Genetic Information Nondiscrimination Act Impacts Employee Benefits

May 27, 2008

On May 21, 2008, President Bush signed into law the Genetic Information Nondiscrimination Act (“GINA”), which prohibits health insurers, health plans and employers from discriminating on the basis of genetic information. GINA passed by votes of 414-1 in the House and 95-0 in the Senate.

GINA amends the Employee Retirement Income Security Act (“ERISA”), the Internal Revenue Code, and the Public Health Service Act (which governs health plans of state and local government bodies) to prohibit group health plans and health insurers from discriminating against individuals based on genetic information and to forbid insurers from requiring genetic tests. GINA prohibits health plans and insurers from requesting or requiring genetic testing, with limited exceptions. This part of GINA goes into effect one year after the date of GINA’s enactment on May 21, 2009 and applies to group health plans for plan years beginning after that date.

GINA generally broadens the protections afforded by current federal anti-discrimination laws, including Title VII of the Civil Rights Act and the Americans with Disabilities Act, to prohibit employers from discriminating against employees based on their genetic information. An employer cannot acquire employees’ genetic information except under limited circumstances and must keep employees’ genetic information confidential. The Equal Employment Opportunity Commission (“EEOC”), among other federal agencies, can enforce and seek remedies under GINA. The employment discrimination provisions of GINA go into effect eighteen months enactment, on November 21, 2009.

GINA amends the HIPAA Privacy and Non-discrimination provisions of ERISA, the Internal Revenue Code and the Public Health Service Act to prohibit health plans and insurers from discriminating based on genetic information by 1) forbidding enrollment restrictions and premium adjustments on the basis of genetic information; or 2) prohibiting health plans and insurers from asking or requiring that individuals take a genetic test.

As defined by GINA, “genetic information” includes not only genetic test results for individuals and their families, but also the manifestation of a particular disease or disorder in a family member, as well as participation in genetic research and requests for genetic services. “Genetic information” does not include gender or age.

GINA amends ERISA to prohibit adjustments in group health rates on the basis of genetic information (similar to the prohibition on individual premium adjustments under HIPAA). GINA also authorizes the Department of Labor to assess civil penalties of up to $100 per day per individual for improper use of genetic information by a group health plan, from the time the failure occurs until it is corrected. If the Labor Department finds violations have not been corrected, GINA imposes minimum penalty of $15,000 for material violations and $2,500 for de minimis violations.

Penalties are limited to the lesser of ten percent of the amount paid or incurred by the plan sponsor during the preceding taxable year for group health plans, or $500,000, for unintentional failures to meet the law’s requirements not due to willful neglect. The Department of Labor may waive penalties if the person liable for the penalties did not know about the failure when “exercising reasonable diligence.” Penalties may also be waived if “reasonable cause” existed for the use of the genetic information, there was no willful neglect, and the improper use was corrected within 30 days of discovery.

The Labor Department must issue final regulations on the health insurance provisions by May 21, 2009. The time line for these regulations may be impacted by the Bush administration’s May 9, 2008 memo to Department and Agency Heads that “[e]xcept in extraordinary circumstances, regulations to be finalized in this Administration should be proposed no later than June 1, 2008, and final regulations shall be issued no later than November 1, 2008.”

Several states presently prohibit genetic discrimination by employers, and GINA does not preempt state laws that are more protective of individuals.