Benefit News

EEOC Releases Proposed Wellness Program Rules

January 13, 2020

On January 7, 2021, the Equal Employment Opportunity Commission (EEOC) issued two proposed rules on wellness programs under the Americans with Disabilities Act (ADA) (available here) and the Genetic Information Nondiscrimination Act (GINA) (available here). These proposed rules were issued in response to a federal court decision that vacated a portion of EEOC regulations describing the incentives that an employer could offer:

  • Under the ADA as part of wellness programs that ask about employees’ health and/or ask them to undergo medical examinations; or
  • Under GINA to an employee whose spouse provides information about the spouse’s manifestation of disease or disorder as part of a wellness program.

Please note: These rules are proposed only, and thus, subject to change. The public has 60 days to review the proposed rule and provide comments to the EEOC. Upon completion of the review period, the EEOC then has an additional 30 days to take the comments into consideration and finalize the rule. In addition, when the Biden Administration takes office next week, all current guidance in the pipeline that hasn’t been finalized, will in effect be frozen pending further review by the new administration. It remains to be seen whether it will support the proposed regulations as currently written.

Background

Under the ADA, an employer may make disability-related inquiries and require medical examinations after employment begins only if they are job-related and consistent with business necessity. However, these inquiries and exams are permitted if they are part of a voluntary wellness program. In 2016, the EEOC issued a final rule that established a 30 percent limit on the permissible incentives a wellness program could offer for participation while still qualifying for the ADA exception for voluntary wellness programs.

GINA's restrictions apply to a wellness program when it requests genetic information (for example, family health history). In 2016, the EEOC issued a separate final rule that allowed an employer to offer limited incentives for an employee's spouse to provide current or past health status information as part of a wellness program. Under the final rule, the maximum incentive attributable to a spouse's participation could not exceed 30 percent of the total cost of self-only coverage, which was the same as the incentive allowed for the employee under the final ADA rule.

In 2017, the AARP challenged these limits and sued the EEOC, arguing that the 30 percent limit was arbitrary and inconsistent with the voluntary requirements of the ADA and GINA, and the U.S. District Court for the District of Columbia agreed. In response to the court’s decision, the EEOC amended the ADA and GINA regulations to remove the incentive limit provisions, effective January 1, 2019.

Proposed Changes to ADA Rule

The proposed rule responds to the courts finding that the 30 percent incentive limit is not an appropriate measure for voluntariness, so it defines what is meant to be “voluntary” and in lieu of the 30 percent limit, imposes a de minimis standard for most wellness programs that include disability-related inquiries and/ or medical examinations. Specifically, the proposed rule would amend two sections of the ADA regulations related to (1) medical examinations and inquiries specifically permitted; and (2) health insurance, life insurance and other benefit plans.

For purposes of the proposed rule, a wellness program is any program of health promotion or disease prevention that includes disability-related inquiries or medical examinations. There are two types: (1) participatory, and (2) health-contingent. Furthermore, wellness programs that do not include disability-related inquiries or medical examinations are not subject to the proposed rule.

Permitted Incentives under the Proposed ADA Rule

  • De Minimis Incentives for Participatory Wellness Programs. The proposed rule adopts the view that allowing too high of an incentive would make employees feel coerced to disclose protected medical information to receive a reward or avoid a penalty and, therefore, states that most wellness programs that include disability-related inquiries and/or medical examinations may offer no more than de minimis incentives to encourage employees to participate. While the term “de minimis” is not defined in the proposed rule, examples noted include a water bottle or a gift card of modest value. The proposed rule also provides a couple of examples of incentives that would not be de minimis. For example, charging an employee $50 per month more for health insurance for not completing a health risk assessment (HRA) as part of a participatory wellness program would not be a de minimis incentive. Incentives such as paying for an employee’s annual gym membership or rewarding an employee with airline tickets also would not be de minimis.
  • ADA Safe Harbor for Health-contingent Wellness Programs. Health-contingent wellness programs that are part of, or qualify as, group health plans, are an exception to the de minimis standard. The proposed rule restricts the ADA safe harbor to apply only to these types of wellness programs and permits them to offer the maximum allowed incentive under existing HIPAA regulations (currently, 30 percent of the total cost of coverage, or 50 percent to the extent that the wellness program is designed to prevent or reduce tobacco use), as long as the wellness program complies with the five HIPAA nondiscrimination requirements for these plans.

