- The U.S. Equal Employment Opportunity Commission (EEOC) has issued a final rule to amend the regulations and the accompanying interpretive guidance implementing Title I of the Americas with Disabilities Act (ADA) as those regulations relate to employer wellness programs.
- The EEOC also amended the regulations and interpretive guidance implementing Title II of the Genetic Information Nondiscrimination Act (GINA).
- Both final rules allow employers to provide limited financial and other incentives in exchange for an employee answering disability-related questions or taking medical examinations as part of a wellness program.
- The final rules will apply, prospectively, to wellness programs on the first day of the first plan year that begins on or after Jan. 1, 2017.
Increasingly, more employers are offering workplace wellness programs to promote and encourage healthier lifestyles for their employees and to prevent disease. These programs often involve medical questionnaires, health risk assessments (HRAs) and biometric screenings to determine employees' health risk factors such as weight, cholesterol, glucose and blood pressure levels. Some employers and health insurance plans offer incentives, financial and otherwise, to employees who participate in wellness programs or achieve certain health outcomes. Those all seem to be positive steps, but the use of incentives to boost participation in wellness programs came under fire when the General Counsel for the U.S. Equal Employment Opportunity Commission (EEOC) filed several lawsuits against employers alleging that their wellness programs violated federal law.
The EEOC issued a final rule on May 17, 2016, to amend the regulations and the accompanying interpretive guidance implementing Title I of the Americas with Disabilities Act (ADA) as those regulations relate to employer wellness programs. The EEOC also amended the regulations and interpretive guidance implementing Title II of the Genetic Information Nondiscrimination Act (GINA). GINA is a federal statute that protects job applicants, current and former employees, labor union members, and apprentices and trainees from discrimination in employment based on their genetic information. GINA also restricts, with a few very narrow exceptions, employers and other entities from requesting, requiring or purchasing genetic information. The GINA final rule clarifies that an employer may offer a limited incentive for an employee's spouse to provide information about the spouse's current or past health status as part of a voluntary wellness program.
Both final rules allow employers to provide limited financial and other incentives in exchange for an employee answering disability-related questions or taking medical examinations as part of a wellness program. Specifically, the ADA final rule limits the incentive that an employer can offer for participation in a wellness program to 30 percent of the total cost for employee-only insurance coverage. Similarly, the final GINA rule limits the maximum incentive allowable for a spouse's participation in an wellness plan to 30 percent of the cost of self-only coverage and prohibits incentives for providing the current or past health status information of employee's children or in exchange for certain genetic information of an employee (e.g., results of genetic testing or family medical history). Importantly for employers, the two final rules address, to some extent, the differences between the requirements for voluntary wellness programs under the ADA and GINA, as well as those of other federal laws implicated by wellness programs that are part of a group health plan: the Affordable Care Act (ACA) and the Health Insurance Portability and Accountability Act (HIPAA).
Voluntariness Under the ADA
The EEOC defines "wellness programs" as health promotion and disease prevention programs and activities offered to employees as part of an employer-sponsored group health plan or separately as a benefit of employment. Under the ADA, all such programs that require disability-related inquiries and/or medical examinations must be "voluntary." Unlike HIPAA and the ACA, the ADA makes no distinction between wellness programs that are part of or outside of an employer-sponsored group health plan. (The requirements of HIPAA and the ACA apply only to wellness programs that are part of group health plans.)
For an employee's participation in a wellness program, as defined above, to be considered voluntary, the employer must meet the following criteria:
- employee participation may not be required
- any employee who does not participate in a wellness program may not be denied access to health coverage or prohibited from selecting a particular plan offered by the employer
- employer may not take any adverse action or retaliate against, interfere with, coerce, intimidate or threaten any employee who a) chooses not to participate in a wellness program or b) fails to achieve certain health outcomes;
- employer must provide notice that clearly explains to the employees what medical information will be obtained in connection with the program, how it will be used, who will receive it and the restrictions on disclosure
Finally, for the program to be considered voluntary under the ADA, the employer must comply with certain incentive limits. When an employer requires the employee to be enrolled in a particular health plan to participate in the wellness plan, the incentive to participate cannot exceed 30 percent of the total cost of the self-only version of the health plan. When more than one self-only health plan is offered and the employer does not require the employee to be enrolled in a particular one to participate in the wellness plan, the incentive cannot exceed 30 percent of the lowest-cost, self-only plan the employer offers. When the employer does not offer a health plan but offers a qualifying wellness program that is open to employees, the incentive may not exceed 30 percent of the total cost for a 40-year old nonsmoker to purchase self-only coverage under the second-lowest-cost Silver Plan available on the ACA state or federal exchange in the location identified by the employer as its primary place of business.
