The Equal Employment Opportunity Commission (EEOC) has finally issued proposed regulations under the Americans with Disabilities Act (ADA) regarding wellness programs. The proposed regulations amend existing regulations and provide guidance on the extent to which employers may use incentives to encourage employee participation in wellness programs that include disability-related inquiries and/or medical examinations. The proposed regulations are intended to work in tandem with final regulations under the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA), but there are significant differences.
This advisory discusses the proposed regulations’ content, how they interact with the final HIPAA/ACA regulations, and what next-steps employers should consider. While the regulations are not yet final, and are now subject to a 60-day comment period, they are likely to be implemented largely as drafted and it is not too early to start preparing.
Many different laws govern wellness programs, including HIPAA, ACA, Civil Rights Act, Equal Pay Act, Age Discrimination in Employment Act, Genetic Information Nondiscrimination Act and, of course, the ADA. In recent years employers have revised their wellness programs to comply with final regulations under HIPAA and the ACA (see our previous advisory). These rules prohibit discrimination in premiums, benefits or eligibility based on a health factor, with exceptions for premium discounts, rebates or modifications to otherwise applicable cost sharing (e.g. copayments, deductibles or coinsurance) for wellness programs. In contrast, the ADA prohibits discrimination against individuals with disabilities and prohibits employers from making disability-related inquiries or requiring medical examinations of employees, except in limited circumstances. Relevant to wellness programs, medical examinations and inquiries must be “voluntary” and there cannot be a “penalty” for not participating. A key open question was whether withholding a premium adjustment or reward available under a wellness plan, for an employee who elected to opt out, was akin to a penalty and therefore the program was not “voluntary.” The EEOC’s position under the ADA on wellness programs has been unclear for many years, culminating in a burst of recent enforcement activity, and lawsuits being filed this past year, that left employers wondering whether their HIPAA/ACA compliant wellness programs are also ADA compliant.
How do the proposed regulations and the HIPAA/ACA regulations fit together?
The EEOC stated that compliance with the HIPAA/ACA regulations is not determinative of compliance with the ADA, but acknowledged its responsibility to interpret the ADA in a manner that reflects both the ADA’s goal of limiting employer access to medical information and the HIPAA/ACA provisions promoting wellness programs. In addition, the EEOC rejected the “bona fide benefit plan” ADA safe harbor as the proper basis for finding wellness incentives permissible and states that wellness incentives should be measured under the “voluntary” ADA standard.
What does that mean and where does it leave employers? The short answer is that employers now have two sets of rules for compliance that work together (sort of). The table below describes the proposed regulations’ requirements, and how the new rules fit into the HIPAA/ACA scheme. Employers should assess what action they need to take by using the checklists in the table below, and should contact their DWT employment and benefits attorneys for further information.
Click here to view table.