Yesterday the Equal Employment Opportunity Commission issued its final rules on wellness programs and the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. The ADA rule applies to requests for health information from employees. The GINA rule applies to requests for health information from employees’ family members.

I think employers will be generally pleased to see where the EEOC ended with these regulations. They appear to be clearer, more employer-friendly, and less complicated than the proposed regulations, which we covered here (ADA) and here (GINA). Because the rules are intended to go together and have many of the same provisions, I will discuss them together unless it’s necessary to distinguish.

When do the Rules take effect?

The Rules will be effective 60 days from today (the date that the rules are published in the Federal Register), but will apply only to health insurance plans whose plan years begin on or after January 1, 2017. In the case of an “Obamacare” plan purchased on a federal or state exchange, the relevant plan year will be deemed to begin on January 1, 2017. But if a new employer-sponsored plan year begins on, say, March 1, 2017, then the Final Rules will not apply until then.

What are the major changes from the Proposed Rules?

First, the Final Rules will not be limited to wellness programs that are offered to employees who are enrolled in an employer’s group health insurance plan. They will also apply to wellness programs available to (1) employees who are not enrolled in the employer’s group health insurance, (2) employees who are enrolled in only one of a variety of group health insurance options offered by the employer, and (3) employees who are enrolled in an “Obamacare” plan through a federal or state exchange for which the employer provides reimbursements.

Second, the Final Rules clarify that “incentives” (ADA) or “inducements” (GINA) for participation in wellness programs that collect information protected under the ADA or the GINA include not only financial but also in-kind and “de minimis” (relatively trivial) incentives and inducements. For simplicity’s sake, I’ll refer to incentives and inducements as “incentives,” whether I’m talking about the ADA or the GINA provisions.

Third – and I think this may be the best part for employers – calculation of the 30 percent limit on incentives for employees and spouses will be much simpler under the Final Rules. Under the Proposed Rule (GINA), the maximum incentive for the employee was 30 percent of the cost of employee-only coverage, while the spouse could get 30 percent of the remainder of the cost of spousal/family coverage. Under the Final Rules, employee and spouse can each get a maximum of 30 percent of the cost of employee-only coverage. “Employee-only” includes the employee’s cost as well as the employer’s cost. (On the other hand, “30 percent of what?” is more complicated, but only because the EEOC is now allowing the Rules to apply to wellness programs beyond those offered to employees, or spouses of employees, who are enrolled in an employer group health plan.)

Fourth, the ADA Rule includes an Interpretive Guidance that most employers and wellness program providers will find helpful. (The GINA Rule did not include an Interpretive Guidance.)

Fifth, the EEOC promises to provide a sample to employees within the next 30 days that will satisfy employers’ notice requirements.

What do we have to do?

First, a wellness program can offer incentives if it is “reasonably designed to promote health or prevent disease.” This is unchanged from the Proposed Rules. Generally, a wellness program will not be “reasonably designed” if the employer collects health data without giving any feedback to the employees or spouses who provide it, or without using the information to design a wellness program that fits the needs of employees and spouses. A program will also not be “reasonably designed” if it is a subterfuge for evading the law, or if it appears to be designed simply to shift health costs from the employer to the employee.

Assuming the program is “reasonably designed,” a wellness program will be “voluntary,” which means that it can offer incentives to employees and their their spouses, if

  1. participation is not required,
  2. health insurance coverage is not denied or limited because an employee or spouse declines to participate, and
  3. employees are not retaliated against, or coerced, intimidated, or threatened. It is also unlawful to retaliate against an employee because his or her spouse has refused to participate in the wellness program or to provide medical information.

Most importantly, offering incentives in compliance with the Rules will not make the program “not voluntary.” Incentives can include both “carrots” (rewards) and “sticks” (penalties or absence of rewards).

The wellness program must also issue written notification to employees or spouses who participate, in plain language, that “[d]escribes the type of medical information that will be obtained and the specific purposes for which” it will be used, and that describes the restrictions on disclosure and security measures that the program will follow and take. As already noted, the EEOC plans to publish a sample notice within the next 30 days.

What are the new limits on incentives?