The GINA final rule allows that an employer may offer a limited incentive to an employee whose spouse receives health or genetic services offered by the employer – including as part of a wellness program – and provides information about his or her current or present health status. If a wellness program is open to only employees and family members in a particular group health plan, the maximum incentive for the employee's spouse to health information is 30 percent of the total cost of self-coverage under the group health plan in which the employee and family are enrolled. The "employee-only" or self-coverage limitation puts the EEOC rules at odds with incentive caps under the wellness rules interpreting the ACA issued by the departments of Health and Human Services, Treasury and Labor, which permit employers to offer incentives based on the cost of the group health plan the employee selects – whether employee-only or family coverage. Even if the employer offers no group health plan at all, it may still, under GINA, offer incentives for spouse participation in wellness programs. However, no incentives are allowed in exchange for current or past health information about employees' children or for specified genetic information about employees, their spouses or children.
In addition to being voluntary, employee health programs under the new rules must be "reasonably designed to promoted health or prevent disease." To meet this standard under the ADA, a wellness program cannot require an overly burdensome amount of time for participation, involve unreasonably intrusive procedures, be a subterfuge for violating laws prohibiting employment discrimination or require employees significant costs for medical examinations. For example, collecting employee medical information from an HRA without providing any feedback about risk factors or without using aggregate information to design programs or treat any specific conditions prevalent in the workplace would not be reasonably designed to promote health or prevent disease. Similarly, under GINA, a wellness program will not be considered reasonably designed when it exists to shift costs from an employer to the employees based on their health; is used by an employer to predict future health costs; or imposes unreasonably intrusive procedures, an overly burdensome amount of time for participation or significant costs related to medical exams on employees.
The Final Rules Include New Confidentiality/Retaliation Provisions
The final rule does not change the language pertaining to confidentiality already contained in the existing ADA regulations, including the exceptions to confidentiality, but it does add two new requirements. First, a covered employer entity may receive only that information collected by a wellness program in aggregate form that does not disclose and is not reasonably likely to disclose identities of specific individuals, except as necessary to administer the health plan. Second, the employer cannot require an employee to agree to the sale, exchange, sharing, transfer or other disclosure of medical information, or to waive confidentiality protections under the ADA as a condition for participating in a wellness program or receiving an incentive for participating, except to the extent permitted by the ADA to carry out specific activities related to the wellness program. GINA's final rule includes a prohibition against an employer requiring an employee or spouse to agree to the sale, exchange, transfer or other distribution of health information in exchange for an incentive or as a condition to participation in a wellness program. Also, employers are expressly prohibited from denying access to health insurance or any package of benefits to, or retaliating against, employees whose spouses refused to provide information about their current or past health status to an employer wellness program.
Tobacco/Smoking Cessation Under the ADA Final Rule
The final rule draws a distinction between smoking cessation programs that require employees to be tested for nicotine use versus programs that only ask employees if they smoke. A wellness program that merely asks employees whether or not they use tobacco and whether they ceased using tobacco by the end of the program, does not qualify as a wellness program that asks disability-related questions. Accordingly, the rule's 30 percent incentive limit does not apply and an employer may offer an incentive of up to 50 percent of the cost of self-only coverage, as permitted under HIPAA as amended by the ACA. However, when an employer requires biometric screening or another medical procedure to test for the presence of nicotine or tobacco, the 30 percent incentive limitation would apply.
ADA Safe Harbor Provision, Applicable to Insurance, is Not Applicable to Employer Wellness Programs
The ADA safe harbor provision allows insurers and plan sponsors (including employers) to use information, including actuarial data, about risks posed by certain health conditions to make decisions about insurability and about the cost of insurance as long as such practices are consistent with the laws governing insurance and are not subterfuge to violate the ADA. This safe harbor does not apply to employer wellness programs, even if the program is part of an employer's health plan, because, in that context, employers are not collecting or using information to determine whether employees with certain health conditions are insurable or to set insurance premiums.
What Should Employers Do?
The obvious first step for employers is to review their existing wellness programs to determine what, if any, changes are required to bring those programs into compliance with the new rules. The EEOC rules provide a roadmap for employers to draft or revise wellness plans that, by the EEOC's standards, comply with the ADA and GINA. Specifically, employers should ensure that the information requested or medical testing involved in their wellness plans does not exceed that permitted by the rules. Additionally, employers should confirm that their wellness plans satisfy the criteria for voluntariness set forth in the final rules. This includes making sure that the employer is providing proper notice under the final rules, describing the information to be collected as well as how that information will be used and kept confidential. Similarly, employers should make sure that any incentives offered in connection with these wellness plans are in line with what the regulations now permit.
The EEOC final rules will apply, prospectively, to wellness programs on the first day of the first plan year that begins on or after Jan. 1, 2017.