F. Health Benefits of Employees with Aids

Companies must keep abreast of changing statutory and case law developments to ensure they are acting properly in administering and maintaining employee health benefit plans. Claims for employee benefits are typically covered under federal Employee Retirement Income Security Act (ERISA) law, discussed in the next section of this chapter, and violations by employers and/or plan administrators can be quite expensive. However, a number of important recent cases have been decided which benefit companies; such cases may be able to guide you in the proper implementation and functioning of employee health plans.

Several cases deal with individuals inflicted with the AIDS virus. Although the federal Americans With Disabilities Act specifically forbids private employers with more than 15 workers from firing, transferring or reassigning a worker who is HIV-positive, one area not yet resolved involves company obligations to provide and maintain health insurance coverage for workers with AIDS and related medical conditions. Some experts predict that, if legal precedent permits them to do so, companies will gradually reduce medical coverage and the lifetime cap for AIDS-related expenses for such individuals due to higher health insurance premiums. One federal Court of Appeals decision ruled that it was legal for a company to set a lifetime limit on the benefits payable under its group health insurance plan for AIDS. In that case, a company elected to set a small lifetime limit of $5,000 on benefits payable in connection with AIDS in order to avoid increasing its health insurance costs. This decision was made after it learned that one of its employees had tested positive for AIDS, although all other workers continued to receive a $1 million cap. Although the Texas Court found a connection between the benefits reduction and the worker's illness, it ruled that economic motivation was not, in itself, unlawful under the ADA and that the employer complied with a summary plan description that clearly reserved the right to amend or terminate the plan at any time.

In another case, an employee afflicted with the AIDS virus brought an injunctive proceeding challenging the employer's decision to suddenly reduce the lifetime maximum benefit from $1 million to $25,000. The employee's request was denied.

TIP: All employers must review current company policies regarding limits and benefits to AIDS workers, since statistics indicate that one in ten employers recently surveyed has one or more employees with AIDS, and many more currently have employees with the HIV virus. Seek comprehensive legal advice to take advantage of case developments, including a recent Supreme Court decision allowing a company to drastically reduce its health coverage of an employee with AIDS.

Counsel Comment #47: Under the ADA, it is unlawful to refuse to hire any person afflicted with the HIV virus because you are concerned that it will have a negative impact on your insurance plan. It may be legal to establish, in a pre-existing plan, certain exclusions affecting AIDS sufferers generally, especially if you currently have no workers with AIDS or the HIV virus. All companies must also analyze the effect of your state's civil rights laws, which may be more strict than the federal ADA, before implementing any policy or changing existing coverage or benefits.