United States: EEOC Issues Final ADA Regulations On Wellness Plans

Last Updated: June 14 2016
Article by Eugene S. Griggs

The EEOC's issuance on May 16, 2016, of final regulations under the Americans with Disabilities Act (ADA) on employee wellness programs represents the close of another chapter in the history of confusion regarding rules applicable to wellness programs. Prior to the EEOC's issuance of proposed regulations on the ADA's application to wellness programs less than a year ago, confusion resulted from the EEOC's position in lawsuits alleging that certain wellness plan practices violated the ADA, and the juxtaposition of the EEOC's positions in the litigation against the relatively clear guidance on wellness programs under the HIPAA regulations. While these final ADA regulations resolve some of the unanswered questions raised by the proposed ADA regulations, they do little to resolve the complexities wellness programs face in complying with multiple, only partially-coordinated, regulatory schemes.

The final ADA regulations generally follow the proposed regulations discussed in our May 2015 Employer Alert, avoiding the threat in the proposed regulations of more burdensome administrative requirements in the final rule. The final rule retains the following proposed regulation requirements, and provides some clarification on additional points, including:

  • All wellness programs must be reasonably designed to promote health or prevent disease by having a reasonable chance of improving health, not being overly burdensome or a subterfuge for violating the ADA or other employment nondiscrimination laws; and must satisfy the ADA's confidentially rules.
  • A wellness program cannot

    • Exist merely to shift costs to employees based on their health or predict an employer's future health costs;
    • Impose unreasonably intrusive, burdensome, or costly procedures; or
    • Collect health information unless the information is used to provide follow-up advice to individual participants or to design a program that addresses at least some conditions identified in the collected information.
  • A notice must be provided to participants explaining the requested medical information, how it will be used, who will receive it, and the restrictions on disclosure.
  • Participation in a wellness program that includes disability-related inquiries or medical examinations must be voluntary, and the employer cannot deny access to health benefits, or coerce, intimidate or retaliate for nonparticipation or failure to achieve certain health outcomes.
  • Rewards or penalties tied to wellness programs that include disability-related inquiries or medical examinations are limited to 30%, and the cap applies to different self-only coverage benchmark plans depending on whether enrollment in a particular plan is required for participation in the wellness program or the employer offers no health coverage.
  • Merely asking about tobacco use is not a disability-related inquiry, but screening for tobacco use in a medical exam triggers the requirements for wellness programs that include medical examinations.

The provisions of the regulations requiring a notice and establishing incentive limits apply prospectively to wellness programs on the first day of the first plan year beginning on or after January 1, 2017. The other provisions are regarded by the EEOC as clarifications of existing requirements that already apply to wellness programs. The final regulations breathe new life into cases challenging these regulations in several federal appeals courts, casting a shadow on the already difficult path to compliance. However, regulatory agencies generally are given broad deference in promulgating regulations, so employers are advised to comply with these rules for now.

In conjunction with these ADA regulations EEOC also issued final regulations for wellness programs under the Genetic Information Nondiscrimination Act (GINA). Under the GINA rule employers may provide rewards or penalties in exchange for an employee's spouse (but not children) providing information about the spouse's current or past health status as part of a wellness program, whether or not the program is part of a group health plan. Spousal incentives are subject to most of the restrictions applicable under the final ADA rule. In addition, wellness programs also must comply with other laws such as HIPAA, Title VII, the Equal Pay Act, and the Age Discrimination in Employment Act (ADEA). Therefore, employers should consult employee benefits counsel to assist with a review of current wellness programs or proposed program designs or changes.

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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Eugene S. Griggs
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