EEOC Proposes Long-Awaited Wellness Program Regulations
The Equal Employment Opportunity Commission (EEOC) has proposed long-awaited regulations on how employer wellness programs may comply with the Americans with Disabilities Act (ADA). For organizations with established wellness programs, or those that are implementing one because of incentives offered under the Affordable Care Act (ACA), the proposed regs are an important development.
The ADA permits a wellness program to include disability-related inquiries or medical examinations, such as health risk assessments or medical screenings, only if:
- Participation is voluntary,
- Information is maintained according to ADA confidentiality requirements, and
- Information isn’t used to discriminate against an employee.
The proposed EEOC regulations address the interplay between ADA requirements and the wellness program rules under the Health Insurance Portability and Accountability Act (HIPAA). The regs would expand existing ADA regulations to provide guidance on the extent to which employers may offer incentives for participation in wellness programs with disability-related inquiries or medical examinations.
The preamble to the proposed regulations specifically rejects application of the ADA’s “bona fide benefit plan” safe harbor as a basis for permitting wellness incentives. The EEOC states that such an interpretation — adopted by the U.S. Court of Appeals for the Eleventh Circuit in Seff v. Broward County — would render the ADA’s “voluntary” exception superfluous.
Plan design and compliance
Wellness programs, including any disability-related inquiries or medical examinations that are part of such programs, must be reasonably designed to promote health or prevent disease. (The HIPAA rules include a similar standard for health-contingent wellness programs.) To meet this standard, the program must have a reasonable chance of improving health or preventing disease, and it must not be:
- Overly burdensome,
- A subterfuge for violating the ADA or other employment discrimination laws, or
- “Highly suspect” in its chosen methods.
The Appendix to the proposed regs includes examples of programs that will and won’t meet this standard. For example, conducting a health risk assessment or biometric screening for the purpose of alerting employees to health risks would meet the standard. But collecting medical information without providing follow-up information or advice wouldn’t.
Compliance with the proposed regulations won’t relieve an ADA-covered entity of its obligation to comply with other federal antidiscrimination laws, such as:
- Title VII of the Civil Rights Act of 1964,
- The Age Discrimination in Employment Act, and
- Title II of the Genetic Information Nondiscrimination Act (GINA).
In particular, the preamble notes that future rulemaking will address the extent to which GINA affects an employer’s ability to condition incentives on a family member’s participation in a wellness program.
Incentives (whether structured as rewards or penalties) may be offered under wellness programs that are part of a group health plan without making the program involuntary. However, the total incentive available under all programs — participatory or health-contingent — cannot exceed 30% of the total cost of employee-only coverage.
The EEOC has requested comments on whether regulations should address incentives under programs that aren’t part of a group health plan. The 30% limit permitted by the regulations is similar to the HIPAA rules for nontobacco incentives under health-contingent wellness programs.
Under HIPAA, however, the limit increases to 30% of the cost of family coverage when dependents participate in the program. The higher tobacco-related incentives permitted under HIPAA aren’t allowed under the proposed EEOC regulations unless the program doesn’t include a disability-related inquiry or medical examination. (An Appendix to the proposed regs includes, as an example, a program in which employees are only asked about tobacco use as opposed to being tested for nicotine.)
Medical information may be provided to employers only in aggregate terms that are unlikely to disclose an employee’s identity, with certain exceptions for employers that self-administer wellness programs. The Appendix lists legal requirements and “best practices” to protect confidentiality when a wellness program isn’t part of a group health plan.
The Appendix also notes that, when a wellness program is part of a group health plan, individually identifiable health information about wellness program participants will be protected health information (PHI) under HIPAA’s privacy and security rules. Furthermore, a wellness program likely will comply with the proposed regulations by complying with HIPAA.
Generally, HIPAA permits employees of a health plan sponsor to receive PHI only to perform plan administration functions. But a firewall is required between employees authorized to access PHI and all other employees. The EEOC also notes that using a third party may reduce the risk that information will be shared inappropriately, with the preamble seeming to suggest that a third party acting as an employer’s agent will be independently responsible for compliance with the confidentiality requirements.
In addition, the proposed regulations specify that an employer may not require participation in a wellness program. Nor may employers deny or limit coverage under any of its group health plans or benefits packages for nonparticipation. And employers may not take any adverse action against employees who don’t participate or who fail to achieve health outcomes.
If a wellness program is part of a group health plan, the proposed regulations would require that employees receive a notice explaining what medical information will be obtained. The notice should also state how data will be used, the restrictions on its disclosure and how improper disclosures will be prevented.
The proposed regulations — recommended reading for anyone who works with wellness programs — provide much-needed guidance on how wellness programs can comply with the ADA. Although the EEOC has indicated its intent to provide as much consistency as possible with the HIPAA rules, there are some key differences.
For example, the proposed regulations’ notice, maximum incentive and reasonable design requirements apply to both participatory and health-contingent wellness programs. Participatory programs are exempt from comparable requirements under HIPAA. Programs in which conditions for receiving a reward aren’t based on satisfaction of a health standard are typically considered “participatory.”
The EEOC’s Q&A clarifies that employers aren’t required to comply with the proposed regulations. But it’s unlikely that the EEOC or a court would conclude that an employer violated the ADA if it complied with the rules before final regulations are issued. The Q&As also note that some provisions of the regulations are already required under the ADA. For example, employers must provide reasonable accommodations that allow employees with disabilities to participate in wellness programs.
Meanwhile, the EEOC has requested comments on several issues, such as whether:
- Employees should be able to provide a medical professional’s certification instead of disclosing medical information,
- Employees should have to provide written confirmation that their participation is voluntary, and
- Incentives that cause coverage to be unaffordable under the ACA should be prohibited.
The answers gathered to these questions could, presumably, shape further changes to the EEOC’s position on wellness programs.
Up to speed
A wellness program can encourage healthy behaviors in employees while helping reduce health care costs and increase productivity. But it can bring a number of legal and compliance risks.
Work with Ron Present, Partner and Health Care Industry Group Leader, to ensure you’re up to speed on the forthcoming EEOC regs and any other legal requirements that could affect your program. Fill out the adjacent form to schedule a meeting or request a copy of Ron's recent presentation "Health Care Reform: Current & Future State."