(This article was amended Jan. 25, 2017 to add the section entitled “Limits on Inducements for Spouses.”)
The U.S. Equal Employment Opportunity Commission (EEOC) issued two final rules on how employer wellness programs can comply with Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA). Both rules were published in the May 17, 2016 Federal Register, along with Question-and-Answer documents for ADA and GINA, and Fact Sheets for Small Businesses on ADA and GINA.
- The ADA final rule applies to all workplace wellness programs that make disability-related inquiries (e.g., health risk assessments) or require medical examinations (e.g., biometric or lab tests, tests for nicotine use). This applies to both participatory and health-contingent wellness plans. The ADA rule does not apply to wellness programs that do not make disability-related inquiries or require medical examinations.
- The GINA rule applies to all wellness programs that request, require or purchase genetic information about employees or their family members. Genetic information includes a family member’s medical history or health information.
- Both rules apply to wellness plans that require participation in the employer group health plan and those that do not, and to plans that are offered only for employees or also for family members. However, employers with fewer than 15 employees are not subject to either rule.
Employer wellness programs are also subject to rules under the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA). Those final rules were issued in June 2013 by the Departments of Labor, Health and Human Services, and Treasury (they are known as the “tri-department” rules).
The EEOC final rules issued May 17th contain some differences from the 2013 tri-department rules. This is because the EEOC rules implement ADA and GINA, and the 2013 rules implement HIPAA and the ACA. Employers should review their wellness program provisions to ensure they are in compliance with the new EEOC final rules as well as the tri-department rules.
“Applicability Date” of the Final Rule
The “applicability date” is the date the new regulations are effective or the date they apply. Although the EEOC regulations provide that the applicability date is plan years beginning on or after January 1, 2017, most of the provisions in the final rules apply immediately. Actually, as the EEOC states, they apply “both before and after publication of the final rule” because they “simply clarify existing obligations.”
However, there are two provisions that (although they were part of the proposed rules issued on October 30, 2015) do not apply until the first day of the 2017 plan year. These two provisions are:
- the requirement to provide a notice that clearly explains to employees what medical information will be obtained and how it will be used (see below in section entitled Required Employer Notice, and also Q&A 10 of the ADA Fact Sheet) and
- the limits on incentives (see below in section entitled Limits on Incentives to Participate, and see Q&As 12 – 14 of the ADA Fact Sheet).
Background on the ADA
Title I of the ADA is a federal civil rights law that prohibits employers from discriminating against individuals on the basis of disability in regard to employment compensation and other terms and conditions, and it requires employers to provide reasonable accommodations to individuals with disabilities to allow them equal access to wellness programs and other fringe benefits. Additionally, the ADA generally prohibits employers from obtaining employee medical information by making disability-related inquiries or requiring medical examinations, unless such information is obtained from voluntary employee health programs such as wellness programs. The ADA also requires employers to keep all medical information confidential.
The EEOC has been concerned that some employer wellness programs are collecting employee medical information but are not truly voluntary, because the penalties on employees who choose not to participate are so high they are coercive. EEOC issued this final rule to address the question of what incentives employers may offer to employees to participate in wellness programs that ask them to answer disability-related questions or undergo medical examinations. The rule also explains how the ADA’s requirements for voluntary health programs differ from those of other federal laws such as HIPAA as amended by the ACA.
The ADA Final Rule on Wellness Programs
The final ADA rule addresses what makes a wellness program “voluntary” if it makes disability-related inquiries or requires medical examinations. The four requirements for a “voluntary” wellness program are:
- It must be “reasonably designed to promote health or prevent disease.”
- Employees who elect not to participate in the wellness program cannot be denied access to health coverage or to certain benefits options. (No “gateway” wellness programs.)
- Employers must provide a notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure.
- Incentives to participate must be limited to not more than 30% of the total cost of employee-only coverage in the group health plan. The 30% limit applies to all incentives, whether financial or in-kind, including smoking cessation programs that test for nicotine use.
Additionally, the final ADA rule adds two new requirements about the confidentiality of medical information and limits employers’ ability to receive individually-identifiable wellness information.
