Many employers use wellness incentive programs to encourage their employees to lead healthy and active lifestyles. Wellness programs often include questionnaires or health assessments that request employees’ private health information. Although the programs are explicitly allowed under federal laws like the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA), it was arguably less clear how the programs interact with health-related antidiscrimination laws. However, on May 16, 2016, the Equal Employment Opportunity Commission (EEOC) issued final rules that amended regulations implementing the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), shedding some light on the issue.
What is a ‘voluntary health program’?
The ADA and Title II of GINA generally prohibit employers from obtaining and using the health information of employees and their spouses, but those laws have a special exception that allows employers to ask for limited health information as part of a “voluntary health program.” The new rules attempt to provide clarification on when—in the EEOC’s view—wellness incentive programs qualify as voluntary health programs.
The new rules specifically note that for a wellness program to be “voluntary,” the employer can’t (1) require participation, (2) deny insurance coverage or prohibit certain plan options to employees who elect not to participate, or (3) take adverse action or otherwise retaliate against nonparticipants. Furthermore, the program must be reasonably designed to promote health and prevent disease, and it can’t be unduly burdensome on employees’ time, require employees to incur costs, require unreasonably intrusive procedures, or be used as a “subterfuge” for violations of antidiscrimination laws.
Under the new rules, employers may provide incentives to encourage employees’ spouses to participate in a wellness plan, but employers may not provide incentives for the past or current health information of employees’ children. Some genetic information of employees and their spouses and children (including family medical history and genetic test results) may not be used in incentive programs.
Financial incentive limits
Perhaps most important, the new regulations place specific limits on the size of allowable financial incentives, with the assumption that larger incentives would affect the “voluntary” nature of wellness plans. Under the ADA, the maximum financial incentive allowed is 30% of the total cost of self-coverage in a health insurance plan or 30% of the cost of self-coverage in the least expensive plan if multiple plans are offered. Similarly, under GINA, the maximum incentive for spousal participation is 30% of self-coverage costs. For an employer that offers a wellness incentive plan but not health insurance, the 30% maximum is calculated using the second-lowest-cost silver plan on the federal healthcare exchange for a 40-year-old nonsmoker in the location the employer identifies as its principal place of business.
Both of the final rules, which become effective January 1, 2017, will apply to all workplace wellness programs. The rules are detailed, so the EEOC has provided Q&A documents as well as a Small Business Fact Sheet to assist employers at the following sites:
- https://www1.eeoc.gov/laws/regulations/facts-ada-wellness-final-rule.cfm; and
The full text of the rules may be found at:
- https://www.federalregister.gov/articles/2016/05/17/2016-11558/regulations-under-the-americans-with-disabilities-act; or
Employers with wellness programs, or companies that are thinking about instituting wellness plans, should become familiar with the final rules to avoid popping up on the EEOC’s radar. In that regard, make sure you are in compliance with certain requirements of the ADA and GINA:
- Do not require employees to participate in your wellness plan.
- Do not deny health insurance to employees who do not participate in your wellness plan.
- Do not take any adverse action or retaliate against employees who do not participate in your wellness plan or who fail to achieve certain health outcomes.
- Provide reasonable accommodations to allow disabled employees to participate in your wellness program and obtain any incentives offered for certain health outcomes.
Because the legal requirements governing wellness plans are complex, it’s advisable to consult with employment counsel well versed in this area of the law to ensure that your plan won’t become the subject of a legal challenge.
The new rules will apply to all employer-sponsored wellness programs starting on the first day of the first plan year beginning on or after January 1, 2017. Employers should not only review their plans to ensure compliance with the new rules before their next plan year begins, but they also should closely review all notices and literature provided to employees to ensure they reflect the changes and clarifications.