Human resources professionals could be forgiven if their heads spin each time they consider their employee wellness programs.  When they’re not fielding employee questions about program provisions, or responding to demands from senior management for proof of the program’s return on investment, they’re trying to stay current on legal developments.  Yet it seems that every time they turn around, another federal agency or court is expounding on the topic.  The latest round of guidance, issued by the Equal Employment Opportunity Commission (“EEOC”) on May 17, 2016, includes both final regulations and FAQs under both the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”).

These EEOC regulations are significant because they extend far beyond the scope of the HIPAA wellness-program rules with which most employers are now familiar.  The HIPAA rules apply only to “health plans,” and certain aspects of those rules (such as the 30% cap on wellness-program incentives) apply only to “outcomes-based” wellness programs (and not to participation-only programs).  By contrast, both the ADA and GINA regulations finalized by the EEOC apply to employers(regardless of whether they even sponsor a health plan), and the caps on wellness-program incentives apply even to participation-onlyprograms.  So even those employers who feel comfortable that their wellness programs meet the HIPAA standards should take heed of these final EEOC regulations.

ADA – “Voluntary Wellness Programs”

The ADA generally bars an employer from obtaining medical information from applicants or employees.  There is an exception to this prohibition, however, for “voluntary wellness programs.”  For quite some time, employers worried that any penalty for not providing the requested information – or even the denial of a reward for doing so – could be viewed by the EEOC as undermining the voluntary nature of a wellness program.  In these final ADA regulations, the EEOC resolves that concern.

A wellness program may provide an incentive for providing the requested medical information – or even impose a penalty for refusing to do so – so long as that program meets all of the following requirements:

  • Any incentives for providing the requested medical information must be limited. These incentives may not exceed 30% of the total cost (employer and employee shares) of providing employee-only health coverage under a designated benchmark plan. This benchmark plan is determined as follows:

    • If an employee must be enrolled in a particular health plan in order to participate in the wellness program, the incentive may not exceed 30% of the total cost of self-only coverage underthat plan.

    • If an employee need not be enrolled in a health plan in order to participate in a wellness program, the incentive may not exceed 30% of the lowest cost, self-only plan the employer offers.

    • If the employer does not even offer a health plan, the incentive for participating in a wellness program may not exceed 30% of the total cost for a 40-year-old non-smoker to purchase self-only coverage under the second-lowest cost “Silver Plan” available on the public Exchange in the state of the employer’s principal place of business.

  • Participation in the wellness program must actually be “voluntary.” According to the EEOC, this means that an employer may not:

    • Require an employee to participate,

    • Condition coverage under any health plan option on participation in the wellness program, or

    • Retaliate against an employee for refusing to participate.

Although not new to these final regulations, the second of these three requirements may take some employers by surprise. As a way of encouraging employees to complete an HRA or biometric screening, some employers have made this a condition of enrollment in their health plan’s most generous benefit option. Under these EEOC final regulations, that approach would be an ADA violation.

  • The program must be “reasonably designed to promote health or prevent disease.” The EEOC notes that simply asking employees to provide medical information, such as by completing a health risk assessment (“HRA”) or submitting to biometric screening – withoutalso providing feedback concerning risk factors, or using aggregate information to design programs for the treatment of specific conditions – would not meet this standard. Nor is a wellness program “reasonably designed” if it exists merely to shift costs from the employer to employees based on their health condition, or if the employer uses the information only to predict its future health costs. Reading this latest guidance, one senses that the EEOC has encountered wellness programs of the type it disapproves. Employers would thus do well to review their programs for compliance with this “reasonable design” requirement. 
  • Employees must receive a notice. This notice should clearly explain:
     
    • What medical information will be obtained,
    • How that information will be used,
    • Who will receive it, and
    • The restrictions on disclosure.

Although the EEOC concedes that some employers are already providing this type of information – perhaps to comply with the HIPAA Privacy Rule – they have also promised to post a sample notice on their website by mid-June.

  • Any information received by the employer must be subject to HIPAA-like confidentiality requirements. The final regulations specify two new requirements in this regard.
     
    • Any information collected by a wellness program must be received by an employer only in aggregate form, such that the information does not disclose, and is not reasonably likely to disclose, the identity of specific individuals (except as necessary to administer the plan), and
    • An employer may not require an employee to agree to the sale, exchange, transfer, or other disclosure of medical information, or to waive any confidentiality protections under the ADA, in exchange for an incentive to participate in a wellness program.


