On April 16, 2015, the Equal Employment Opportunity Commission (EEOC) issued a notice of proposed rulemaking (proposed regulations) amending the existing regulations under Title I of the Americans with Disabilities Act (ADA). The proposed regulations are the first step towards long-anticipated EEOC ADA guidance for wellness programs. The following Q&As outline some background and information about the proposed ADA regulations.
What is an employer wellness program?
A wellness program is a program reasonably designed to promote health or prevent disease. Usually, these programs encourage healthy choices and lifestyles by giving employees a reward (or imposing a penalty) for health-related actions or outcomes. When a program is part of an employer group health plan, rewards often consist of premium discounts (or surcharges) for employees (or their covered dependents) based on an activity (e.g., a health risk assessment) or achievement of a particular health standard (e.g., smoking cessation).
Don’t we already have wellness program regulations?
Yes. The Department of Treasury (Treasury), the Department of Health and Human Services (HHS) and the Department of Labor (DOL) have jointly issued wellness regulations under the Health Insurance Portability and Accountability Act (the HIPAA regulations). Final HIPAA regulations were first issued in 2006, and amendments to those regulations were finalized in 2013.
How is the EEOC involved with wellness programs?
The EEOC administers the ADA, which prohibits employment-related discrimination on the basis of disability and restricts employers’ ability to conduct medical examinations or disability-related inquiries. Many wellness programs include elements such as health risk assessments (which could constitute a disability- related medical inquiry) and biometric screenings (a form of medical examination). The ADA does permit “voluntary medical examinations and inquiries” that are “part of an employee health program.” In 2009, the EEOC announced that it was examining the extent to which compliance with the HIPAA regulations would constitute compliance the ADA. Recently, the EEOC has taken legal action against several employers sponsoring wellness programs alleging violations of the ADA. The proposed regulations address when a wellness program is considered “voluntary” for purposes of the ADA.
What are the key requirements of a “voluntary” program under the proposed ADA regulations?
Under the proposed regulations, a voluntary program:
- Does not require employees to participate;
- Does not deny coverage (or limit benefits) under group health plans or benefit packages within a group health plan for non-participants;
- Does not take adverse employment action or retaliate against employees based on participation; and
- If the program is part of a group health plan, employees must be provided notice (written in a manner employees are likely to understand) describing the medical information that will be obtained, the purposes for which it will be used, and the restrictions on the disclosure of the information (including the parties with whom it will be shared and the methods used to ensure information is not improperly disclosed).
Importantly, wellness programs that are part of a group health plan can provide incentives (in the form of a reward or penalty) of up to 30 percent of the cost of employee only coverage. The total cost includes both employer and employee contributions.
Do the proposed ADA regulations line up exactly with the HIPAA regulations?
No. The ADA regulations differ from the HIPAA regulations in some key aspects. While the EEOC indicated it believes its proposal reflects a balance between the existing HIPAA regulations and its duty to enforce the ADA, some HIPAA-compliant wellness programs may need to be tweaked to fit any final ADA regulation (see below regarding the effective date).
On the same day the proposed regulations were released, the Treasury, HHS and DOL released FAQs pointing out that the HIPAA regulations apply only to determining a wellness program’s compliance with HIPAA (in other words, don’t look to the HIPAA regulations to evaluate compliance with other laws, such as ADA).
What are some key differences between the proposed ADA regulations and the HIPAA regulations?
Key differences between the proposal and the HIPAA regulations include the programs to which the rules apply, the limitation on incentives and the prohibition on coverage restrictions. Other differences exist, but the features described below are most likely to impact current wellness program designs.
The key features of the proposed ADA rules only apply to wellness programs that include medical examinations or disability-related inquiries. Certain wellness programs that are covered by the HIPAA regulations are not, therefore, necessarily covered by the proposed ADA regulations. For example, a program that merely inquires about tobacco user status is not subject to the proposed ADA regulations because tobacco use is not a disability.
The proposed ADA regulations limit the incentive (penalty) for wellness programs to 30% of the cost of employee-only coverage, but the HIPAA regulations allow additional flexibility.
- HIPAA-compliant wellness programs are permitted to have an incentive up to 50% of the cost of coverage to the extent that the additional incentive is in connection with a program designed to prevent tobacco use. No such exception exists in the proposed ADA regulation. However, as described above, a program that merely inquires about tobacco usage (without a medical examination or screening for the presence of nicotine) is not subject to the proposed ADA regulations, so the 50% HIPAA limit would apply. (A program that includes a screening for the presence of nicotine would be subject to the proposed ADA regulations because it includes a medical examination.)
- Employee-only coverage is the only reference point in the proposed ADA regulations regarding the incentive limit. The HIPAA regulations allow reference to the total cost of family coverage if spouses and dependents can participate in the wellness program. The EEOC has not, to date, provided any explanation for this difference. Hopefully, future guidance during the review and comment period will shed some light on this issue.
- The limit under the proposed ADA regulations includes rewards for participatory wellness programs; rewards for such programs under the HIPAA regulations do not count against the limit.
The proposed regulations prohibit any wellness program from limiting the availability of a particular benefits package. This would impact current wellness program designs for some employers. For example, we have seen employer wellness programs that offer both a traditional PPO and a HDHP to wellness participants, but only the HDHP to employees who do not participate in wellness programs. Under the proposed ADA regulations, this design would not be permitted.
Are the proposed ADA regulations effective immediately?
No. The rules are a proposal at this time, but they do offer insight into the EEOC’s views on “voluntary” programs for purposes of its enforcement authority. If and when final rules are published, they will address the effective date of the changes.
What are employers’ next steps for their wellness programs?
Employers should continue to monitor guidance from EEOC to determine whether changes are necessary to bring wellness programs into compliance. Employers should bear in mind that EEOC may continue to bring enforcement actions before the proposed regulations become final.
In addition, the EEOC has promised future guidance on whether Title II of the Genetic Information Nondiscrimination Act affects an employer’s ability to condition financial incentives on a family member’s participation in an employer wellness program.