Employers implementing wellness programs have a number of laws to navigate: the Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA); the Americans with Disabilities Act (ADA); and the Genetic Information Nondiscrimination Act (GINA), among others. Most companies are familiar with the requirements of HIPAA, which historically has been regarded as establishing the confines for employer-sponsored wellness programs.
However, the ADA and GINA also apply to wellness programs. And, on May 17, 2016, the Equal Employment Opportunity Commission (EEOC) finalized its wellness program regulations under these laws. The commission’s final regulations (the EEOC Wellness Rules) largely adopt the rules proposed in 2015, which were addressed in our newsletter here. Only the notice and maximum incentive limits have delayed compliance dates until 2017. Thus, employers should make it a priority to review their programs for compliance with the EEOC rules:
Identify All Wellness Programs, Whether Participatory or Health Contingent.
Unlike the HIPPA wellness program rules, the EEOC Wellness Rules not only apply to wellness programs that are tied to particular health outcomes (e.g., participants receive a premium discount if they achieve a specified body mass index or cholesterol count), but also to participatory programs that provide rewards simply for taking a health risk assessment or biometric screening.
Determine if Your Smoking Cessation / Tobacco Wellness Program is Subject to the EEOC Wellness Rules.
Some smoking cessation programs are subject to the EEOC Wellness Rules; some are not. If an employer only asks employees to certify whether they use tobacco, the program is not subject to the rules, and the employer can reward up to the HIPAA wellness program limitation of 50 percent of the total cost of coverage for participation. By contrast, if an employer requires employees to be tested for nicotine use, then the wellness program would be governed by the 30 percent limit in the EEOC Wellness Rule, which is addressed below.
Calculate the Maximum Reward under the EEOC Wellness Rules.
The maximum reward that may be provided for EEOC-governed wellness programs is limited to 30 percent of the total cost of self-only coverage. When more than one plan is offered, and employees can qualify for the reward regardless of the plan in which they enroll, the reward is calculated on the lowest-cost self-only coverage option. Unlike the HIPAA wellness program rules, the maximum under the EEOC Wellness Rules is applied in the aggregate across all programs. These limitations are effective as of the first day of the first plan year that begins on or after Jan. 1, 2017.
Here is an illustration:
An employer offers a number of different health plan options ranging from a total cost of $5,000 to $8,000 per year for self-only coverage and $12,000 to $15,000 for family coverage. Under this scenario, the maximum reward that may be provided under the EEOC Wellness Rules, assuming the reward is available regardless of the plan in which the employee enrolls, is $1,500 (30 percent of $5,000 – the lowest-cost self-only coverage option). If the wellness program also includes the employee’s spouse, who is covered under family coverage, the maximum reward is limited to $1,500 x 2 or $3,000 (not 30 percent of $12,000, or $3,600).
Under the EEOC Wellness Rules, the employer can provide this $1,500 reward by any means it chooses (e.g., $500 for taking a health risk assessment, $500 for doing a biometric screening, and $500 for meeting specified health outcomes). Comparatively, the HIPAA wellness program regulations would have allowed unlimited rewards for the health risk assessment and biometric screening, and up to $1,500 for meeting specified health outcomes.
Confirm that Inducements Are Not Offered For the Disclosure of Health or Genetic Information About Children.
Although employers can offer incentives for a spouse to answer questions about current or past health status, the same is not true for adult or minor children. According to the EEOC, there is a greater possibility that information about a child’s genetic make-up or predisposition to disease could be used to discriminate against an employee, while this risk is minimal for a spouse. So although employers may offer children the opportunity to participate in wellness programs, incentives or rewards cannot be offered in exchange for their provision of health or genetic information.
Issue the Notice Required Under the EEOC Wellness Rules.
Under the HIPAA wellness program regulations, employers are required to notify employees about the availability of reasonable alternative standards for achieving a reward if, for example, a health condition precluded them from attaining it. The EEOC Wellness Rules require a much more detailed explanation in the notice, including the medical information that will be obtained, the purposes for which it will be used, the restrictions on the further disclosure of the information, and the methods the employer will use to avoid an improper disclosure. The EEOC will issue a model notice to guide employers on the satisfaction of these requirements. These notice rules are effective as of the first day of the first plan year that begins on or after Jan. 1, 2017.
Eliminate Mandatory Wellness Programs.
The EEOC specifically articulated its disagreement with some recent court decisions, including EEOC v. Flambeau, Inc., which upheld an employer’s mandatory wellness program that conditioned health plan coverage on taking a health risk assessment. According to the EEOC, the insurance safe harbor provision – which allows employers to establish, sponsor, and observe the terms of a bona fide employee benefit plan based upon underwriting risks, classifying risks, or administering risks – does not apply to wellness programs. The EEOC Wellness Rules close this perceived loophole by specifically denying the application of this exception to wellness programs and instead requiring all wellness programs to be structured as “voluntary” programs. Thus, employers should confirm they are not requiring employees to participate, not denying coverage to anyone opting not to participate, and not taking adverse employment action against employees who do not participate or achieve certain health outcomes.
Review Confidentiality Agreements and Waiver Forms.
The EEOC Wellness Rules add two new requirements pertaining to confidentiality. First, employers should be certain the information they receive about wellness program participation is in an aggregate form that does not identify the employee except as necessary to administer the health plan. And second, employers should not require an employee to agree to waive confidentiality protections under the ADA as a condition of participating in the wellness program.
Although the EEOC Wellness Rules are a step in the right direction, the commission is marching to the beat of a different drummer – a drummer with a slower, reserved pace. One thing is clear: the rules will continue to evolve as time marches on.