United States: EEOC Issues Final Rules On Wellness Programs

Concluding many years of uncertainty regarding the EEOC's official enforcement position, on May 16, 2016, the agency issued two sets of final regulations affecting employer-sponsored wellness programs. The EEOC's proposed regulations (discussed here) were met with a great deal of criticism from the employer community, many of whom had designed robust wellness programs to comply with the detailed HIPAA requirements. The proposed regulations ignored the safe harbor for bona fide plans and imposed harsh standards. The EEOC received numerous comments urging them to bring their rules in line with HIPAA. However, the final regulations were issued without any significant concessions. Read on for a summary of the new final rules under the ADA and GINA.

Regulations Under The ADA

Like the proposed rules, the final ADA (Americans With Disabilities Act) rules purport to provide guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that ask them to respond to disability-related inquiries and/or undergo medical examinations, whether offered as part of or outside of a group health plan. For example, many wellness programs ask employees to complete a health risk assessment (HRA) and/or undergo biometric screenings for risk factors (such as high blood pressure or cholesterol) with incentives tied to merely participating in the program, or to achieving certain outcomes. Other wellness programs, such as those that provide general health and educational information, are not subject to the final rules.

Title I of the ADA prohibits employers from discriminating against individuals on the basis of disability in regard to compensation and other terms and privileges of employment.

[InSeyt: Wellness programs are generally considered group health plans. So, it is difficult to understand when a wellness program could be offered outside of a group health plan.]

EEOC Says Wellness Programs Must Be "Voluntary"

Under the rules, an employer may conduct voluntary medical examinations and activities, including voluntary medical histories, which are part of an employee health program available to employees at the work site. The final ADA rules set forth several requirements for employee health programs to meet this standard.

Reasonably Designed. An employee health program, including any disability-related inquiries or medical examinations, must be reasonably designed to promote health or prevent disease. A program consisting of a measurement test, screening or collection of health-related information without providing results, follow-up information or advice designed to improve the health of participating employees is not reasonably designed to promote health or prevent disease, unless the collected information actually is used to design a program that addresses some of the conditions identified. A program also is not reasonably designed if it exists mainly to shift costs from the employer to targeted employees based on their health or simply to give an employer information to estimate future health care costs.

Voluntary. An employee health program that includes disability-related inquiries or a medical exam must be voluntary. In order to be "voluntary":

Employees must not be required to participate;

  • The employer may not deny coverage under any of its group health plans or particular benefits packages within a group health plan for non-participation, or limit the extent of benefits for employees who do not participate;
  • The employer may not take any adverse employment action or retaliate against employees for not participating; and
  • In keeping with government agencies' penchant for notices, employees must be provided with a notice that:
    • is written so that the employee from whom medical information is being obtained is reasonably likely to understand it;
    • describes the type of medical information that will be obtained and the specific purposes for which the information will be used; and
    • describes the restrictions on the disclosure of the employee's medical information, the employer representatives or other parties with whom the information will be shared, and the methods that the employer will use to ensure that medical information is not improperly disclosed (including whether it complies with the HIPAA regulations).

      [InSeyt: As wellness programs are group health plans, this notice requirement appears to be largely duplicative of the required HIPAA Privacy Notices distributed by covered entity health plans.]

Limited Incentives Offered. The use of incentives (financial or in-kind) in a wellness program, whether in the form of a reward or penalty, will not render the program involuntary if the maximum available incentive under the program (whether the program is a participatory program or a health contingent program) does not exceed 30% of the cost of self-only coverage (including employee and employer contributions).

Are there Spousal Incentive Limits? Numerous commenters pointed out that calculating the 30% limit on the total cost of self-only coverage does not align with the HIPAA regulations, which provide that the incentive limit applies to the total cost of coverage in which the employee and any dependents are enrolled, when wellness programs are available to an employee's dependents or spouse. The preamble states that because the ADA's prohibitions on discrimination apply only to employees, not their spouses and other dependents, the ADA rules do not address the incentives that wellness programs may offer in connection with dependent or spousal participation. Therefore, sponsors are left with the incentive limits for spouses that would apply under HIPAA or GINA.

The 30% limit is measured against the cost of the applicable group health plan depending on the enrollment of the affected individual and the reach of the wellness program as follows:

  • the total cost of the group health plan option in which the employee is enrolled, when participation in the wellness program is limited to employees enrolled in that plan option;
  • where the employer offers only one group health plan and participation in the wellness is offered to all employees regardless of whether they are enrolled in the plan, the total cost of that group health plan;
  • where the employer offers more than one group health plan option, but participation in the wellness program is offered to employees whether or not they are enrolled in a particular plan, the total cost of the lowest cost self-only coverage under a major medical plan; and
  • if the employer does not offer a group health plan, other than the wellness program, the cost of the second lowest cost Silver Plan for a 40-year-old non-smoker on an ACA Marketplace in the location that the employer identifies as its principal place of business.

[InSeyt: It is hard to understand how a stand-alone wellness program would be ACA compliant.]

What about the 50% standard for smoking cessation programs? A smoking cessation program that merely asks employees to certify whether or not they use tobacco is not an employee health program that includes disability-related inquiries or medical examinations. Therefore, the incentive limits described above do not apply to self-certification and an employer may offer incentives as high as 50% of the cost of self-only coverage pursuant to HIPAA. However, any biometric screening or the medical procedure that tests for the presence of nicotine, cotinine or tobacco is a medical exam under the ADA and the 30% incentive limit would apply.