The four requirements for a “voluntary” wellness program are detailed below.
1) “Reasonably designed” to promote health or prevent disease
A “reasonably designed” wellness program cannot require an overly burdensome amount of time for participation, involve unreasonably intrusive procedures, be a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or require employees to incur significant costs for medical examinations.
Examples of reasonably designed programs:
- A wellness program that asks employees to answer questions about their health conditions or have a biometric screening or other medical examination for the purpose of alerting them to health risks (such as having high cholesterol or elevated blood pressure).
- A wellness program that collects and uses aggregate information from employee HRAs to design and offer programs aimed at specific conditions prevalent in the workplace (such as diabetes or hypertension).
Examples of programs that are NOT reasonably designed:
- A program that asks employees to provide medical information on a HRA without providing any feedback about risk factors or without using aggregate information to design programs or treat any specific conditions.
- A wellness program that “exists merely to shift costs from the employer to employees based on their health or is used by the employer only to predict its future health costs.”
2) Employees who decline to participate cannot be denied access to health coverage or to certain benefit options
These programs are sometimes referred to as “gateway” wellness programs, which are not allowed. Specifically, an employer:
- may not require any employee to participate;
- may not deny any employee who does not participate in a wellness program access to health coverage or prohibit any employee from choosing a particular plan; and
- may not take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten any employee who chooses not to participate in a wellness program or fails to achieve certain health outcomes.
3) Employer must provide specific Notice to employees
Employers must provide a notice that clearly explains:
- what medical information will be obtained,
- how it will be used,
- who will receive it, and
- the restrictions on disclosure.
If an employer already clearly provides the information required by this rule, such as in a brochure or email that describes the details of the wellness program, an employer does not have to create a new notice. Since these requirements were in the proposed regulations, some employers may already have included them in their notices to employees. Employers who do not already provide the level of detail required will have to provide a new notice, by the first day of the 2017 plan year.
4) Limits on incentives to participate must be limited to no more than 30% of the total cost of employee-only coverage
The final rule limits financial incentives to participate to not more than 30% of the total cost (employer and employee contribution) of self-only coverage under the group health plan connected with the wellness program. An alternative is provided if the employer offers only a wellness program and not a group health plan. A special rule applies for smoking cessation wellness programs.
NOTE that for smoking cessation programs the EEOC final rule is more stringent than the earlier wellness rules under the ACA. The ACA wellness rule allows the maximum reward/penalty for smoking cessation programs to be 50% of the cost of health plan coverage, while the EEOC rule limits it to not more than 30%. For additional details, see below in section entitled Special Rule on Limits on Smoking Cessation Programs.
The financial incentive limits in the EEOC final rule are as follows:
- If a wellness program is open only to employees enrolled in a particular plan, the maximum allowable incentive an employer can offer is 30% of the total cost for self-only coverage of the plan in which the employee is enrolled.
- When an employer offers more than one group health plan but participation in a wellness program is open to all employees regardless of whether they are enrolled in a plan, the employer may offer a maximum incentive of 30% of the lowest cost major medical self-only plan it offers.
- If an employer does not offer health insurance but wants to offer an incentive for employees to complete a HRA or to have annual tests that check their glucose and cholesterol levels, the employer could offer an incentive up to 30% of the cost that a 40-year-old non-smoker would pay for self-only coverage under the second lowest cost Silver Plan on the state or federal health care Exchange in the location that the employer identifies as its principal place of business.
The 30% limit does not apply to wellness programs that do not obtain medical information but simply require employees to engage in a certain activity (such as attending a nutrition or weight loss class or walking a certain amount every week) in order to earn an incentive. (These are known as “participatory” wellness programs.) However, participatory wellness programs must be “reasonably designed” to promote health or prevent disease, and employers must provide “reasonable accommodations” to allow employees with disabilities to earn the same incentives. Examples of reasonable accommodations include: providing a sign language interpreter for deaf attendees at a smoking cessation or nutrition class, or offering an alternative to a walking program for an employee who uses a wheelchair.
