On April 16, 2015, the EEOC released its long-anticipated proposed rule on the extent to which the ADA permits employers to offer incentives to employees to promote participation in wellness programs that are employee health programs. For the most part, the rule reflects the EEOC’s efforts to make the ADA’s requirements consistent with the requirements for employer wellness programs that are already found in HIPAA’s non-discrimination provisions, as amended by the Affordable Care Act (“ACA”), but there are some key differences and the EEOC’s proposed rule leaves open some questions that hopefully will be addressed when the final rule is issued. (Note that the Office of Civil Rights of the U.S. Dept. of Health and Human Services also issued two FAQ’s regarding the application of HIPAA privacy and security rules on workplace wellness programs on April 16th. Those FAQ’s can be found here.)
Many employers use wellness programs in an effort to promote healthier lifestyles for their employees and families, which of course also tends to reduce the employers’ health insurance expenses. In these programs, employers use tools such as health risk assessments that measure such health markers as blood glucose and cholesterol levels, blood pressure and body mass indices and typically provide health insurance discounts or other financial incentives to get employees and their families to either participate or to achieve specific healthier outcomes.
In order to ensure that participation in wellness programs are voluntary, however, the EEOC’s proposed rule limits the financial incentive that an employer may offer employees to 30% of the total cost of employee-only coverage under the plan, including both employee and employer contributions towards the cost of coverage (or 50 percent to the extent that the additional percentage is attributed to tobacco prevention or reduction).
It is unclear why the EEOC’s proposed limitation is based on employee-only coverage when the ACA does not seem to limit the incentive to employee-only coverage. The EEOC’s proposed rule also puts the 30% limitation on any participatory wellness program where participation requires employees to answer disability-related inquiries or submit to medical examinations. The EEOC clarifies, however, that a smoking cessation program that merely asks employees whether or not they use tobacco (or whether or not they ceased using tobacco upon completion of the program) is not an employee health program that includes disability-related inquiries or medical examinations.
Further, to ensure that participation in a wellness program that includes disability-related inquiries and/or medical examinations and that is part of a group health plan is truly voluntary, the proposed rule would require that an employer must provide a notice that clearly explains what medical information will be obtained, who will receive the medical information, how the medical information will be used, the restrictions on its disclosure, and the methods the covered entity will employ to prevent improper disclosure of the medical information. Finally, the proposed rule allows the disclosure of medical information obtained by wellness programs to employers only in aggregate form, except as needed to administer the health plan.
Interestingly, the EEOC’s proposed rule chooses to ignore the ADA statutory safe harbor provision that exempts certain insurance plans, including group health plans, from the ADA’s general prohibitions, including the prohibition on “required” medical examinations and disability-related inquiries. The EEOC’s ability to restrict the terms of a wellness program based on its inclusion of disability-related inquiries ultimately may end up being litigated in court. Indeed, a panel of the 11th Circuit Court of Appeals already has concluded that the safe harbor applies to permit the disability-related inquiries to be made as part of a wellness program established as part of a group health plan.
The EEOC’s proposed rule does not address the extent to which Title II of the Genetic Information Nondiscrimination Act (GINA) affects an employer’s ability to condition incentives on a family member’s participation in a wellness program. This issue apparently will be addressed in future EEOC rulemaking.
Although the EEOC’s proposed rule on employer wellness programs won’t go into effect until after a comment period has passed and the rule (as it may be amended) becomes final, employers should evaluate their wellness programs to determine whether they will be compliant. At a minimum, employers should be sure that they do not require employees to participate in their wellness programs or deny health insurance to those who do not participate or meet stated health-related goals. In addition, employers may not take any other adverse employment action or retaliate against those who do not participate or meet their health-related goals.