ADA – “Benefit Plan Safe Harbor”

The final ADA regulations also reiterate the EEOC’s strongly-stated position that a statutory “safe harbor” for “bona fide benefit plans” doesnot apply to wellness programs.  As explained in our earlier articles on this topic, both Florida and Wisconsin federal courts have disagreed with the EEOC on this point.  They have held that penalties for non-participation in a wellness program that is connected to an employer’s health plan need not comply with the restrictions set forth above.

The EEOC contends, however, that those courts read the safe harbor far too broadly.  The EEOC views the safe harbor as applying only to inquiries designed to allow health insurers and self-funded plan sponsors to make decisions about an individual’s insurability and appropriate premium level.  At the time the safe harbor was enacted, such practices were still legal.  Most have now been prohibited under subsequent laws, including HIPAA and the Affordable Care Act.

Although the EEOC’s position on this point is not new, the fact that its position is now reflected in final regulations is new.  Courts may be more likely to pay heed to this position than they were when the regulations were only proposed.  Thus, employers relying on this safe harbor to support wellness programs that would otherwise not comply with the requirements outlined above may wish to take this opportunity to revisit their position.

GINA – Health Information of an Employee’s Spouse or Children

The EEOC has jurisdiction over Title II of GINA, which applies to employment.  Title I, which governs employee benefit plans, is administered by the Departments of Labor, Health and Human Services, and Treasury.  There are subtle differences between the two Titles in their treatment of employee wellness programs.  One of the challenges faced by H/R professionals is complying with both of these two Titles.

Under Title II of GINA, an employer is generally prohibited from requesting “genetic information” concerning an applicant or employee.  One exception to this prohibition applies to “voluntary wellness programs.”  For this purpose “genetic information” is defined to include not only results of genetic tests, but also family medical history that might shed light on an individual’s genetic makeup.

Because many wellness programs include the completion of an HRA, insurers and employers have long been sensitive to this GINA restriction on requesting an employee’s family medical history.  As explained in our October 9, 2009, article, a wellness program may not provide any financial inducement for an employee to answer questions concerning his or her family medical history.  If those questions appear on an HRA, an employee must receive any financial inducement available for completing the HRA even if the questions are left unanswered.

A question that arose subsequent to the first round of EEOC guidance involved the permissibility of collecting health information concerning an employee’s spouse or children.  The EEOC notes that GINA’s listing of the family members whose medical history constitutes an employee’s “genetic information” includes the employee’s spouse.  Thus, although the likelihood of a spouse’s medical history shedding light on an employee’s genetic makeup appears slight, the EEOC’s final regulations make clear that collecting this type of information does implicate the GINA Title II prohibition.

The final EEOC regulations do allow the collection of such spousal information, but only under rules that track those applicable to the collection of an employee’s other family medical history.  Thus, the maximum inducement for a spouse to answer questions concerning his or her current or past health condition is capped at the same 30% level that applies to employees under the ADA.  Moreover, the calculation of that 30% amount is determined in exactly the same way as under the ADA (including the selection of the appropriate benchmark plan).

Many of the other ADA requirements apply, as well.  Thus, any wellness program involving the collection of information concerning a spouse’s health condition must be “reasonably designed to promote health or prevent disease,” is subject to the same notification requirements described above, and must also comply with those confidentiality rules.  However, because the 30% inducement allowed for the collection of a spouse’s health information is in addition to the 30% allowed for the collection of an employee’s genetic information, the total inducement allowed under any program collecting both types of information could be as large as 60% of the cost of self-only coverage under the benchmark plan.

Although the EEOC regulations rather grudgingly allow a wellness program to include an inducement for an employee’s spouse to provide information concerning his or her health condition, they flatly prohibitthe collection of a spouse’s genetic information – including the spouse’s family medical history.  Thus, although a properly-designed HRA may request information concerning a spouse’s current or past health condition (with any inducement for providing that information limited to 30% of the self-only cost of coverage under the benchmark plan), that HRA should not ask for any medical history concerning the spouse’s own relatives.

Nor may an HRA (or other employee wellness program) seek to collection any health information concerning an employee’s children.  This applies not only to the children’s genetic information, but even their current or past health condition.  The EEOC notes that, because a child’s health condition is more informative concerning an employee’s genetic information (i.e., when compared to information concerning a spouse’shealth condition), its collection is more likely to lead to genetic discrimination against the employee. 

In other words, an employer may collect information concerning aspouse’s health condition (even though it constitutes “genetic information” with respect to an employee) because it’s not likely to be all that informative.  But information concerning a child’s health condition is simply too informative.