Limits on Inducements for Spouses
The EEOC issued final wellness rules under the Genetic Information Nondiscrimination Act (GINA) as well as under the ADA. The GINA rule only applies if an employer offers an inducement for an employee’s spouse to answer questions about his or her current or past health status (in a Health Risk Assessment (HRA), for example) or to take a medical examination (biometric screening or a blood draw, for example). The GINA rule imposes the same limits on the maximum amount of the inducement for the spouse as the ADA rule imposes on inducements for the employee. Thus, the maximum amount of the inducement on either the employee or the spouse is 30% of the total cost of self-only coverage under the group health plan in which the employee and family members are enrolled. Note that this is NOT the same as 30% of the cost of family coverage. Rather, it is two times 30% of the total cost of self-only coverage.
For example, if an employee enrolls herself and family in family coverage at a total cost of $14,000 (including both employee’s and employer’s contributions to the premium) and that plan also has a self-only option for a total cost of $6,000, the maximum inducement for the employee’s spouse to provide health information is $1,800 (30% x $6,000). This same limit also applies (under the ADA rule) for the employee. Thus, the maximum inducement for both the employee and spouse would be $3,600. It would not be 30% of the total cost of family coverage, which would be 30% x $14,000 or $4,200. Additionally, if an employer imposes a penalty if the employee participates but the spouse does not, that penalty cannot be more than 30% of the total cost of self-only coverage (i.e., $1,800 in this example).
The GINA rule applies even if the wellness program is not offered through a group health plan, if an inducement is offered to spouses to take an HRA or a medical exam. This could be the case, for example, if the employer does not offer a group health plan but does offer a wellness program, or if the employer offers a group health plan but also offers the wellness program to employees and spouses who do not enroll in the group health plan. The special ADA rules noted in the bullet points above apply the same under the GINA rule (i.e., 30% of the lowest cost major medical self-only plan the employer offers, or 30% of the cost a 40-year-old non-smoker would pay for self-only coverage under the applicable second lowest cost Silver Plan. In these cases, obviously, the inducement would only be a potential financial incentive for the employee, not a surcharge on the employee’s cost of group health plan coverage (because the employee would not be paying for group health plan coverage through the employer).
If the spouse is not asked to answer health status questions or take a medical exam, the GINA rule does not apply. Nor does it apply if the spouse is only asked to engage in certain activities that do not include providing health status information (such as attending a weight loss or nutrition program).
Special rule on limits on smoking cessation programs:
The EEOC ADA rule only applies to wellness programs that ask disability-related questions or require medical examinations. It does not apply to wellness programs that merely ask employees if they smoke. Therefore, a wellness program that merely asks employees whether or not they use tobacco (or whether they ceased using tobacco by the end of the program) is not a wellness program that is subject to the ADA. This means that the ADA final rule’s 30% incentive limit does not apply, and an employer can offer an incentive up to 50% of the cost of self-only coverage, consistent with HIPAA and the ACA. However, where an employer requires any biometric screening or other medical procedure that tests for the presence of nicotine or tobacco, the maximum incentive or penalty amount is 30% of the cost of self-only coverage. (This distinction was made in the EEOC proposed rule and the final rule continues it.)
Two New Requirements on Confidentiality of Medical Information
The ADA final rule adds two new requirements about the confidentiality of medical information. These requirements were not in the proposed rule issued on October 30, 2015:
- First, an entity covered by these rules may only may receive information collected by a wellness program in aggregate form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals except as is necessary to administer a health plan. The final rule does not specify or define what would be “necessary” to administer the health plan as opposed to merely “desirable” in administering the health plan.
- Second, an employer may not 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. This means that an employee must be allowed to participate in the biometric screening or take the health risk assessment even if the employee refuses to allow the results to be shared with the employer or a third-party data analysis company, unless the ADA permits the disclosure of such information to carry out specific activities related to the wellness program (not to the group health plan or the employer‘s management of it). For example, it appears that if the wellness program included a smoking cessation program for employees who smoke, the employer could restrict participation only to those employees who agreed to have their medical information shared with the employer or the wellness program coordinator.