On May 17, 2016, the Equal Employment Opportunity Commission (the “EEOC”) finalized regulations on wellness program incentives permissible under the Americans with Disabilities Act (the “ADA”), which prohibits discrimination on the basis of disability status, and the Genetic Information Nondiscrimination Act (“GINA”), which prohibits discrimination on the basis of genetic information. The rules were published in proposed form in April 2015. The final rules limit incentives available through wellness programs to ensure that such incentives do not become coercive or a means through which employers are able to discriminate against certain employees on the basis of disability or genetic information. Under both the ADA and GINA, “incentives” include both rewards and penalties, both financial and in kind. The final rules are very similar to their proposed versions, with changes including the addition of rules related to participant confidentiality and simplification of the GINA “apportionment” rules.
HIPAA. The EEOC joins the Departments of Labor, Treasury, and Health & Human Services (the “Tri-Departments”) as the fourth federal agency to have oversight over employer-sponsored wellness programs and incentives available to employee participants through them. The Tri-Departments are responsible for enforcing the Health Insurance Portability and Accountability Act (“HIPAA”), which, as amended by the Patient Protection and Affordable Care Act, also regulates permissible incentives under employer-sponsored wellness programs. Under HIPAA, wellness programs are divided into participatory and health-contingent programs, determined based on the nature of the requirements for obtaining an incentive through the program. The HIPAA regulations do not impose a limit on the incentives for participatory wellness programs. They do, however, limit incentives for health-contingent wellness programs to 30 percent of the total cost of enrolled coverage – and up to 50 percent when a tobacco cessation component is in play.
ADA. Under the ADA, employers are generally prohibited from obtaining medical information about employees by requiring medical examinations or making disability-related inquiries, with limited exceptions. There is an exception for employee participation in a “voluntary employee health program,” which the EEOC interprets to include many employer-sponsored wellness programs. The final rules apply to all employer-sponsored wellness programs that require medical examinations or make disability-related inquiries (thereby, subject to the ADA) – regardless of whether such program is associated with a health plan, or would be considered participatory or health contingent under HIPAA – and endeavor to define what constitutes a “voluntary” health program.
Under the final rules, a health program is not voluntary if it (i) requires employees to participate, (ii) denies health coverage for failure to participate, (iii) results in any adverse employment action, threat or retaliation for failure to participate, or (iv) does not provide adequate notice of the medical information to be obtained and how it will and will not be used. Additionally, to be considered a “voluntary” wellness program, incentives must not exceed 30 percent of the total cost of self-only coverage.
GINA. The GINA regulations tackle the “very limited question” of offering wellness program incentives to an employee for his or her spouse to provide information about the spouse’s manifestation of any disease or disorder. This rule comes about due to the EEOC’s (strange?) position that an employee’s spouse’s medical information is the employee’s genetic information. GINA prohibits employers from conditioning any “inducement” on the employee disclosing genetic information. “Genetic information” includes the manifestation of any disease or disorder in a family member – including a spouse. Often, employer-sponsored wellness programs are available to employees’ spouses and dependents who participate in the employer’s health plan. And, often, obtaining a wellness program incentive requires a health risk assessment (an “HRA”), which makes certain inquiries into the manifestation of diseases and disorders in participants. Under the definitions given in GINA, a spouse’s HRA is considered to be an employee’s genetic information – and offering an incentive for it would violate GINA’s prohibition against inducements.
The EEOC recognized that this interpretation may run counter to Congress’ and the Tri-Departments’ efforts to encourage wellness programs, and so struck a balance by imposing limits on incentives available for an employee’s spouse to complete an HRA. (As in the proposed rules, incentives for an employee’s children to complete HRAs are still prohibited.) Under the final rules, incentives may be offered for both the employee’s participation and the spouse’s disclosure of his or her own medical information. The proposed rules set out a complicated “apportionment” standard that resulted in different incentive limits applicable to employees and their spouses. In the preamble to the final rules, the EEOC recognized the administrative difficulty and questionable policy behind the proposed apportionment standard, and instead finalized a simplified version, which allows equal maximum incentives. Under the final rules, each incentive is limited to 30 percent of the total cost of self-only coverage, for a total available incentive for the employee and spouse not to exceed 60 percent of the total cost of self-only coverage.
Highlights. Despite commenters’ requests, the final rules under the ADA and GINA are not synchronized with HIPAA’s incentive limits. The EEOC declined to limit applicability of these thresholds to health-contingent wellness programs, as in HIPAA. Further, the EEOC declined to apply the 30 percent threshold against the total cost of the enrolled coverage, as in HIPAA. The EEOC reasoned that because the ADA only prohibits discrimination against employees and applicants – not their spouses and dependents – self-only coverage was the appropriate benchmark. The GINA final rules were drafted to use an identical benchmark.
The EEOC also added parallel provisions to both the ADA and GINA final rules regarding participants’ confidentiality rights. Under this new provision, an employer may not require a participant to agree to the sale, exchange, sharing, transfer or other disclosure of medical/genetic information, or to waive confidentiality protections as a condition for participating or receiving an incentive.