Health Issues in the Hiring Process

By Fay Hansen

Jan. 7, 2008

As the workforce ages and more Americans are screened and treated for serious illnesses, a growing number of job candidates enter the hiring process with pre-existing health conditions and serious questions about insurance provisions during a change in employment.

At the same time, the rising number of uninsured Americans means that more job applicants have no health coverage and need information about waiting periods and exclusions.

These trends put recruiters and hiring managers in a difficult and potentially dangerous position. They want to sell the company, including its benefits programs, and they need to build rapport with candidates by responding to their questions and concerns.

But they must not engage in any conversation that might reveal information about the candidate’s health. To do so would open the door to a discrimination lawsuit under the Americans With Disabilities Act.

Responding to candidates’ concerns without running afoul of the ADA requires an understanding of the protections generated for candidates under both the ADA and the Health Insurance Portability and Accountability Act of 1996, or HIPAA.

“Recruiters should be wary of any situation where a candidate provides health information in case there is a later charge that the information colored the offer decision,” warns Phyllis Kupferstein, partner and head of the West Coast labor and employment practice for McDermott, Will & Emery in Los Angeles.

ADA prohibitions
   The ADA sharply prohibits recruiters and hiring managers from asking questions about the applicant’s health or questions that are likely to reveal the existence of a health problem or disability before making a job offer. This prohibition covers applications, written questionnaires and inquiries made during interviews.

Examples of prohibited lines of questioning during the pre-offer period include any query or comment that refers to health conditions, injuries, sick-day usage, medical insurance coverage, workers’ compensation claims, prescription drug use or mental health problems. In short, a recruiter should make no reference to a candidate’s health and carefully steer any conversation to avoid situations where the candidate offers health-related information.

A more complex situation arises when a candidate needs a modification in the recruiting process to accommodate a disability. Recruiters and hiring managers must exercise extreme caution in learning only the health- or disability-related information that is necessary to determine the modifications needed, and no more.

Under the ADA, employers are required to provide reasonable accommodation for disabled candidates. An employer does not have to provide a specific accommodation if it would cause an undue hardship, which the ADA defines as a significant difficulty or expense. However, an employer cannot refuse to provide an accommodation solely because it entails some financial or administrative costs.

If the requested accommodation causes an undue hardship, the employer is still required to provide another accommodation that does not. Reasonable accommodation can take many forms during the hiring process, including providing written materials in accessible formats, such as large print, Braille or audiotape; providing readers or sign language interpreters; ensuring that recruitment, interviews, tests and other components of the application process are held in accessible locations; providing or modifying equipment or devices; and adjusting or modifying application policies and procedures.

Responding to concerns
The difficulty recruiters face in dealing with candidates with health concerns is exacerbated by the complexity of HIPAA, which protects most workers from losing their health care coverage when they change employers. A little more than a decade ago, real concerns about labor mobility fueled support for legislation that would ensure continued coverage for workers changing jobs.

HIPAA’s passage quickly quelled concerns about job lock among economists and employers, but many job candidates remain unaware of HIPAA’s protections.
Consequently, recruiters and hiring managers may be faced with candidates who ask questions about the employer’s health plan and most commonly any waiting periods or exclusions for pre-existing conditions. Candidates may not understand that HIPAA rules out exclusions for pre-existing conditions for candidates that have coverage under their current employer’s plan or under COBRA, Medicare, Medicaid or an individual health insurance policy unless the candidate has had a significant break in coverage.

HIPAA defines a significant break in coverage as a break of 63 days or more. This 63-day break period may be extended under state law if the candidate’s coverage is insured through an insurance company or offered through an HMO.

Recruiters cannot respond to candidates’ coverage questions without full information on current and past coverage, which would put them into troubled ADA territory.

“But recruiters can tell candidates that they are generally protected by HIPAA and refer them to the Department of Labor Web site, which offers good materials on HIPAA and answers frequently asked questions,” Kupferstein says.

Recruiters can also tell candidates to contact the benefits department with specific questions about the employer’s plan, but they should instruct the candidate not to provide any health information.

