United States: EEOC Issues Proposed Regulations On Wellness Programs And The ADA

On April 20, 2015, the Equal Employment Opportunity Commission (EEOC) issued highly anticipated proposed regulations addressing the application of the Americans With Disabilities Act (ADA) to workplace wellness programs. In recent years, the EEOC has been sharply criticized for challenging employers' wellness programs under the ADA despite not having issued regulations addressing those programs. Its willingness to bring litigation against employers combined with its inaction on the regulatory front have been widely viewed as having a chilling effect on employers' adoption of wellness programs.

Executive Summary

Under the proposed regulations, a wellness program offered as part of an employer's group health plan can comply with the ADA if the following conditions are satisfied:

  1. the program is reasonably designed to promote health or prevent disease;
  2. participation in the program is voluntary;
  3. reasonable accommodations are made for employees with disabilities;
  4. the employer provides notice to employees explaining what medical information will be obtained and how that information will be used and disclosed; and
  5. restrictions are placed on how the medical information can be collected by the employer and disclosed to others.

A Primer on Existing Regulations

The proposed regulations reference final regulations that were issued by three governmental agencies in June 2013. Briefly, these regulations distinguish between "participatory" and "health contingent" wellness programs. Participatory programs merely require participation and any reward is not contingent upon satisfaction of a standard related to a health factor. Generally, participatory programs are permitted under existing regulations provided they are made available to all similarly situated individuals. By contrast, health-contingent programs require individuals to satisfy a standard related to a health factor (e.g., cholesterol levels below 200 mg/dL) or require individuals to complete an activity related to a health factor (e.g., individuals with high cholesterol levels must attend an educational session on heart disease) to obtain a reward. Health-contingent programs are subject to numerous additional requirements, including a requirement that rewards not exceed 30 percent of the total cost of employee-only coverage under a plan (or up to 50 percent if attributable to tobacco prevention or reduction).

Wellness Programs Must Be "Voluntary"

The proposed regulations also build upon existing EEOC regulations. For example, existing regulations prohibit employers from making "disability-related inquiries or requiring medical examinations" with a limited exception for "voluntary" medical histories and examinations which are part of an employee health program. The proposed regulations clarify that a program is "voluntary" if the employer does not: (1) require employees to participate; (2) deny coverage under its group health plans or particular benefit package within a group health plan for nonparticipation or limit the extent of such coverage (except pursuant to allowed incentives); or (3) take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees. Further, the employer must provide a notice that clearly explains what medical information will be used, the restrictions on its disclosure, and the methods employed to prevent improper disclosure of the medical information.

The proposed regulations clarify that incentives must be limited to prevent economic coercion that could render provision of medical information involuntary. If a participatory wellness program includes a disability-related inquiry such as a health risk assessment or requires a medical examination, the 30 percent limit described above applies. Furthermore, if employees must undergo a biometric screening or medical examination in connection with a tobacco cessation or reduction program, the 30 percent limit (and not the 50 percent limit) described above applies.

Wellness Programs Must Be Reasonably Designed to Promote Health or Prevent Disease

As under existing regulations, wellness programs must be reasonably designed to promote health or prevent disease. For the EEOC, this means that they: (1) must have a reasonable chance of improving the health of, or preventing disease in, participating employees; and (2) must not be: (i) overly burdensome; (ii) a subterfuge for violating the ADA or other laws prohibiting employment discrimination; or (iii) highly suspect in the method chosen to promote health or prevent disease.

A wellness program cannot condition a reward on an overly burdensome amount of time for participation, use unreasonably intrusive procedures, or place significant costs related to medical examinations on employees. If an employer collects medical information on a health questionnaire, it should provide follow-up information or advice, such as providing feedback about risk factors or using aggregate information to design programs to treat any specific conditions.

Reasonable Accommodations

Absent undue hardship, reasonable accommodations must be provided to employees with disabilities. Under the proposed regulations, the reasonable accommodations requirement applies to both participatory and health-contingent programs. For example, an employer might have to provide a sign language interpreter for a deaf employee attending a nutrition class or a large-print version of written materials for an employee with impaired vision. Also, if an employee has a disability that makes drawing blood dangerous, an alternative test or certification requirement would have to be provided for a biometric screening that includes a blood draw.

Notice to Employees

If a wellness program is integrated with a group health plan, as many are, employees must be provided a notice that describes: (1) the type of medical information that will be obtained; (2) the specific purposes for which the medical information will be used; (3) restrictions on the disclosure of the employee's medical information; (4) the employer representatives or other parties with whom the information will be shared; and (5) the methods that the covered entity will use to ensure that medical information is not improperly disclosed, including whether it complies with HIPAA privacy rules. The notice must be written so that the employee from whom medical information is being obtained is reasonably likely to understand it.

Restrictions on Disclosure of Medical Information

The proposed regulations restrict how medical information collected through wellness programs may be disclosed. An employer may receive the information only in aggregate terms that do not disclose, and are not reasonably likely to disclose, the identity of specific individuals except as necessary to administer the health plan. If the wellness program is administered by a third party, the aggregate information must be de-identified in accordance with the HIPAA privacy rules.

Medical records must be maintained confidentially and cannot be used for improper purposes. If a wellness program is integrated with a group health plan, the medical records are subject to the full panoply of HIPAA privacy laws.

Request for Comments

The EEOC has requested comments on the new rule. The EEOC has specifically requested comments about: (1) whether a wellness program that asks an employee to respond to disability-related inquiries or undergo medical examinations should be considered "voluntary" if health insurance coverage without the incentive would be "unaffordable" for the employee under the Affordable Care Act; and (2) whether individuals should be entitled to incentives if, in lieu of providing medical information through a wellness program, they provide certifications from medical professionals stating that they are under the care of a physician and that any medical risks identified by that physician are under active treatment. The comment period on the proposed regulations will close on June 19, 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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