Confidentiality. The final rules provide that medical records developed in the course of providing voluntary health services to employees, including wellness programs, must be maintain in a confidential manner. Unless disclosure is necessary to administer the health plan, information collected as part of an employee health program may only be provided to the employer in aggregate form and in a manner that does not disclose the identity of any employee. Of course, a wellness program is generally a covered entity health plan that will also have to comply with similar standards under the HIPAA privacy and security rules. Although only the group health plan (and not the employer) is subject to the HIPAA privacy and security rules, both the employer and the group health plan are responsible for ensuring compliance with the ADA's confidentiality provisions.

HIPAA Non-Discrimination Rules. Wellness programs that are part of a group health plan must also comply with the non-discrimination rules issued pursuant to HIPAA. While many employers sought a single wellness standard for compliance, the final ADA rules state the EEOC's position that wellness plans compliance with HIPAA is not determinative of compliance with the ADA.

Why doesn't the Safe Harbor apply? The ADA contains a "safe harbor" that the ADA "shall not be construed to prohibit or restrict" an employer from establishing or administering "the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks." The EEOC goes to great lengths in the final rules to justify their position that the ADA benefit plan safe harbor does not apply to wellness programs. Note that court decisions are to the contrary, and place in jeopardy the legality of the final rules. (See our alert on EEOC vs Flambeau here. Notably, the Flambeau case is currently on appeal with the Seventh Circuit.) Note also that these rules have been criticized by employer groups as well as Republican leaders of relevant Senate and House committees. One Senator has vowed to pursue enactment of the Preserving Employee Wellness Programs Act (H.R. 1189, S. 620) to void the EEOC rules (to the extent that courts do not).

Regulations Under GINA

In a similar vein as the final rules issued under the ADA, the final GINA (Genetic Information Nondiscrimination Act) rules apply to all wellness programs that offer incentives to employees based on an employee's spouse providing genetic information as part of an HRA. GINA restricts employers from requesting, requiring, or purchasing genetic information, unless such action falls under one of six narrowly expressed exceptions. One exception is where an employer offers health or genetic services, including such services offered as part of a voluntary wellness program (provided several requirements are met). The final GINA rules closely track the final ADA rules regarding voluntary wellness program and confidentiality requirements and incentive limits. Note that GINA does not contain a benefit plan safe harbor.

Title II of GINA protects job applicants, current and former employees, union members and trainees from employment discrimination on the basis of genetic information. Genetic information is defined to include information about the "manifestation of a disease or disorder in family members of an individual." Family members include parents, grandparents and children, as well as spouses and adopted children.

Limited Incentives Offered

The major change included in the final GINA rules is the alignment of the maximum incentive amount with the maximum incentive amount provided in the final ADA rules. When an employee and spouse are given the opportunity to participate in a wellness program, the incentive to each may not exceed 30% of the cost of self-only coverage under the applicable group health plan as described above for the ADA rules. For example, if a wellness program is offered only to employees and family members in a particular group health plan, then the maximum inducement for the employee's spouse to provide information about current or past health status is 30% of the total cost of self-only coverage under the group health plan in which the employee and family members are enrolled.

So, the combined total incentive for both the employee and the spouse can be no more than twice the cost of 30% of self-only coverage. The final GINA rule clarifies that no incentives may be provided for the provision of genetic information about employees' children, including adult children.

The final GINA rules also clarify that an employer may not deny access to health insurance or any package of health benefits to an employee and/or his or her family members based on a spouse's refusal to provide information about his or her manifestation of disease or disorder to an employer-sponsored wellness program.

Notable Issues

Incentive Limit Based on Self-Only Coverage. The HIPAA rules provide that the incentive limit applies to the total cost of coverage in which the employee and any dependents are enrolled, if the wellness program is available to an employee's spouse or other dependents. The preamble states that because the ADA prohibitions on discrimination only apply to employees, not their spouses and other dependents, the rule does not address the incentives that may be offered in connection with spousal or dependent participation. However, because medical information about an employee's family members is considered genetic information about the employee, incentives offered in exchange for information about a family member implicates Title II of GINA.

Gateway Plans. A number of employers have tiered health plan benefit structures and base eligibility for a particular program on completing an HRA or undergoing biometric screenings. The preamble to the final rules states that when an employer denies access to a health plan or program because the employee does not answer disability-related inquiries or undergo medical examinations, it discriminates against the employee by requiring the employee to answer questions or undergo examinations that are not job-related and cannot be considered voluntary. Consequently, the final regulations do not allow for gateway plans.

Universal Wellness Coverage. In FAQ 2 posted on EEOC's website (as of May 18, 2016), the agency stated that "Title I of the ADA requires employers to make all wellness programs, even those that do not obtain medical information, available to all employees . . . " There is no mention of this standard in the actual final rule, and in fact the measurement of the 30% limit implies that only a certain segment of employees could be eligible for a wellness program. This statement in the FAQs should serve as another cautionary tale regarding the continuing uncertainty of the EEOC's position.

To-Do List

The final rules state that they will apply prospectively to employer wellness programs as of the first day of the first plan year that begins on or after January 1, 2017 (for calendar year plans, January 1, 2017). What should an employer do before then?

  • Employers that have not done so already should analyze their wellness programs to determine if they are a group health plan. As noted above, most wellness programs provide some type of medical care and therefore fall within the definition of a group health plan. Wellness programs can be included in an employer's "wrap plan" in order to comply with many of the ERISA and Affordable Care Act requirements.
  • Employers should consider whether to take the position that the EEOC final rules are outside the law and invalid.
  • Alternatively, employers may decide to accept the final rules and comply. As a result:
    • Those with gateway plans should consider changing their plan design,
    • Those with incentives should ensure they meet the limitations of the final rules, and
    • Employee communications containing the required notice information should be developed. (The EEOC has indicated that it will provide an example of a compliant notice on its website by June 16, 2016.)

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.