The Equal Employment Opportunity Commission (EEOC) has released its long-awaited proposed rule providing guidance on the application of the Americans with Disabilities Act (ADA) to employer-sponsored wellness programs.

In recent years, employers have been offering and encouraging employee participation in wellness programs to reduce the cost of group health coverage, to encourage employees to track and improve their health, and to boost productivity in the workplace. Employers typically offer incentives to employees who participate in these programs, such as reduced employee premium contributions, gift cards, or other rewards. These programs have gained the support of Congress and the Obama administration. HIPAA, as amended by the Affordable Care Act, is the primary body of law that governs wellness programs. In 2013, joint final regulations setting forth the HIPAA requirements for wellness programs were issued by the Department of Treasury, the Department of Labor, and the Department of Health and Human Services (the Joint Departments).

As discussed in a prior alert, the Chicago office of the EEOC filed three lawsuits in 2014 against employers alleging that their wellness programs violated ADA and the Genetic Information Nondiscrimination Act (GINA). Unfortunately, the EEOC had at that point not given any clear guidance as to what additional requirements the EEOC expected wellness programs to meet under the ADA and GINA aside from the clear rules under HIPAA and the ACA.

The EEOC has now proposed guidelines in this area. There are three main takeaways from the proposed rule for employers that sponsor wellness programs. First, the EEOC essentially extends the incentive limitations applicable to health-contingent programs under the HIPAA/ACA regulations (i.e. 30% of the total cost of employee-only coverage or 50% of the total cost if at least 20% is attributable to tobacco reduction and prevention) to participation-only programs that ask for disability-related information or require a medical examination.

Second, the proposed rule requires all wellness programs to provide reasonable accommodations for employees with disabilities to earn any financial incentive offered. The HIPAA/ACA regulations included a reasonable alternative standard requirement that applied to health-contingent programs, but the EEOC’s regulations would extend that requirement to all wellness programs.

Third, an employer must provide notice to its employees clearly explaining what medical information will be obtained, how the medical information will be used, who will receive the medical information, the restrictions on its disclosure, and the methods the employer uses to prevent the unauthorized disclosure of medical information.

The proposed rule also includes other requirements, such as (i) wellness programs must be reasonably designed to promote health and prevent disease (a requirement that is similar to that imposed under the HIPAA/ACA rules), (ii) medical information collected must be in aggregate terms that do not disclose, or are not reasonably likely to disclose, the identity of specific individuals, except as to administer the health plan or other purposes outlined in regulations, and (iii) employers may not require an employee to participate in a wellness program and are prohibited from retaliating against, interfering with, coercing, intimidating, or threatening employees who choose not to participate.

On the same day that the EEOC issued the proposed rule, the Joint Departments issued a set of FAQs about wellness programs, which clarify that (i) health-contingent wellness programs will not comply with applicable rules and regulations if they are designed to dissuade or discourage enrollment in the plan or program by individuals who are sick or potentially have high claims experience and (ii) compliance with guidance issued by the Joint Departments does not ensure compliance with other laws, including ADA.

The EEOC’s proposed rule is now open for comments.