On April 16, 2015, the Equal Employment Opportunity Commission (“EEOC”) issued proposed regulations on the application of the Americans with Disabilities Act (“ADA”) to wellness program incentives. The release was followed closely by FAQs and a fact sheet.

The ADA generally prohibits an employer from making a disability-related inquiry or requiring a medical examination of an employee unless it is (a) “job-related and consistent with business necessity” or (b) a “voluntary” component of an “employee health program.” The proposed regulations clarify the meaning of “voluntary” and “employee health program.” Under the proposed regulations, a wellness program is a type of employee health program and, thus, must be reasonably designed to promote employee’s health or prevent disease by, among other things, not being overly burdensome or circumventive of discrimination laws. Such a program is “voluntary” if the employer (1) does not require participation, take adverse employment action against or deny health coverage to an employee who does not participate and (2) provides notice to employees, in an understandable format, that describes the medical information that will be used, the purposes for which it will be used, and the protective measures it will take on such information. More specifically, incentives may be used in wellness programs that are part of group health plans if limited to 30% of the total cost of employee-only coverage for both participatory programs and health-contingent programs. See our previous guidance explaining the difference between the two.

The proposed regulations also add to the regulations’ confidentiality provisions the stipulation that medical information collected through the employee health program be used by the employer only in aggregate terms that would not disclose the identity of specific individuals. Furthermore, where individually identifiable information is collected through a wellness program that is part of a group health plan, such information is protected heath information under the Health Insurance Portability and Accountability Act (HIPAA).

The proposed regulations seek to reconcile the ADA’s goal of protecting employees from employers seeking and using disability-related information to discriminate and HIPAA’s approval of incentives to encourage participation in wellness programs. However, the proposed guidance presents some deviations from HIPAA regulations. Specifically, the proposed regulations apply the 30% limit to both participatory and health-contingent programs, whereas HIPAA applies it only to health-contingent programs and allows a 50% limit for tobacco-related incentives. With regard to tobacco-related programs, however, the EEOC has indicated that an employer merely asking about tobacco use is not an employee health program for purposes of the ADA and is thus not subject to the lower limit. Also different under the proposed regulations is basing the 30% limit on employee-only coverage. Under HIPAA, the limit is based on the type of coverage selected, whether employee-only or employee-plus if dependents can participate in the wellness program. The EEOC will accept comments on these and other provisions in the proposed regulations until June 19, 2015.