“Recruiters should be very general in any discussion of the health plan and defer any questions to the post-offer phase,” Kupferstein says.

Recruiters can also offer to provide the candidate with a copy of the plan and promote the employer’s health insurance plan as part of their broader effort to sell the company, but the effectiveness of this strategy clearly hinges on the strength of the plan.

“Health coverage varies from employer to employer, and this can have an impact on recruiting,” says Tom Billet, senior benefits consultant at Watson Wyatt Worldwide in Stamford, Connecticut.

“Recruiters generally should not try to sell candidates on the basis of benefits unless the package is a differentiator,” Billet warns. “Most companies prefer to strike a middle-of-the-road position with their benefits, so recruiters can’t press the package as a positive point, but they can help ensure that it’s not viewed as a negative point or a detractor.”

Billet notes, however, that some companies have developed leading-edge health management tools and health improvement programs, and many of these are particularly useful for employees with chronic conditions.

“Recruiters can promote these tools and programs as an indication of the company’s commitment to employees’ health,” he says.

Most companies provide candidates with full information about benefits at the time of offer, but some companies are providing more information on their Web sites as part of the upfront recruiting process. This is a positive trend, Billet notes, and should take some of the pressure off recruiters.

Hiring the uninsured
With a growing number of uninsured workers applying for jobs, recruiters are encountering more candidates who are concerned about waiting periods and exclusions for employer coverage. Although the largest employers often do not impose a waiting period, many do.

At companies with more than 200 employees, 73 percent of covered workers face a waiting period before coverage is available, according to the 2007 Kaiser Family Foundation survey of health plans. In the retail industry, 94 percent of workers face a waiting period.

The average waiting period is three months in retail and 2.2 months across all industries, but some of the big-box retailers impose yearlong waiting periods. Although HIPAA effectively eliminates these provisions for workers with prior coverage, the uninsured are not protected.

“What employers are worried about in hiring people who have not had health care coverage is adverse selection, because we know these new hires use more health services,” says Helen Darling, president of the National Business Group on Health in Washington. “In retail, where many of the high-turnover jobs are based, employers often use a waiting period to protect against this.”

For jobs at the low end of the wage scale, Medicaid is considered credible coverage and new hires would have to be covered under the employer’s policy, according to Darling. For older workers, Medicare is also considered credible coverage under HIPAA.

As insurance has become more expensive, employers have pushed for longer waiting periods, Kupferstein reports. Any pre-existing condition exclusion period begins on the same day that the waiting period begins.

Some companies are rethinking their waiting periods, however.

“It is becoming a more competitive environment, and there has been more media scrutiny of the benefits provided for low-wage workers, so some companies have improved their benefits offerings,” Billet notes. “Wal-Mart and other companies are attempting to provide some kind of health care coverage for part-time workers, and recruiters can use these benefits to help recruit for these positions.”

Retiree bottleneck
Although HIPAA relieved labor mobility issues arising at the hiring end of the health benefits issue, an extremely serious mobility problem is building at the retirement end. Recruiters and hiring managers who would like to bring in fresh talent increasingly encounter a shortage of job openings because workers without defined-benefit plans and retiree health coverage are unwilling to leave work even when it’s clear to everyone that they are no longer fully productive.

“The biggest labor mobility issue for employers is the question of retirement,” says Darling. “If you want a free flow of workers and real labor mobility, this problem must be addressed. If you don’t provide retiree health coverage—and most employers don’t—employees may stay on the job until they are Medicare eligible purely because they don’t have health coverage.”

The NBGH strongly recommends that employers provide health accounts for retirees to alleviate this problem.

According to the 2007 Kaiser survey, only 33 percent of all firms still offer retiree health benefits. Even among companies with 5,000 or more workers, only 52 percent provide retiree health plans, and most of these are concentrated in the state and local government sector. Health benefits have always been an effective two-pronged tool for recruiting employees into the organization and then easing them out, but with the discontinuation of retiree health benefits at most companies, the second prong is no longer effective.

Workforce management executives will have to shift their focus from recruiting top candidates to managing employees who postpone retirement too long.

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