Many employers offer some type of “wellness program” to their employees as a way to improve employee health and reduce healthcare spending. Wellness programs can be called many different things, including “weight loss challenges” or “healthy employee programs”. Recently, there were new rules issued by the U.S. Equal Employment Opportunity Commission (EEOC) regarding the way these programs can be structured, and the types of incentives or rewards they may provide. These new rules are discussed in more detail below, and are relevant for all employers that either currently offer or are considering offering these types of programs in the future.
History of Wellness Program Regulations
As a general rule, the Health Insurance Portability and Accountability Act (HIPAA) prohibits employers from discriminating against employees under a group health plan based on a health-status related factor. These 2013 Affordable Care Act (ACA)/HIPAA regulations provided that “participatory” wellness programs, that either do not provide a reward or do not require participants to satisfy a standard related to a health factor, are generally permissible as long as they are made available to all similarly situated individuals. However, for wellness programs that require an individual to achieve a standard related to a health factor to receive an award (“health-contingent wellness programs”), the 2013 regulations provided a list of conditions that must be satisfied, including with regards to: (i) how frequently individuals may qualify for a reward, (ii) that maximum reward/incentive that may be offered, (iii) reasonable alternative standards that must be offered and disclosed, and (iv) whether the design of the wellness program promotes health/prevents disease.
The ADA Final Rule
Title I of the Americans with Disabilities Act (ADA) prohibits employers from discriminating against individuals on the basis of disability, and generally restricts employers from obtaining medical information from applicants and employees. However, Title I permits employers to make inquiries about employees’ health or do medical examinations that are part of a voluntary employee health program.
With the ADA Final Rule, the EEOC has described the requirements that must be satisfied for a wellness program to satisfy the voluntary employee health program exceptions.
- Wellness Programs Subject to the ADA Final Rule: The Final Rule has clarified the type of wellness programs that the ADA applies to, specifically those that require employees to answer disability-related questions or to undergo medical examinations in order to earn a reward or avoid a penalty (potentially including wellness programs that would otherwise be classified by the ACA/HIPAA regulations as participatory, and not subject to additional compliance requirements).
- Maximum Incentive: Like the ACA/HIPAA regulations, the ADA Final Rule limits incentives that may be offered as part of a wellness program at 30% of the cost of self-only coverage. However, unlike the ACA/HIPAA regulations, the ADA Final Rule does not provide an increased incentive limit for wellness programs designed to reduce tobacco use. Therefore, a wellness program subject to the ADA Final Rule will need to limit incentives to 30%.
- Notice: The ADA Final Rule requires employers to provide participating employees with a notice that clearly explains what medical information will be obtained from the employee, and how the medical information will be used and disclosed by the employer. The EEOC will post a sample notice on its website within 30 days.
The GINA Final Rule
The Genetic Information Nondiscrimination Act (GINA) Final Rule provided a number of requirements that must be satisfied if an employer wishes to offer an incentive in connection with a wellness program that asks for genetic information about an employee or employee’s family members.
- Wellness Programs Subject to the GINA Final Rule: The GINA Final Rule only applies to wellness programs that offer an inducement to an employee or employee’s family member to answer questions about the individual’s current or past health status, or to take a medical examination.
- Eligibility for Wellness Programs Subject to the GINA Final Rule: The GINA Final Rule provided that an employee’s spouse may participate in, and earn an incentive up to 30% of the cost of employee-only coverage, however it bars children from participating, or earning incentives through, a wellness program that would otherwise be subject to the GINA Final Rule.
- Wellness Programs Subject to the GINA Final Rule Must Be Reasonably Designed. Like the ACA/HIPAA regulations, the GINA Final Rule requires wellness programs to be reasonably designed to promote health. However, the GINA Final Rule provide more stringent criteria than the ACA/HIPAA regulations for determining whether this requirement is satisfied (including requiring wellness programs which consist of a measurement, test, screening, or collection of health-related information to provide results, follow-up information, or advice to individual participants).
Next Steps for Employers
Given the differences and distinctions between the EEOC and the ACA/HIPAA regulations, and the EEOC’s recent litigation efforts against employer-sponsored wellness programs, employers should be sure to confirm that their current or future wellness programs comply with all necessary guidance.
For more information about the requirements for wellness programs, please click here for a practice update published by Akerman’s Employee Benefits Practice.