ADA Discrimination in Health Insurance Plans: What To Know

ADA Discrimination in Health Insurance Plans: What You Should Know

The Americans with Disabilities Act of 1990 (ADA) is federal law designed to protect individuals with disabilities from unfair treatment both inside and outside the workplace. It’s broad provisions have given disabled workers opportunities to obtain and maintain employment free of unlawful treatment in almost every aspect of employment, including health insurance plans and benefits.

Discrimination in health insurance under the ADA can take several forms. Employers may withhold benefits, making a health care plan inaccessible to persons with disabilities. Sometimes discrimination occurs in the way that benefits plans are designed. For instance, a state health insurance plan may limit funding for the kind of care disabled persons can receive. Such plans may be in violation of the ADA since their structure specifically limits access to health care for disabled individuals.

The ADA: Protection for Qualified Individuals with Disability

Under the ADA only “qualified individuals with disability” are covered. A disability is defined as an impairment that substantially limits major life activities. Disabilities may also be simply a record of such an impairment. According to the Act, qualified individuals are those who can still perform essential duties of a job with or without accommodation. Individuals eligible for services under certain programs may also be considered qualified for purposes of the Act.

Discrimination against disabled individuals in the workplace is prohibited under provisions of Title I of the ADA. Specifically, the Act states that “[n]o covered entity shall discriminate against a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.”

Title II covers discrimination in health benefits and insurance. Section 12132 prohibits exclusion from participation or denial of benefits in “services, programs or activities of a public entity.” In other words, public health benefits cannot be used as a tool for discrimination against persons with disabilities.

However, private entities are not exempt from the dictates of the Act. Title III counts private entities that offer public accommodations, such as parks, movie theaters and shopping malls, as public entities for purposes of the law. Further, the ADA provides that such entities must offer reasonable accommodations for persons with disabilities and prohibits discrimination in those accommodations. According to the ADA, private health care services fall under the protections granted which bar discrimination against the disabled.

Public Health Care Services as Places of Public Accommodation: Bragdon v. Abbot

Congressional drafters of the ADA in 1990 made it a point to emphasize that “[n]o individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” This prohibition of discrimination on the basis of disability in the enjoyment of accommodations is the foundation for the ADA prohibitions on discrimination in health care.

In other words, it is unlawful for both public and private health insurance plans to discriminate on the basis of disability when public accommodations are offered. According to the terms of the ADA, health services and benefits are considered accommodations of private and public entities. This was a concern noted in the findings of the law which state, “discrimination against individuals with disabilities persists in such critical areas as employment, housing, public accommodations, education, transportation, communication, recreation, institutionalization, health services, voting, and access to public services.” (emphasis added)

ADA Discrimination by Administration: Olmstead v. L.C.

When an employer or entity fails to administer its health insurance plans in a way that is accessible to disabled individuals, it could be in violation of the ADA. This is because the administration of health benefits must be done fairly, in a way that does not exclude or deny benefits to the disabled.

The seminal case in this regard is Olmstead v. L.C., 527 U.S. 581 (1999).  This case, heard by the Supreme Court, emphasized the way in which the ADA applies to public healthcare plans. The issue in Olmert was whether a state’s limitation on the usage of personal care slots for disabled individuals who were not medically justified to receive institutionalized care was lawful under the ADA.

The Court held that the state limitations were a violation of the ADA. In terms of administration of the health care plan (Medicaid), the state effectively excluded disabled individuals by placing restrictions on the amount of personal care slots funded. These restrictions were put in place despite the fact that the federal government had provided funding for over 500 slots more than the states accepted.

ADA Discrimination by Design: Alexander v. Choate and Doe v. Mutual of Omaha

One case that illustrates the application of fairness in the design of health insurance plans for the disabled is Alexander v. Choate, 469 U.S. 287 (1985). The issue in Alexander was whether Tennessee’s Medicaid plan, with its 14-day annual limit on inpatient hospital care, violated  Section 504 of the Rehabilitation Act for disabled persons, a group that often possesses extensive and prolonged health care needs. Though the case did not directly involve the ADA, Section 504 of the Rehabilitation Act is considered a precursor to the Act, its text providing inspiration for the provisions of the ADA.

As with other cases on the same issue, the Supreme Court held that nothing in Section 504,  including its anti-discrimination provisions, indicates a Congressional intention to limit state’s discretion in the design of its healthcare plans. In a similar ADA case, Doe v. Mutual of Omaha, 528 U.S. 1106 (2000), the Supreme Court considered whether limits on lifetime benefits for AIDS and AIDS related conditions in a Mutual of Omaha insurance plan violated the public accommodations requirement of the ADA for persons with disabilities.

The Court held that the ADA public accommodations protections protecting persons with disabilities from discrimination in health insurance did not reach into the content or design of health insurance plans. In other words, states are free to design their health care plans as they see fit, so long as they are not administered in a way that is discriminatory toward the disabled.

Keeping Health Insurance Discrimination-Free

Unfortunate incidents of disability discrimination come in all shapes and sizes. The plight of disabled individuals is exacerbated when discrimination occurs in the terms of health insurance plans. The ADA prohibits discrimination in public accommodations, including public health insurance plans. Courts have ruled that health insurance plans must be administered without discrimination against disabled individuals, but they have also ruled that the ADA’s discrimination provisions do not affect states’ rights to design health insurance plans in terms of detail.

Manuela Varela

Relations Manager

Manuela Varela has been with Shegerian & Associates since August 2022. She is responsible for outreach and marketing on behalf of the firm and manages relationships between firms and referring attorneys. She is also responsible for developing business opportunities and affiliations. Manuela graduated from Loyola Marymount University with a degree in Economics and Political Science.