Health-Contingent Wellness Programs

Under the proposed rule, the ADA safe harbor would apply only to health-contingent wellness programs that are part of, or qualify as, group health plans. There are four factors that the EEOC believes are helpful in determining when a wellness program is part of a group health plan for purposes of the ADA:

  • The program must be only offered to employees who are enrolled in an employer-sponsored health plan;
  • Any incentive offered must be tied to cost-sharing or premium reductions (or increases) under the group health plan;
  • The program must be offered by a vendor that has contracted with the group health plan or issuer; and
  • The program must be a term of coverage under the group health plan.

Meaning of “Voluntary” under the Proposed ADA Rule

A wellness program is considered “voluntary” as long as it doesn’t:

  • Require employees to participate in the wellness program;
  • Deny coverage under any of its group health plans or a particular benefits package within a group health plan for non-participation or limit the extent of benefits (except as permitted under the proposed rule) for employees who do not participate;
  • Take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees in a manner prohibited under the ADA; and
  • Offer more than a de minimis incentive in exchange for an employee participating in the wellness program unless the program is a health-contingent wellness program that falls within the ADA safe harbor.

Other Requirements

The proposed rule retains the confidentially protections that exist in the 2016 final rule, including the exceptions for disclosure. Medical information collected through a wellness program may be provided to a [HIPAA] covered entity only in aggregate terms that do not disclose, or are not reasonably likely to disclose, the identity of specific individuals. EEOC anticipates that a program that is part of a [HIPAA] covered entity likely will be able to comply with its confidentiality obligations under the proposed rule by complying with the HIPAA Privacy, Security and Breach Notification Rules.

However, unlike the 2016 final rule, the new proposed rule no longer requires employers to issue a unique ADA notice that describes, among other things, the type of medical information that will be obtained and the purposes for which the information will be used. The proposed rule also provides that, regardless of whether notice is given, employers may not condition participation in a wellness program on an employee allowing information to be disclosed to a third party.

Proposed Changes To GINA Rules

The proposed GINA rule addresses the extent to which an employer may offer incentives to an employee in exchange for the employee’s spouse (or other family member) providing information about that family member’s manifestation of disease or disorder and/or for that family member to achieve health outcomes as part of an employer-sponsored wellness program. Information about a family member’s manifestation of disease or disorder is one type of genetic information about the employee (also known as “family medical history”) but is not genetic information about the family member for purposes of Title II of GINA. The general prohibition on providing incentives in return for genetic information would remain. However, the rule describes certain situations in which incentives (financial or in-kind) could be provided without violating Title II of GINA, subject to an individual voluntarily providing written authorization designed in a way so as to be reasonably understood by such individual.

  • De minimis Incentives. The proposed rule would allow a limited exception where wellness programs could offer a de minimis incentive to all family members—not just spouses—in exchange for family members providing information about their manifestation of diseases or disorders. For example, a water bottle or a gift card of modest value for each participating family member would clearly be de minimis.
  • Health Risk Assessments. Incentives may be offered for completion of an HRA that includes questions about family medical history or other genetic information, provided the HRA clearly specifies, in language reasonably likely to be understood by those completing the HRA, that the incentive would be made available even if the participant doesn’t answer the questions regarding genetic information.
  • Disease Management Programs. Incentives may be offered to encourage individuals who have provided genetic information (e.g., family medical history) that indicate that they are at increased risk of acquiring a health condition in the future to participate in disease management programs or other programs that promote healthy lifestyles, and/or to meet particular health goals as part of a health or genetic service. However, to comply with Title II of GINA, these programs must also be offered to individuals with current health conditions and/or to individuals whose lifestyle choices put them at increased risk of developing a condition.

For additional information, please contact your Burnham Consultant or Burnham, A Baldwin Risk Partner at 949‐833‐2983 or inquiries@burnhambenefits.com.


Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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