April 21, 2015
On April 16, 2015, the U.S. Equal Employment Opportunity Commission (EEOC) released a proposed rule that describes how the Americans with Disabilities Act (ADA) applies to employee wellness programs that include questions about employees' health or medical examinations. Although the ADA limits when employers may inquire about employees' health or require them to undergo medical examinations, these inquiries and exams are permitted if they are part of a voluntary wellness program.
The long-awaited proposed rule provides much needed guidance for employers on how to structure employee wellness programs without violating the ADA. Most importantly, the proposed rule addresses the amount of incentives that may be offered under employee wellness programs that are part of group health plans. This amount is generally consistent with HIPAA's limits on wellness program incentives, although the proposed rule does not fully incorporate HIPAA's increased incentive limit for tobacco cessation programs.
Until the rule is finalized, employers that follow the proposed rule will likely comply with the ADA's requirements for wellness programs.
The EEOC is seeking comments on the proposed rule and may make revisions to its guidance before it is finalized. While employers are not required to comply with the proposed rule before it is finalized, they may choose to do so. According to the EEOC, it is unlikely that a court or the EEOC would find an ADA violation where an employer complied with the proposed guidance until a final rule is issued. In addition, previous guidance issued regarding wellness programs under HIPAA, as amended by the Affordable Care Act (ACA), must still be complied with.
Note also that the proposed rule doesn't address the extent to which the Genetic Information Nondiscrimination Act (GINA) affects an employer's ability to condition incentives on a family member's participation in a wellness program. That issue will be addressed in future guidance.
Many employers offer workplace wellness programs as a way to help control health care costs, encourage healthier lifestyles and prevent disease. Options available to employers include offering participatory wellness programs or health-contingent wellness programs.
Participatory wellness programs do not require individuals to meet a health-related standard in order to obtain an incentive. Participatory wellness programs include, for example, subsidized fitness club memberships, reimbursement of smoking cessation classes (without regard to whether the employee quits smoking) or rewards for completing a health risk assessment (HRA) without any further action required by the employee with respect to the health issues identified by the HRA.
Health-contingent wellness programs require individuals to satisfy a standard related to a health factor in order to obtain an incentive. For example, health-contingent wellness programs may require participants to participate in exercise programs, remain tobacco-free or attain certain results on biometric screenings (for example, low cholesterol, blood glucose and blood pressure levels) to obtain an incentive.
Wellness program incentives can be framed as rewards or penalties and often take the form of prizes, cash, or a reduction or increase in health care premiums or cost-sharing.
Employee wellness programs must be carefully designed to comply with the ADA and other federal laws that prohibit discrimination based on race, color, sex (including pregnancy), national origin, religion, compensation, age or genetic information. Wellness programs that are part of group health plans must also be designed to comply with HIPAA's nondiscrimination requirements, as amended by the ACA. Under HIPAA, health-contingent wellness programs are required to follow certain standards related to nondiscrimination, including a standard that limits the amount of incentives that can be offered. The maximum reward under HIPAA for health-contingent wellness programs is 30 percent of the cost of health coverage (or 50 percent for programs designed to prevent or reduce tobacco use).
Neither the ADA nor prior EEOC guidance addressed the extent to which incentives affected the voluntary nature of a wellness program. Recently, the EEOC filed well-publicized lawsuits against a number of employers, alleging that their wellness programs violated the ADA and other federal fair employment laws. In response, Congress called on the EEOC to issue guidance on wellness programs and introduced legislation, the Preserving Employee Wellness Program Act, to provide more certainty for employers regarding wellness programs.
The EEOC's proposed rule would establish the following parameters for permissible wellness program designs under the ADA.
Examples of specific health programs that are not reasonably designed to promote health or prevent disease include:
To help employers understand the proposed guidance, the EEOC provided a set of questions and answers, which is available at http://www.eeoc.gov/laws/regulations/qanda_nprm_wellness.cfm. In addition, the Departments of Labor, Treasury and Health and Human Services jointly issued a set of Frequently Asked Questions, available at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Tri-agency-Wellness-FAQS-4-16-15pdf-AdobeAcrobat-Pro.pdf and the Department of Health and Human Services issued a set of Frequently Asked Questions at http://www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/wellness.
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