On April 16, the Equal Employment Opportunity Commission (the “EEOC”) finally gave a peek into its thinking about what constitutes a “voluntary” wellness program under the Americans with Disabilities Act (the “ADA”). Recall that, while there are extensive wellness rules under HIPAA and ACA for these types of programs, there was always a gray area with regard to whether these programs were considered “voluntary” for ADA purposes. The EEOC recently started suing companies over their programs and was heavily criticized for doing so without issuing any guidance (aside from a couple of non-binding opinion letters). These proposed regulations are the beginnings of the guidance the critics have requested. While not binding, they are a good starting point for understanding where the EEOC may end up.

Under the proposed rules, a workplace wellness program will be “voluntary” if:

  1. It does not require employees to participate.
  2. It does not deny coverage under a plan or benefit package for non-participation. It also cannot limit benefits for employees who do not participate.
  3. The employer does not take an adverse employment action against employees (presumably for not participating).
  4. If the program is part of a group health plan, the employer must provide a notice in understandable language that describes the type of medical information that will be obtained, how it will be used, and the restrictions on the disclosure of that information. The notice also must describe the employer representatives and other parties to whom the information will be disclosed and the methods that the employer will use to ensure the information is not improperly disclosed.
  5. The incentive under the program, when combined with the reward for any other wellness program that is part of a group health plan, cannot exceed 30% of the total cost of employee-only coverage under the plan.

There are a few observations from a review of the proposed rule. First, under the HIPAA rules, the incentive can be up to 30% of the total cost of family coverage if spouses and dependents are eligible to participate in the wellness program. The EEOC’s proposed rules contain no such expansion. It is not clear whether the EEOC feels it does not have jurisdiction over non-employees participating in a health plan or if it is trying to reign in the possible incentives under wellness programs.

Also, under the ACA wellness rules, the incentive can swell to 50% of the cost of coverage if the program is related to tobacco use cessation. The EEOC noted that a program that merely asks individuals if they are tobacco users is not subject to the ADA because that information is not considered a disability-related inquiry or a medical examination. Therefore, the incentive for that type of program could still go as high as 50% of the cost of coverage. However, if biometric screening (like a blood test) is used to determine the presence of tobacco, then it would be subject to the EEOC’s requirements, when they are finalized.

Additionally, the second requirement that the program “cannot limit benefits for employees who do not participate” raises a concern for disease management type programs which may provide additional benefits for employees who choose to participate. Usually, those types of programs do not include a penalty for non-participation, but it would be helpful to see a carve-out for these types of programs.

Fourth, in the preamble, the EEOC takes issue with the opinion in Seff v. Broward County where the court ruled that a wellness program that is part of a group health plan does not have to comply with the “voluntariness” requirement under a separate ADA exception for bona fide benefit plans. The EEOC’s position is that Seff was wrongly decided because that logic would render the “voluntary” exception as irrelevant. However, the EEOC’s analysis fails to recognize that employers can (and do) offer wellness programs to their employee populations, regardless of health plan participation. Therefore, it would not be inconsistent to say that a wellness program that is part of a group health plan satisfies the separate “bona fide benefit plan” exception and one that is available to employees generally must satisfy the “voluntary” exception.

The EEOC also noted that employers are still required to give reasonable accommodations for employees with disabilities to earn the financial incentives. The EEOC stated that providing a reasonable alternative standard and notice, as required by HIPAA, would likely (although not conclusively) fulfill this obligation. The EEOC also said the ADA requires a reasonable accommodation for participation-only programs (i.e, programs which reward participation regardless of results), even though HIPAA would not require a reasonable alternative standard and notice for those programs. However, the examples include offering a sign language interpreter for a deaf employee who is attending one of the classes, so it is not clear that the EEOC necessarily requires an alternative standard for participation-only programs.

Comments to the proposed rule are due 60 days after it is published in the Federal Register (which is expected to happen on April 20).