This prohibition on collecting information concerning either the health condition or genetic information of an employee’s children applies not only to minor children, but also to children over age 18.  And the prohibition applies even to adopted children.  Although the EEOC acknowledges that adopted children do not share the same genetic information as their adoptive parents, the EEOC notes that employers are unlikely to know which children are adopted versus natural born.

Incentives for Non-Tobacco Usage

As explained in our December 4, 2012, article, the three agencies charged with applying HIPAA’s nondiscrimination rules to employee wellness programs draw a distinction between programs that include an incentive for non-tobacco usage and those that do not.  Although the HIPAA wellness program incentive is capped at 30% of the self-only cost of coverage, the incentive may be increased by 20% of that cost – up to a total of 50% – if a program includes an incentive for not using tobacco.  In these final regulations, the EEOC takes a somewhat different approach to tobacco usage.

Under both its ADA and GINA regulations, the EEOC caps the total incentive or inducement at the 30% level.  However, these EEOC regulations apply only where an employer actually tests for tobacco usage; they impose no limit on a wellness program that simply asks employees to certify that they do not use tobacco.  Under this latter type of wellness program, the applicable cap on incentives would be the 50% level established under HIPAA.

Given this distinction made by the EEOC, employers whose wellness programs include a test for tobacco usage may want to reconsider that component.  They could either (1) continue testing for tobacco usage but then cap the program’s total incentive at 30% of the employee-only cost of coverage, or (2) retain a greater incentive (up to 50% of the total cost of coverage) by simply asking employees to certify that they do not use tobacco.

Applicability Dates

Although the EEOC characterizes most aspects of these final ADA and GINA regulations as mere clarifications of existing guidance – and therefore already fully effective – certain aspects of the regulations are sufficiently new to merit a prospective applicability date.  The following provisions of the regulations will not apply until the first day of the first plan year beginning on or after January 1, 2017:

  • The maximum incentive for providing information protected by the ADA;

  • The expanded ADA notification requirements; and

  • The maximum inducement for collecting information concerning the current health condition of an employee’s spouse.

This applicability date is based on the plan year of the appropriate benchmark plan used to determine the maximum incentive (under the ADA) or inducement (under GINA).  Where the benchmark plan is the second-lowest cost “Silver Plan” available on a public Exchange, this applicability date is presumably January 1, 2017.

Note that this delayed applicability date does not apply to certain key provisions of these final regulations.  These include the requirement that any wellness program be “reasonably designed to promote health or prevent disease,” that any information obtained through such a program be maintained in confidence, and that an HRA request no spousal family medical history (or any health information concerning an employee’s children).

Employer Next Steps

Given these final EEOC regulations, employers sponsoring wellness programs for their employees should immediately take the following steps:

  • Employers who have taken the position that their wellness programs need not comply with the 30% cap on incentives to participate – either because the program is not part of a health plan or because the program lacks any outcomes-based component – should take a close look at these EEOC regulations. Neither of these defenses will apply. So any changes needed to comply with these regulations must be made by the first day of the 2017 plan year.

  • Existing programs should also be reviewed for compliance with the EEOC’s “reasonable design” requirement. For instance, the results of any HRA or biometric screening should be used either to counsel employees on their specific risk factors or to design programs for the treatment of specific conditions identified by those tests.

  • Employers who condition enrollment in a health plan – or in any option thereunder – should reconsider that approach. This approach would violate one of the requirements for a “voluntary” program under the ADA regulations.

  • Employee communications concerning wellness program should be reviewed for compliance with the notification requirements set forth in the ADA regulations. Employers may wish to review the EEOC’s model notice (which should be posted on the EEOC website by mid-June) to determine whether it provides an appropriate template for this purpose.

  • Any health risk assessment should be reviewed for questions concerning health conditions of an employee’s spouse or children. To the extent the HRA seeks information concerning a spouse’s current or past health condition, the program should be reviewed for compliance with the other ADA and GINA requirements. Any questions concerning a spouse’s family medical history should be deleted entirely, as should any questions concerning health conditions of an employee’s children.

  • If a wellness program provides an incentive for not using tobacco, an employer might consider whether allowing employee self-certification on this point would be sufficient. If so, the total program incentive could be larger than under a program that involves testing for tobacco usage.

Despite the complexity of these final EEOC regulations, they constitute only a portion of the legal constraints applicable to employee wellness programs.  Spencer Fane’s Employee Benefits Team stands ready to assist employers in meeting these difficult compliance challenges.