Many employers offer corporate wellness programs to promote healthier lifestyles, prevent disease and reduce healthcare costs. These wellness programs may include, for example, nutrition classes, on-site exercise facilities, weight-loss and smoking-cessation programs, and/or coaching to help employees meet personal fitness goals.
On April 16, 2015, the U.S. Equal Employment Opportunity Commission (EEOC) issued a much-anticipated notice of proposed rulemaking describing how Title I of the Americans with Disabilities Act (ADA) applies to such wellness programs that (a) are part of group health plans, and/or (b) include questions about employees’ health or medical examinations. The Federal Register officially published the proposed rule on April 20, 2015. The EEOC will take public comments on its proposal until June 19, 2015 before issuing final regulations.
As with other applicable federal laws, under the proposed rule, employers are permitted to encourage workers to participate in wellness programs under their employers’ medical plans without running afoul of the ADA, subject to specific limitations and requirements. In general, the incentive can be in the form of a reward or penalty of up to 30 percent of the total cost (employer and employee share) of employee-only (not spouse or family) premiums. The wellness programs also may include certain disability-related inquiries or medical examinations.
The proposed rule is intended to reconcile the confidentiality provisions in Title I of the ADA with the nondiscrimination provisions in the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Patient Protection and Affordable Care Act (Affordable Care Act). Further, per the EEOC’s statement announcing its notice of proposed rulemaking, the rule “makes clear that wellness programs are permitted under the ADA, but that they may not be used to discriminate based on disability.” Highlights of the proposed rule are below.
HIPAA and the ADA
The nondiscrimination provisions in HIPAA, as amended by the Affordable Care Act, generally prohibit group health plans from discriminating against participants and beneficiaries based on health factors. 71 FR 75014 (Dec. 13, 2006); 26 C.F.R. § 54.9815-2705 (Aug. 2, 2013). Wellness programs, however, are an exception to the general rule. 78 FR 33158 (June 3, 2013).
The ADA, in turn, generally prohibits employers from making disability-related inquiries or requiring medical examinations of their employees unless job-related and consistent with business necessity. 42 U.S.C. § 12112(d)(4)(A). The statute, however, provides an exception to this rule by stating that “[a] covered entity may conduct voluntary medical examinations, including voluntary medical histories, which are part of an employee health program available to employees at that work site.” 42 U.S.C. § 12112(d)(4)(B). Employee health programs include workplace wellness programs. In previous guidance on disability-related inquiries and medical examinations under the ADA, the EEOC stated, “[a] wellness program is ‘voluntary’ as long as an employer neither requires participation nor penalizes employees who do not participate.” See Guidance, at Q&A 22. However, neither the statute nor EEOC’s regulations address the extent to which incentives might affect the voluntary nature of a wellness program.
The Proposed Rule
The EEOC’s new proposed rule provides guidance to businesses on the extent to which they can use incentives to encourage workers to take part in wellness programs that include disability-related inquiries or medical examinations. The proposed rule also explains what a wellness program is, what it means for a wellness program to be voluntary, and what requirements apply concerning notice and confidentiality of medical information obtained as part of a wellness program (even if voluntary).
Through the proposed rule, the EEOC hopes to provide employers with much-needed guidance about how wellness programs offered as part of an employer’s group health plan can satisfy both the ADA’s goal of limiting employer access to medical information, and HIPAA’s and the Affordable Care Act’s promotion of wellness programs. In particular, the proposed rule addresses employee incentives, voluntary participation, and notice and confidentiality concerns.
Under the proposed rule, an employer can reward a worker with a credit or reduction in the employee’s total annual medical premium of as much as 30 percent of the cost of the employee-only health insurance coverage, in return for participation in a wellness program. If an employee declines to participate, an employer can add an additional cost of up to the same amount. For example, if the total annual cost of coverage paid by both the employer and employee for self-only coverage is $5,000, the maximum incentive for an employee under that plan is $1,500.
Through this proposed rule, the EEOC appears to be pulling back on the previous ADA safe harbor for wellness programs that are part of employee benefit plans, as well as the relevant legal framework under the Employee Retirement Income Security Act of 1974 (ERISA), the Affordable Care Act, HIPAA and the Genetic Information Nondiscrimination Act of 2008 (GINA). Some examples include the following:
- Employers should note that under the proposed rule, the incentive is limited to employee-only coverage, as opposed to total-enrolled coverage. Further, the smoking cessation incentive is capped at 30 percent (as opposed to 50 percent under other health and benefit laws).
- It is unclear whether the EEOC intended to limit the incentives to employee-only coverage, or if this was simply an oversight. However, as the proposed rule currently stands, it appears to block employers from offering incentives to workers’ dependents or other family members.
- The proposed rule offers no guidance on the interplay between GINA and wellness programs. Incentives for employees’ spouses to complete health risk assessments will be the subject of a forthcoming rulemaking push. While the proposed GINA regulations are expected in the near future, it remains unclear exactly when they will be released.
Under the proposed rule, wellness programs allowed in accordance with the ADA must be voluntary in nature. For example, per the EEOC, employers may not:
- require employees to participate in wellness programs;
- deny employees access to health coverage under any of an employer’s group health plans or particular benefits packages within a group health plan for nonparticipation;
- limit coverage under their health plans for employees who decline to participate, except to the extent the limitation (e.g., having to pay a higher deductible) may be the result of forgoing a permissible financial incentive; or
- take any other adverse action against employees who choose not to answer disability-related inquiries or submit to medical examinations.
Additionally, an employer may not:
- retaliate against an employee who refuses to participate in a wellness program or files a charge with the EEOC concerning the program,
- coerce an employee into participating in a wellness program or into giving the employer access to medical information collected as part of the program, or
- threaten an employee with discipline if the employee does not participate in a wellness program or does not achieve a certain health outcome.
Notice and Confidentiality
In addition to the topics addressed above, the proposed rule further provides the following:
- Employers and wellness program providers must adhere to HIPAA and take steps to protect the confidentiality of employee medical information provided as part of a wellness program.
- Employers must provide employees with a notice that describes what medical information will be collected as part of a wellness program, who will receive it, how the information will be used and how it will be kept confidential.
- Wellness programs and any disability-related inquiries and medical examinations that are part of such programs must be reasonably designed to promote health or prevent disease.
- Medical information obtained by wellness programs may be disclosed to employers in aggregate form only, except as needed to administer the health plan. An employer’s obligation to comply with this proposed requirement generally may be satisfied by adhering to the HIPAA Privacy Rule.
- Employers must provide reasonable accommodations that enable employees with disabilities as defined by the ADA to participate in and earn whatever incentives the employer offers for voluntary participation in a wellness program.