to issue final regulations on the ERISA amendments no later than the 1-year anniversary date. GINA amends ERISA to impose the following restrictions.

Prohibit Discrimination in Group Premiums
- A group health plan and an issuer offering insurance coverage in connection with a group health plan "may not adjust premium or contribution amounts for the group coveredunder such plan on the basis of genetic information." ERISA § 702(b)(3)(A)
  However, an issuer is permitted to increase the premium for an employer "based on the manifestation of a disease or disorder of an individual who is enrolled." ERISA § 702(b)(3)(B)M
Limit Genetic Testing
- A plan and issuer "shall not request or require an individual or family member of such individual to undergo a genetic test." ERISA § 702(c)(1)
  However, a health care professional who is providing services to an individual may request the individual to undergo a genetic test. ERISA § 702(c)(2)
  Also, a plan or issuer may obtain and use genetic test results "in making a determination regarding payment", but may request only the minimum information necessary to do so. ERISA § 702(c)(3)
  A plan or issuer may request -- but not require -- a participant to undergo genetic testing for research purposes if GINA's specified requirements are met (e.g., the request is made in writing, it clearly indicates it is voluntary and refusal will have no effect on enrollment status or premium or contribution amounts, the Secretary of Labor is notified, etc.). ERISA § 702(c)(4)
Prohibit Collection of Genetic Information
- A plan and issuer "shall not request, require or purchase genetic information for underwriting purposes" and "shall not request, require or purchase genetic information with respect to any individual prior to such individual's enrollment under the plan or coverage in connection with such enrollment." ERISA § 702(d)(1), (2)
  However, if a plan or issuer obtains genetic information "incidental to the requesting, requiring, or purchasing of other information concerning any individual" it is not a violation as long as the request, requirement or purchase was permissible. ERISA § 702(d)(3)
Restrictions Apply to All Group Health Plans
- The new provisions under ERISA § 702 -- and existing provisions under ERISA §§702(a)(1)(F) and 701 with respect to genetic information -- apply to all group health plansand insurers. No exception exists for small plans. ERISA § 702(e)
Definitions and Special Rules
- Applies to Fetuses or Embryos: References to the genetic information of an "individual" or "family member of an individual" includes the genetic information of any: (1) fetus carried by a pregnant woman who is such an individual or family member, and (2) embryo legally held by an individual or family member utilizing assisted reproductive technology. ERISA § 702(f)
- Family Member: "Family member" means a dependent (as defined under ERISA §701(f)(2)) of an individual, and "any other individual who is a first-degree, seconddegree, third-degree, or fourth-degree relative of such individual or such dependent." ERISA § 733(d)(5)
- Genetic Information: "Genetic information" means, with respect to any individual, information about: (1) the genetic tests of the individual or family members of the individual; and (2) manifestation of a disease or disorder in family members of the individual. ERISA § 733(d)(6)
- Genetic Test: "Genetic test" means an "analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detects genotypes, mutations, or chromosomal changes." It does not include: (1) analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or (2) analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise. ERISA § 733(d)(7)
- Underwriting Purposes. "Underwriting purposes" means: (1) the rules for, or determination of, eligibility (including enrollment and continued eligibility) for benefits or coverage under the plan; (2) the computation of premium or contribution amounts; (3) the application of any pre-existing condition exclusion; and (4) other activities related to the creation, renewal, or replacement of a contract for health insurance or health benefits. ERISA § 733(d)(9)
Enforcement
- The Secretary of Labor is provided new enforcement authority. It may impose a penalty against the plan sponsor or issuer for failure to meet the requirements of ERISA §§ 701 and 702 regarding genetic information and discrimination. The permissive penalty is $100 per day for each participant or beneficiary to whom the failure applies. If the failure is discovered by the Secretary before it is corrected, however, a minimum penalty of at least $2,500 per person shall apply (or, where the violations have been more than de minimis, at least $15,000 per person shall apply). ERISA § 502(c)(9)
  However, no penalty will apply if: (1) it is established to the Secretary that the person liable did not know, and exercising reasonable diligence would not have known, that the failure existed; or (2) the failure was due to reasonable cause and not willful neglect and was corrected within 30 days after the person liable knew, or with reasonable diligence would have known, that the failure existed. ERISA § 502(c)(9)(D)
  If the failure is due to reasonable cause and not willful neglect, the penalties imposed shall not exceed $500,000 (or, if lesser, 10% of the aggregate amount paid by the plan sponsor during the preceding year for group health plans). ERISA § 502(c)(9)(D)
  If the failure is due to reasonable cause and not willful neglect, the Secretary may waive all or part of the penalty, to the extent it would be excessive relative to the failure involved. ERISA § 502(c)(9)(E)

PHSA Amendments

GINA provides parallel amendments to PHSA §§ 2702, 2791 and 2722 prohibiting genetic discrimination in group health plans. It also applies the prohibition against genetic discrimination to nonfederal governmental plans. PHSA § 2721(b)(2)

GINA further amends PHSA by adding new § 2753 to prohibit discrimination in the individual market. PHSA § 2753 prohibits in the individual health insurance market:

eligibility rules based on genetic information;
discrimination based on genetic information in the same manner as is prohibited for group coverage; and
imposition of a pre-existing condition on the basis of genetic information.

The PHSA amendments regarding group health plans are effective on the same date as the parallel ERISA amendments (i.e., plan years beginning after the 1-year anniversary of the date of enactment). PHSA amendments regarding coverage in the individual market are effective for coverage "offered, sold, issued, renewed, in effect, or operated" after the 1-year anniversary of enactment.

