The following is a *Middle Market company client alert.

On April 16, 2015, the Equal Employment Opportunity Commission (“EEOC”) issued highly-anticipated proposed regulations describing how the Americans With Disabilities Act (“ADA”) applies to employer-sponsored wellness programs. The proposed regulations also address the interaction of the HIPAA wellness program rules, as amended by the Affordable Care Act (“ACA”) and the ADA.

Background

Title I of the ADA generally restricts employers from obtaining medical information from employees (e.g., health risk assessments or biometric screenings) but allows medical examinations of employees and inquiries about their health if they are part of a “voluntary” wellness program. Under EEOC enforcement guidance, a wellness program is considered “voluntary” if the employer neither requires participation nor penalizes employees who do not participate. While it was possible for employers to design a wellness program that complied with the HIPAA wellness program rules under the ACA, it was unclear whether an employer could offer rewards for (or assess penalties for not) completing a health risk assessment or undergoing biometric screening under the employer’s group health plan. In recent months, the EEOC has sued three employers, including Honeywell International Inc., for offering wellness program incentives that were, in the EEOC’s view, in violation of the ADA. The major concerns to employers with these lawsuits by the EEOC were that (i) the wellness programs being offered complied with the HIPAA wellness program rules under the ACA, and (ii) the EEOC had not provided any significant guidance for employers to follows as to what qualified as a voluntary wellness program under the ADA.

The Proposed Regulations

The proposed regulations clarify that an employer may offer limited incentives of up to a maximum of 30 percent of the total cost of employer-only coverage, whether in the form of a reward or a penalty, to promote an employee’s participation in a wellness program that includes disability-related inquiries or biometric screenings, as long as participation is voluntary.

Under the proposed regulations, a wellness program is "voluntary" as long as the employer does not:

  • Require employees to participate;
  • Deny coverage under any of its group health plans or limit the extent of such coverage to an employee who refuses to participate in the wellness program; or
  • Take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees who do not participate.

To ensure that participation in a wellness program that includes disability-related inquiries or medical examinations is truly voluntary, an employer must provide an employee with a notice indicating:

  • What medical information will be collected;
  • Who will receive the medical information;
  • How the medical information will be used; and
  • How the medical information will be kept confidential.

The proposed regulations also include special rules for smoking cessation programs. A smoking cessation program that only asks employees if they use tobacco (e.g., on the honor system) would not be subject to the EEOC incentive limitation. However, a biometric screening or other medical examination that tests for the presence of nicotine or tobacco is a medical examination and the financial incentive limitation rules (e.g., maximum of 30 percent of employee-only coverage) would apply.

Remaining Questions

While the proposed regulations address several issues, there are still several questions which remain unanswered. For example:

  • Must similar incentives be offered to employees who decline the wellness program but certify that the employee is under active treatment by a physician for any at-risk conditions?
  • Should “voluntariness” be determined based on whether the incentives render the coverage “unaffordable” under the ACA?
  • Should wellness programs obtain affirmative confirmation from participants that they are aware that their participation is voluntary?
  • Should the rules contain a “de minimis” exception from these requirements?
  • What rules apply to wellness programs offered outside of group health plans?
  • Does the EEOC’s interpretation of the term “voluntary” and its interplay with wellness program incentives under the ADA cross over to similar provisions under the Genetic Information Nondiscrimination Act (“GINA”)?

Comments

The EEOC has asked for public comments on the proposed regulations by June 19, 2015. Employers who are impacted by the proposed regulations should consider submitting comments to the EEOC.

What Employers Should Do Now

While employers do not have to comply with the proposed regulations, there is good reason to do so. It is unlikely that a court or the EEOC would find that an employer violated the ADA if the employer complied with the proposed regulations until final regulations are issued. Moreover, many of the requirements explicitly set forth in the proposed regulations are already requirements under the law. For example, employers should make sure that they:

  • Do not require employees to participate in a wellness program;
  • Do not deny health coverage to employees who do not participate; and
  • Do not take any adverse employment action or retaliate against, interfere with, coerce, or intimidate employees who do not participate in wellness programs or who do not achieve certain health outcomes.

Additionally, employers must provide reasonable accommodations that allow employees with disabilities to participate in wellness programs and obtain any incentives offered. For example, if attending a nutrition class is part of a wellness program, an employer must provide a sign language interpreter, absent undue hardship, to enable an employee who is deaf to participate in the class. Employers also must ensure that they maintain any medical information they obtain from employees in a confidential manner.