On Monday, the Equal Employment Opportunity Commission (EEOC) finalized its wellness program regulations under both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The regulations go into effect in January 2017, and apply to all workplace wellness programs, including those provided to employees outside of the employer’s health plan. The final regulations closely track the EEOC’s proposed rules and will generally allow employers to provide certain limited incentives in exchange for employees providing health information or undertaking medical examinations as part of a voluntary wellness program.
Employee Medical Information
Both the ADA and GINA generally prohibit employers from obtaining or using employee medical information (including genetic information). However, both laws (and the now-final regulations) allow employers to ask health-related questions or conduct medical examinations, such as biometric screenings, to determine risk factors as part of a voluntary employer-sponsored wellness program, as long as certain conditions are met. The GINA rules are primarily focused on resolving an issue from prior regulations: whether employers can collect genetic information as part of a wellness program for spouses of employees who participate in the employer’s health plan. The EEOC’s final GINA regulations clarify that spouses can, in fact, provide this information and receive incentives for doing so as part of a wellness program. The ADA rule more broadly addresses the issue of employee participation in wellness programs.
Both final regulations require that the wellness programs promote health or prevent disease. In other words, the wellness program must have a reasonable chance of improving the health of participating employees. The wellness program must also not be overly burdensome, be a subterfuge for violating the ADA or GINA (or other employment laws prohibiting discrimination), or be highly suspect in the method chosen to promote health or prevent disease. For example, conducting a health risk assessment (HRA) or a biometric screening of employees to advise them of certain health risks is an example of a program that would reasonably be designed to promote health. However, asking employees to provide medical information through an HRA without providing any feedback about risk factors would not.
In addition, the ADA regulations require that employers provide a reasonable accommodation (adjustments or modifications) to any wellness program for an employee with a disability.
The EEOC’s final regulations for the ADA and GINA require that employee health information be disclosed to an employer only in aggregate terms, so that individually identifiable information is not provided. The ADA regulations require that employers provide notice to employees participating in the wellness program as to what information will be collected, with whom it will be shared and for what purpose, any limits on disclosure, and how the information will be kept confidential. Under GINA, employers must obtain prior knowing, voluntary authorization in writing, before requesting and obtaining genetic information from an employee or spouse.
Limits on Financial Incentives
The maximum incentives an employer can provide to an employee for participating in a wellness program is one of the key aspects of the rules. Under the ADA, the maximum incentive (or, conversely, the maximum penalty) is limited to the following:
- Where the employer requires the employee to be enrolled in a particular health plan in order to participate in the wellness program, the incentive to the employee may not exceed 30 percent of the total cost of the self-only version of the plan in which the employee is enrolled.
- Where the employer offers more than one self-only health plan, and does not require the employee to be enrolled in a particular health plan in order to participate in the wellness program, the incentive may not exceed 30 percent of the lowest cost major medical self-only plan offered by the employer.
- Where the employer does not offer a health plan, and offers a wellness program that is open to employees, the incentive may not exceed 30 percent of the total cost to a 40-year-old non-smoker purchasing self-only coverage under the second lowest cost Silver Plan available on the state or federal Affordable Care Act (ACA) Exchange in the location that the employer identifies as its principal place of business.
The final regulations still conflict with the Health Insurance Portability and Accountability Act’s (HIPAA) regulations allowing for varying (and greater) incentives based on the type of wellness program, including whether the program offers a tobacco-cessation initiative. Specifically, the regulations still distinguish between wellness programs that merely ask whether an employee uses tobacco or one in which the employee is tested for the presence of nicotine or tobacco. In the latter case, the maximum allowable incentive is 30 percent rather than the 50 percent incentive allowed under HIPAA.
GINA’s incentive rules mirror those of the ADA’s, but specify that the maximum value of the 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. In addition, it states that no incentives are allowed in exchange for the current or past health status information of employees' children.
A previously discussed by Nemeth Law, some courts have applied the so-called “safe harbor” provision of the ADA to employee wellness programs. The safe harbor provision states broadly that ADA does not restrict an employer from establishing or administering terms of a bona fide benefit plan that are based on underwriting, classifying or administering risks. The EEOC’s final regulations spend significant time addressing the safe harbor provision, stating that the provision applies only to insurers and health plan sponsors, in order to use information about risks posed by certain health conditions to make decisions about insurability and the cost of insurance. Accordingly, the EEOC takes the position that “the safe harbor provision does not apply to employer wellness programs, since employers are not collecting or using information to determine whether employees with certain health conditions are insurable or to set insurance premiums.” Whether courts will adopt the EEOC’s reasoning remains to be seen. It is highly likely that the applicability of the safe harbor provision will be litigated. Employers should, however, err on the side of caution and follow the EEOC’s final regulations for the time being.
Importantly, this is just a summary of some of the major aspects of the new rules. An employer should strongly consider conferring with legal counsel prior to the design and implementation of any employer-sponsored wellness program. Employers with existing wellness programs should immediately review their program design to ensure compliance.
Image credit: commons.wikimedia.org