The ADA Amendments Act of 2008

On September 25, 2008, President Bush signed into law the ADA Amendments Act of 2008 (the “Act”). The Act makes important changes to the definition of “disability” by rejecting the holdings of several  Supreme Court decisions and portions of the EEOC’s  Americans with Disability Act’s regulations. This new law clarifies and broadens the definition of disability, and expands the population eligible for protections under the Americans with Disabilities Act of 1990 (“ADA”). The amendments provided in the Act are effective on January 1, 2009.

The Act provides that the definition of disability should be construed in favor of board coverage of individuals under the ADA, to the maximum extent permitted by the terms of the ADA.  The Act does retain the ADA’s existing definition of “disability, ” but amends the ADA to further define and clarify three critical terms within the existing definition of disability (“substantially limits,” “major life activities,” and “regarded as” having such impairment. The Act also adds several standards that must be applied when considering the construction of the definition. By boarding the definition of “disability, more ADA cases will be passing the initial threshold tests.  Employers will be finding that more employees will be covered by the ADA and should be making employment decisions with that assumption in mind.

Until the passage of the Act, the ADA was silent on what was a major life activity. The Act expands the definition of “major life activities” found by the courts and in the Equal Employment Opportunity Commission (“EEOC”) regulations by including two non-exhaust lists:

• the first list includes many activities that the EEOC has recognized (e.g., walking) as well as activities that the EEOC has not specifically recognized (e.g., reading, bending and communicating);
• the second list includes major bodily functions (e.g., “functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine and reproductive functions).

ADA provides that a physical or mental impairment must “substantially limit” one or more major life activities. The Act includes a number of new provisions that loosen this requirement:

• The Supreme Court’s requirement that the word “substantially” be interpreted strictly to create a demanding standard for individuals seeking to qualify as disabled has now been rejected.
• The Supreme Court’s rule that the word “substantially” be read to mean “prevents or severely restricts” has now been rejected.
• The degree of impairment required for protection under the ADA is now substantially reduced.
• An impairment that substantially limits one major life activity need not limit other major life activities to be considered a disability.
• An impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when it is active.
• The determination of whether an impairment substantially limits a major life activity is made without regard to the ameliorative effects of mitigating measures such as medication, prosthetics, hearing aids, mobility devices, and oxygen therapy equipment.
• There is an important exception to the above rule-it provides that the ameliorative effects of ordinary eyeglasses or contact lenses shall be considered in determining whether an impairment substantially limits a major life activity.

The ADA prohibits discrimination against any individual who is “being regarded as” having a disability. In the past, an individual claiming that he or she was “regarded as” having a disability had to prove that an employer regarded him or her as being substantially limited in a major life activity. The Act has eliminated this burden of proof by providing that an individual may be unlawfully regarded as having a disability “whether or not the impairment limits or is perceived to limit a major life activity.”

The Act provides that transitory and minor impairments which have an actual or expected duration of less than six months will not be considered disabilities under the “regarded as” prong of the definition of disability. The Act also provides that an employer is not required to provide a reasonable accommodation or make reasonable modifications to policies, practices, or procedures for an individual who meets the “regarded as” prong of the definition of disability.

The EEOC will be revising its regulations to take into consideration the change made to the ADA by the Act.

Mental Health Parity and Addition Equity Act of 2008

The Emergency Economic Stabilization Act of 2008 also contains the Paul Wellstone and Pete Domenici Mental Health Parity and Addition Equity Act of 2008 (the “Act”).  This Act builds on the current 1996 parity law, which already requires parity coverage for annual and lifetime limits and amends the Employee Retirement Income Security Act, the Public Health Service Act and the Internal Revenue Code by providing equal coverage of mental and physical illness in an employer’s group health plan.  The Act does not mandate mental health or substance use benefits.  The Act only applies to those employers with more than 50 employees. For most plans, the Act becomes effective for plan years beginning after October 3, 2009.  For group health plans subject to collective bargaining, they may be required to comply with an earlier effective date, as the Act becomes effective as of the later of (a) the termination of the last collective bargaining agreement (without regard to any extension) agreed to after October 3, 2008, or (b) January 1, 2009.

The key provisions of the Act include:

• The applicable “financial requirements” (such as deductibles, co-payments, and co-insurance and out-of-pocket expense limitations) imposed on mental health and substance use disorder benefits must not be more restrictive than the requirements on medical or surgical benefits.
• Separate cost sharing requirements and/or treatment limitations imposed on mental health or substance use disorder benefits must not be more restrictive than the requirements or limitations established for medical or surgical benefits.
• For a group health plan that provides both medical and surgical benefit and mental health or substance use disorder benefit, if the plan provides coverage for medical or surgical benefits provided by out-of-network providers, the plan must also provide coverage for mental health or substance disorder benefits provided by out-of-network providers.
• If a group health plan offers two or more benefit packages to participants, the requirements of the Act apply separately to each package.
• New parity rules apply to both inpatient and outpatient services (whether in-network or out-of-network), as well as emergency care services.
• Any state laws that provide greater consumer protections, benefits, rights or remedies than those provided under the Act would not be preempted.
• A group health plan is exempted from complying with the act if it experiences an increase in actual costs with respect to medical/surgical and mental health/substance use benefits of 1% (2% in the first year that the Act is applicable).

“Michelle Law” Becomes Law

On October 9, President Bush signed into law (H.R. 2851) which amends the Employee Retirement Income Security Act, the Public Health Act and the Internal Revenue Code by providing that dependent full-time college students who take a medically necessary leave of absence for up to one year will not lose  their health insurance coverage under a new Code Section 9813. This requirement becomes effective for the first plan year beginning on or after October 9, 2009.

This new law is called “Michelle Law” in memory of Michelle Morse who maintained her full-time student load while receiving chemotherapy for colon cancer because she needed the family health coverage and could not afford the necessary COBRA premium to continue her coverage if she dropped out or reduced hours.

This new law will only apply to a group insured or self-insured health plan if the plan provides that for a dependent to continue to be covered after a specified age, he or she must be a full-time student.  For this new law to apply, the dependent child must have been enrolled in a group health coverage on the basis of his or her full-time student status on the date immediately preceding the leave of absence.

A self-funded nonfederal governmental plan can opt out of this new requirement by filing an election with the U.S. Department of Health and Human Services under the same provisions that apply to HIPAA and other federal health benefit laws.

New Qualified Transportation Fringe Benefit Added for Bicycle Commuters

On October 3, 2008, President Bush signed into law, as part of the Emergency Economic Stabilization Act of 2008, a qualified transportation fringe benefit for bicycle commuters.  This new law expands Code Section 132(f) by allowing employers to reimburse employees up to $20 per month for bicycle commuters.  This new fringe benefit is effective January 1, 2009.

This benefit can only be paid by the employer and employee salary reduction contributions will not allowed to pay for the benefit.  The employer may reimburse up to $20 per month for reasonable expense incurred by an employee for the purchase of a bicycle and bicycle improvements, repair and storage, if the employee regularly bikes to work during that month. Employees can receive the bicycle reimbursement for a for  particular month, other qualified transit benefits, but not both.

An employer can offer this benefit in a number of ways including reimbursement of receipts, regular monthly payment or under a voucher system.  The Internal Revenue Service (“IRS”) should release guidance shortly.