As noted above, the limit is 30 percent of the total cost of self-only coverage for the employee, plus (if applicable) that amount again for the employee’s spouse. If the employee is not enrolled in the employer’s group health insurance, here are the rules:

  1. If the employer offers group health insurance but the employee is not enrolled, the wellness incentive limit would be the same as if he or she did participate (30 percent of the cost of self-only coverage under the group health plan).
  2. If the employer offers a variety of health insurance options to employees but offers the wellness program to employees who are not enrolled, then the limit would be 30 percent of the cost of self-only coverage under the least-expensive of the options offered.
  3. If the employer reimburses employees for buying insurance on a state or federal health care exchange, then the limit would be 30 percent of (a) the cost of self-only coverage under a Silver Plan (b) for a 40-year-old non-smoker, (c) in the location of the covered entity’s principal place of business.

Again, in-kind and even trivial incentives (like a week of preferred parking), must be included in calculating the applicable 30 percent.

What about tobacco/smoking cessation?

Assuming a tobacco cessation program did not request any medical information from participants, there would not be an ADA issue. Thus, the maximum incentives for these programs would be subject to the 50 percent limit in the Health Insurance Portability and Affordability Act and the Affordable Care Act. (In other words, 50 percent of the total cost to employee and employer of self-only coverage.)

On the other hand, if the tobacco cessation program requests medical information or performs any “medical examinations” within the meaning of the ADA (such as biometric screening or blood tests to measure nicotine levels), then it would be subject to the 30 percent limit in the EEOC rule. The EEOC’s position on tobacco cessation for spouses is that none of this (not even the blood tests) would be a request for “genetic information” within the meaning of the GINA.

What are the confidentiality rules?

  • A covered entity cannot “require an employee to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information [with some exceptions] or waive confidentiality protections available under the ADA as a condition for participating in a wellness program or receiving a wellness program incentive.”
  • Medical information gathered must be kept confidential and separate from the employee’s personnel file. (Similar to the requirement under the ADA for other employee medical information.)
  • Generally, information gathered by the wellness program may be disclosed to the employer only in aggregated, non-individually-identifiable form.
  • In its Interpretive Guidance, the EEOC recommends that, whenever possible, wellness information be “walled off”; from individuals making employment decisions. The Agency recognizes that this may not be possible in the case of small employers but warns that those with access to this information cannot use it as the basis for making employment decisions.
  • Also, in its Interpretive Guidance, the EEOC recommends that wellness programs, group health insurers, and employers adopt measures to ensure the security of medical information provided by employees or spouses in connection with wellness programs. The Agency wisely avoided making specific recommendations, since the technology changes so rapidly. However, in the event of “a hack and a leak,” employers can expect to face the scrutiny of the EEOC in addition to embarrassing media coverage, damage to its public reputation, and exposure to class action litigation from the victims.

What special rules apply to employees’ family members who participate in wellness programs?

The rules for employees’ spouses are, for the most part, described above. The Final GINA Rule makes clear that an employee’s children may not, under any circumstances, be offered incentives to provide information to a wellness program, and this restriction applies to adult as well as juvenile children. (It also applies to adopted children.)

Even with spouses, the wellness program is not allowed to offer incentives for the spouse to disclose what I call “true” genetic information, such as would be disclosed in a karyotype or DNA test. With respect to an employee’s spouse, the wellness program is limited to offering incentives to obtain information about a spouse’s “manifestation of disease or disorder,” such as, “do you have diabetes?,” or weighing or measuring blood pressure.

Is there anything else in the Rules that employers should be aware of?

Yes. The EEOC has specifically rejected court decisions that found that the “safe harbor” provisions in the ADA exempt wellness programs that are part of employer group health plans. This includes Seff v. Broward County and EEOC v. Flambeau, Inc., a wellness case that the EEOC recently lost in Wisconsin but has appealed to the U.S. Court of Appeals for the Seventh Circuit, which hears appeals from federal courts in Illinois, Indiana, and Wisconsin.

On a more positive note, the EEOC has said that offering a “reasonable alternative” when an employee cannot meet the requirements of a health-contingent wellness program is also a form of reasonable accommodation under the ADA (although additional accommodations may be appropriate for employees with disabilities).

Conclusion

Given that Congress probably enacted the ADA and the GINA without much thought to wellness programs, the EEOC has done a good job bringing these laws into harmony with the relevant provisions of the HIPAA and the Affordable Care Act. Employees who handle benefits and coordinate with wellness programs should read and study the new Rules, as should Human Resources representatives and in-house counsel who deal with benefits issues and EEO compliance. The January 1, 2017 (or later) applicability date should give employers and wellness programs plenty of time to prepare. Although it’s unlikely that everyone will agree with the EEOC’s positions in every respect, the Final Rules certainly could have been worse.