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Proposed EEOC Rules Define “Voluntary” for Purposes of Wellness Programs



The federal Equal Employment Opportunity Commission (the “EEOC”) recently released long-awaited guidance on when employees’ participation in workplace wellness programs will be considered “voluntary” for purposes of the Americans With Disabilities Act (the “ADA”) (80 Fed. Reg. 21,659 (Apr. 20, 2015)). This new guidance, in the form of proposed rules, limits the wellness incentive (or penalty) that may be imposed by an employer, in connection with its group health plan, to a maximum of 30 percent of the total cost of employee-only coverage. The proposed rules also impose notice, confidentiality, and nonretaliation requirements, as well as requiring the program to be reasonably designed to promote health or prevent disease. These new EEOC rules apply only to wellness programs that involve health-related inquiries (e.g., “health risk assessments”) or medical examinations of employees, such as biometric screenings.

The term “wellness program” encompasses a broad array of employer programs whose aim is to improve employee health and reduce the cost of health coverage. They range from offering discounted health club memberships, nutrition counseling, and weight-loss and smoking-cessation programs to fitness events, health-risk assessments, and biometric screenings (such as blood-pressure or cholesterol screening). Employers commonly offer incentives to employees to boost participation. Incentives may take the form of health plan premium reductions or surcharges, prizes, time-off awards, or other items of value. Depending on what activities and incentives they involve, if any, wellness programs may be subject to various laws, including the ADA, the Health Insurance Portability and Accountability Act (“HIPAA”), the Genetic Information Nondiscrimination Act (“GINA”), and others.

Under the ADA, an employer generally may not make “disability-related inquiries” (i.e., ask health-related questions) of employees or require employees to undergo medical examinations, although employees may voluntarily do so. (The ADA does, however, permit an employer to make disability-related inquiries or require an employee to undergo a medical exam if it is “job-related” and “consistent with business necessity.”) The EEOC’s long-held position has been that an employer violates the ADA if it offers an incentive (or penalty) under its wellness program in return for employees’ responding to health-related questions or undergoing medical exams, if the incentive/penalty is too large, because the magnitude of the incentive/penalty makes employees’ participation in the program involuntary. In recent years, the EEOC has brought enforcement actions against several employers over their wellness programs that, according to the EEOC, violated the ADA by subjecting employees to health-related questions or medical exams that were not voluntary.

Under the EEOC’s newly proposed rules, there are five requirements for a wellness program to be considered “voluntary” and therefore not in violation of the ADA when soliciting health-related information or involving employee medical examinations:

  • Maximum allowable incentive: The maximum allowable incentive that an employer may offer in connection with its group health plan in return for an employee’s answering health-related questions or undergoing a medical examination is 30 percent of the total cost of employee-only coverage under the plan (regardless of the level of coverage actually elected by the employee). “Total cost” means both the employer’s and employee’s share of the health plan premium. For example, an employer’s wellness program offers employees a reduction in their share of the monthly premium for group health plan coverage if the employee answers a series of health-related questions and undergoes some basic biometric screenings. The total monthly premium (both employer and employee portions) for employee-only coverage under the employer’s plan is $600. The maximum monthly premium reduction permitted under the ADA would be $180 (30 percent of $600).
    Note that the HIPAA nondiscrimination rules permit a maximum incentive of 50 percent of the total cost of employee-only coverage in the case of tobacco-related wellness programs. In order to take advantage of this higher-incentive threshold, an employer must design the tobacco-related wellness incentive so that it does not ask disability-related questions or require any type of medical examination. For example, a smoking-cessation program that offers a 50 percent health plan premium reduction to employees who certify that they do not use tobacco products would be permissible because it is not subject to the ADA (asking an employee whether he or she uses tobacco products is not a disability-related inquiry).

    The EEOC’s proposed rules do not specify how large an incentive/penalty may be, and the wellness program still be considered voluntary, when the incentive/penalty is not offered in connection with the employer’s health plan. The employer should use caution in designing a wellness program, because the larger the incentive or penalty, the more likely the EEOC will be to view the program as involuntary.
  • Reasonable design: The program must be reasonably designed to promote health or prevent disease. In order to meet this criterion, it must have a reasonable chance of improving the health of, or preventing disease in, participating employees. It must not be “overly burdensome,” a subterfuge for violating the ADA or other laws prohibiting discrimination, or “highly suspect” in the method chosen to promote health or prevent disease.
  • Nonretaliation: Employees cannot be required to participate in the program, the employer may not deny an employee health plan coverage or limit coverage if the employee does not participate in the program or does not achieve certain health outcomes, and the employer may not retaliate against, coerce, or threaten an employee who does not participate in the wellness program.
  • Notice: The employer must provide employees with a notice that clearly explains what medical information will be obtained under the wellness program, how the information will be used, the restrictions on disclosure of the information, and what methods will be used to ensure that medical information is not improperly disclosed.
  • Confidentiality: Information developed under the wellness program must be maintained in a confidential manner. Both the employer and the wellness program administrator, if any, bear responsibility for complying with this requirement. The employer may receive information gathered as part of the wellness program only in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals, except as necessary to administer the employer’s health plan. When the wellness program is part of the employer’s group health plan (as in the case of health plan premium reductions or surcharges), information collected under the wellness program is protected health information that is protected by the HIPAA privacy, security, and breach-notification rules. Thus, it may be disclosed to the employer that sponsors the health plan only if the employer has taken certain measures, including certifying to the plan that it will safeguard the information. If the employer is not performing plan administration functions on behalf of the group health plan, then it may receive aggregate information from the wellness program only if the information is “de-identified” in accordance with the HIPAA privacy rule.

While these rules are merely proposed, and the EEOC is soliciting comments from the public about them in order to formulate final rules, employers can and should rely on them now. According to FAQs issued by the EEOC, it is “unlikely” that the EEOC or a court would find that an employer’s wellness program violated the ADA if it complied with the EEOC’s proposed rules pending the issuance of the final rules.

As mentioned above, various other laws, in addition to the ADA, may apply to an employer’s workplace wellness program. HIPAA’s nondiscrimination provisions also impose requirements that vary depending on whether the program involves mere participation in health-related activities or whether it makes an incentive/penalty contingent on the employee’s ability to satisfy a health-related standard. Additionally, GINA prohibits wellness programs from increasing an employee’s health plan premiums or contributions based on genetic information, which includes family and spouse medical history. Also, any reward that is provided for completion of a health-risk questionnaire that asks for genetic information is a violation of GINA.

If you have questions about the EEOC’s guidance, or other laws, please contact the benefits and employment attorneys at Miller Nash Graham & Dunn.

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