HIPAA

GINA also amends the Internal Revenue Code ("Code") to carry over the genetic nondiscrimination requirements to the group health plan requirements added to the Code by the Health Insurance Portability and Accountability Act ("HIPAA"), and to apply the tax under Code § 4980D (applicable to group health plans that fail to comply with the HIPAA requirements) to the failure to comply with GINA's requirements. Code § 9802, 9832, and 9834.

Related amendments are also made to the Social Security Act ("SSA") to treat genetic information as health information under HIPAA. Specifically, GINA amends SSA to require the Secretary of Health and Human Services to revise HIPAA privacy regulations to treat genetic information as health information, and to prohibit the use or disclosure, by a group health plan, a health insurance issuer that issues health coverage, or an issuer of a Medicare supplemental policy, of genetic information about an individual for underwriting purposes. SSA § 1180(a). The Secretary is required to issue final regulations no later than the 1-year anniversary of GINA's enactment, which is the date the HIPAA privacy changes under GINA take effect.

Medicare Supplemental Policies

GINA also amends SSA to carry over the genetic nondiscrimination requirements to Medicare supplemental policies. It amends SSA to prohibit an issuer from denying or conditioning a policy, including the imposition of any exclusion of benefits based on a pre-existing condition on the basis of genetic information. It also prohibits discrimination in the pricing of the policy, including the adjustment of premium rates, based on genetic information. SSA § 1882(s)(2)(E). As with group health plans, issuers of Medicare supplemental policies are prohibited from requesting or r equiring an individual or family member to undergo genetic testing, or requesting or purchasing genetic information for underwriting purposes prior to enrollment. SSA § 1882(x). These amendments apply for policy years beginning on or after the 1-year anniversary of GINA's enactment. States are required to conform their statutes and regulations to these changes no later than October 1, 2008 (or, in the case where the State legislature is not scheduled to meet in 2008 in a session in which the legislation may be considered, the first day of the first calendar quarter beginning after the close of the first legislative session that begins on or after July 1, 2008).

Nondiscrimination in Employment

General Requirements

Title II of GINA creates sweeping prohibitions against employment discrimination based on genetic information. Employees are those defined under the Civil Rights Act of 1964, the Government Employee Rights Act of 1991, the Congressional Accountability Act of 1995, section 411(c) of Title 3 of the U.S. Code, and others. As outlined in the Senate Summary, GINA prohibits, as an unlawful employment practice:

... an employer, employment agency, labor organization, or joint labor-management committee from discriminating against an employee, individual, or member because of genetic information, including:
for an employer, by failing to hire or discharging an employee or otherwise discriminating against an employee with respect to the compensation, terms, conditions or privileges of employment;
for an employment agency, by failing or refusing to refer an individual for employment;
for a labor organization, by excluding or expelling a member from the organization;
for an employment agency, labor organization, or joint labor-management committee, by causing or attempting to cause an employer to discriminate against a member in violation of ... [GINA]; or
for any employer, labor organization or joint labor-management committee, by discriminating against an individual in admission to, or employment in, any program established to provide apprenticeships or other training or retraining.

An employer, employment agency, labor organization, or joint labor-management committee:

is prohibited from limiting, segregating, or classifying employees, individuals, or members because of genetic information in any way that would deprive or tend to deprive them of employment opportunities or otherwise adversely affect their status as employees. GINA § 202(a), 203(a), 204(a), 205(a)
is prohibited from requesting, requiring or purchasing an employee's or family member's genetic information, except for certain circumstances including:
- where the employer inadvertently requests or requires family medical history of the employee or family member;
- where required to comply with the certification requirements of the Family and Medical Leave Act or similar state laws; and
- where health or genetic services are offered by the employer (including as part of a wellness program) and additional requirements are met, including the employee's prior voluntary written authorization and the nondisclosure to the employer of the individual's genetic information. GINA § 202(b), 203(b), 204(b), 205(b)
is required, if in possession of genetic information about an employee or member, to maintain the information in separate files and treat it as a confidential medical record. Information maintained and treated as a confidential record under the Americans with Disabilities Act is deemed to comply. GINA § 206.
is prohibited from disclosing genetic information except: (1) to the employee or member on request, (2) to an occupational or other health researcher, in response to a court order, (3) to a government official investigating compliance with GINA if the information is relevant to the investigation, (4) in connection with compliance with FMLA or state family and medical leave laws, or (5) to a public health agency. GINA § 206.

Disparate impact on the basis of genetic information does not establish a cause of action under GINA. However, a commission will be established 6 years after the enactment of GINA to review the developing science of genetics and make a recommendation to Congress as to whether a disparate impact cause of action should be added. GINA § 208

Enforcement

Title II of GINA, prohibiting discrimination in employment based on genetic information, becomes effective 18 months after GINA's enactment. Where an unlawful employment practice in violation of GINA is alleged, employees covered by Title VII of the Civil Rights Act of 1964, the Government Employee Rights Act of 1991, the Congressional Accountability Act of 1995, Chapter 5 of Title 3 of the United States Code, and Section 717 of the Civil Rights Act of 1964, are generally provided the powers, procedures and remedies prescribed under the particular statute. Reasonable attorney's fees may be awarded to the prevailing party and, in the case of intentional discrimination, punitive damages may be awarded. GINA § 207.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Martha Priddy Patterson 202.879.5634, ? Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Tom Veal 312.946.2595, Deborah Walker 202.879.4955.

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