In response to the issuance of the ADA and GINA Final Rules, employers should review current wellness programs to determine the extent to which the Final Rules apply and to evaluate compliance with their respective restrictions, including the updated notice requirements.

Does your organization offer smoking cessation programs, stress management counseling and coaching, weight loss programs, biometric screenings or other health assessments to employees as part of a wellness program?

Are employees encouraged to participate by providing financial or other incentives, such as premium reductions, gift cards or coupons?

If so, your organization should review these programs in light of recent regulations issued by the Equal Employment Opportunity Commission (“EEOC”).

On May 17, 2016, the EEOC issued two Final Rules, amending the regulations regarding employer wellness programs under the Americans with Disabilities Act (“ADA Final Rule”) and the Genetic Information Nondiscrimination Act (“GINA Final Rule”) (“Final Rules”).

The Final Rules address the extent to which an employer may provide incentives in exchange for participation in an employer’s voluntary wellness program, without violating the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). The Final Rules also clarify additional notices that must be provided to employees and employer confidentiality obligations.

The Final Rules are effective immediately, with the exception of the notice and incentive provisions, which are effective on the first day of an employer’s plan year that begins on or after January 1, 2017.

ADA Final Rule

The ADA’s general prohibition against an employer making any disability-related inquiries or requiring an employee to submit to a medical examination is subject to an exception for employee health programs, which include employer-sponsored, voluntary wellness programs.

The ADA Final Rule addresses three key factors in determining the extent to which an employer may offer incentives to promote an employee’s participation in a wellness program (whether related or unrelated to a group health plan) that includes disability-related inquiries and/or medical examinations:

  • The wellness program must be “reasonably designed to promote health or prevent disease.” In contrast, an employer wellness program that includes health screenings without providing results, follow-up information or health advice is generally not deemed reasonable. A wellness plan that penalize a participant solely on the basis of failing to achieve a particular health outcome is also impermissible;
  • The program must be voluntary. In other words, an employer may not mandate employee participation, deny coverage or access to any health benefits or take an adverse employment action against non-participants; and
  • The program may offer only limited incentives (in the form of a reward or penalty) to participants. The incentive cannot exceed 30 percent of the total cost of self-only coverage (including both the employer’s and employee’s contributions). The ADA Final Rule delineates various ways to calculate the 30-percent limitation, taking into account whether or not the wellness program is offered through an employer-sponsored group health plan and whether or not it is offered only to employees enrolled in an employer-sponsored group health plan.

In connection with a wellness program that includes disability-related inquiries and/or medical examinations, the ADA Final Rule requires employers to provide notice to employees containing, among other provisions, specific information regarding the type of medical information that will be obtained, the purpose for which the medical information is obtained, the restrictions on its disclosure and methods being used to ensure that such medical information will not be improperly disclosed.

The ADA Final Rule also reaffirms existing confidentiality requirements and adds two additional protections:

  • Unless necessary for wellness program administration, employee medical information or history may be provided to an employer in aggregate form only in such a manner that does not disclose, or is not reasonably likely to disclose, the identity of any employee.
  • An employer may not require an employee to waive any of the ADA’s confidentiality protections as a condition to being permitted to participate in a wellness program or to earn an incentive in connection with a wellness program.

GINA Final Rule

GINA generally prohibits employers from requesting, requiring or purchasing genetic information. A permitted exception to this general prohibition is with respect to participation in an employer’s voluntary wellness program, as long as certain requirements are met, including that the program may not condition inducements to employees on the provision of genetic information.

At the same time, however, GINA created some ambiguity with respect to permitted inquiries that could be made of an employee’s family member in connection with a voluntary wellness program and whether an inducement could be provided in exchange for obtaining that family member’s information.

The GINA Final Rule addressed that ambiguity by providing that an employer may offer a limited inducement to an employee whose spouse provides information about the spouse’s manifestation of disease or disorder as part of a health risk assessment administered in connection with an employer-sponsored wellness program (subject to the same design limitations set forth in the ADA Final Rule). The GINA Final Rule establishes that the value of the maximum incentive attributable to a spouse’s participation may not exceed 30 percent of the total cost of self-only coverage, the same incentive allowed for the employee.

The GINA Final Rule also clarifies that no inducement may be offered in exchange for (i) the spouse providing his/her genetic information, (ii) information about the manifestation of disease or disorder of an employee’s children or (iii) genetic information about an employee’s children, including adult children.

Interplay with HIPAA Regulations

Is the health premium reduction or other incentive offered under your group health plan? If so, the Final Rules are unlikely to be the only legal concern. Organizations may also need to consider the impact of the nondiscrimination requirements of the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Patient Protection and Affordable Care Act (ACA) (the “HIPAA Regulations”) on this program.

The HIPAA Regulations apply to a health-contingent wellness program that requires a plan participant to perform or complete an activity or to attain or maintain a specific health-related outcome in order to receive a financial or other incentive. Thus, depending on wellness program design, an employer wellness program could be subject to the ADA Final Rule and/or the GINA Final Rule, as well as the HIPAA Regulations. This is a key consideration, as the incentive limits permitted under the HIPAA Regulations are more generous in some instances from those permitted under the Final Rules.

Key differences between permitted incentives under the Final Rules and the HIPAA Regulations include:

  • Calculation of Permitted Incentive: The HIPAA Regulations require that an incentive not exceed 30 percent of the total cost (the cost paid by the employee and employer) of employee-only coverage in which the employee is enrolled. Unlike the Final Rules, however, if the employee and dependents may participate in the program, the 30-percent limit is to be based on the total cost of the benefit in which the employee and dependent(s) are enrolled. The agencies have not yet provided details regarding the coordination of these provisions; however, it appears that if the Final Rules and the HIPAA Regulations apply to a program, the lower limit under the Final Rules would likely apply.
  • Permitted Tobacco Incentive: The HIPAA Regulations provide that the permitted incentive increases to 50 percent where such program is designed, in whole or in part, to reduce or prevent tobacco use. The ADA Final Rule provides, however, that the lower 30-percent limit under the ADA Final Rules applies to a tobacco cessation program that requires biometric screening or other medical procedure to test for the presence of nicotine or tobacco. The agencies have not yet provided details regarding the coordination of these provisions; however, if the program requires a medical procedure to test for the presence of nicotine or tobacco, it appears that the lower 30-percent limit under the ADA Final Rule would apply. In contrast, if no medical procedure is required, then the more generous 50-percent incentive limit under the HIPAA Regulations applies.

What This Means for Employers

In response to the issuance of the ADA and GINA Final Rules, employers should review current wellness programs to determine the extent to which the Final Rules apply and to evaluate compliance with their respective restrictions, including the updated notice requirements. In particular, employers should review any health-contingent programs provided pursuant to a group health plan, as well as any smoking or tobacco cessation programs, to evaluate the interplay between the ADA and GINA Final Rules and the HIPAA Regulations.