08 June 2016

Final ADA and GINA Regulations Require Wellness Program Changes

New final regulations issued by the Equal Employment Opportunity Commission (EEOC) pursuant to the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) may require employers to update their wellness programs.

Historically, employers have followed the HIPAA/ACA wellness program rules in designing and administering wellness programs connected to group health plans. Those rules govern health contingent incentives which are activity-based or outcome-based. There are five requirements including the ability to requalify annually, a cap on the maximum incentive (generally, 30% of the cost of coverage), the offer of a reasonable alternative for individuals with health conditions and prescribed participant notification.

In addition to the HIPAA/ACA rules, wellness programs must also comply with other federal laws including the ADA and GINA. The EEOC published proposed wellness regulations regarding both laws last year. The recently-issued ADA and GINA final regulations are similar to the proposed regulations with some key clarifications.

The ADA prohibits employers from making inquiries regarding an employee’s health or conducting a medical exam. However, there is an exception for voluntary wellness programs. Similarly, GINA does not allow employers to ask for an employee’s genetic information (including genetic tests and family medical history) except in certain circumstances such as pursuant to a voluntary wellness program. The new regulations set forth the requirements for a voluntary wellness program under the ADA and GINA.

While the ADA focuses on voluntary wellness programs providing incentives to employees for sharing their health information, the new GINA wellness regulations address permitted wellness incentives for spouses to complete health risk assessments (“HRAs”). Since a spouse is a member of the employee’s family for purposes of GINA’s restrictions on sharing genetic information/family medical history, this guidance was necessary to clarify the circumstances under which providing incentives will not be a GINA violation. The new GINA regulations do not allow incentives for additional information from the spouse (such as genetic tests) to be disclosed nor do the new regulations permit offering incentives for the disclosure of genetic information concerning other family members.

Are All Wellness Programs Subject to All Three Sets of Regulations?
No, not all wellness programs will be subject to all three sets of regulations (HIPAA/ACA, ADA and GINA). For example, if a wellness program is connected to a health plan and the incentive is activity-based or outcome-based then the HIPAA/ACA wellness program rules apply. But, if a wellness program is not tied to a health plan or is connected to a health plan but is participation-based (for example, only asks an employee to complete an HRA to receive the incentive) the HIPAA/ACA wellness program rules do not apply.

On the other hand, the ADA and GINA regulations apply to all wellness programs regardless of whether they are connected to a health plan. However, the ADA and GINA regulations only focus on wellness programs (including participation-based programs) which ask for health/genetic information (for example, through an HRA, biometric screen or other medical exam).

What Do the Regulations Have in Common?
All of the regulations (HIPAA/ACA, ADA and GINA) require the wellness program to promote health or prevent disease. Further, all three sets of regulations impose a cap on the maximum incentive amount. However, the cap varies under the three sets of regulations.

How Do the Caps Vary?
Under the HIPAA/ACA wellness program regulations, activity-based and outcome-based incentives are capped at 30% of the total cost of medical coverage. If the incentive only applies to the employee the 30% cap is based on the cost of single coverage under the medical plan in which the employee is enrolled (even if that plan is more expensive than any other medical plans the employer offers). If the incentive is tobacco-related, the cap may be as high as 50%. If the wellness program also applies to the spouse, the caps (30%/50%) are based on the medical plan in which the couple is enrolled (again, even if that plan is more expensive than any other medical plans the employer offers) and based on the coverage tier in which they are enrolled (for example, two-person or family). Participation-based incentives are disregarded in applying the cap.

The ADA regulations also cap the incentive at 30% of the total cost of coverage. However, the final ADA regulations make it clear that the cap is 30% of the total cost of single coverage, even if the spouse participates in the wellness program. Further, the final ADA regulations clarify that where the employer offers multiple medical plans, the cap is generally based on the least expensive plan regardless of which plan the employee is enrolled in. Also, the ADA regulations cast a wider net as to the incentives which are considered. The ADA cap includes both financial and in-kind incentives, includes incentives regardless of whether they are offered in connection with a health plan, and includes any incentives which ask employees questions about their health status or require a medical exam (whether participation-based, activity-based or outcome-based).

The GINA regulations follow the same general rules as the ADA regulations in terms of the amount of the incentive which may be provided in connection with a spouse’s completion of an HRA. So, for example, if a wellness program provided a premium discount for an employee to complete an HRA and a premium discount for his or her spouse to complete an HRA, the cap would be 60% of the cost of single employee coverage under the employer’s least expensive medical plan (with the incentive relating to the employee being subject to the ADA regulations and the incentive relating to the spouse being subject to the GINA regulations).

Under the ADA, the higher 50% cap only applies to tobacco-related incentives where the employee is only asked to certify whether he or she is a tobacco user. If the wellness program tests for tobacco use based on a biometric screen or medical exam, then the lower 30% cap must apply for purposes of the ADA. Since tobacco use is not considered genetic information, the GINA regulations do not address tobacco-based wellness incentives.
Employers will need to review and potentially revise the maximum caps under their wellness programs based upon these new rules.

Do the New ADA Regulations Prevent Employers from Restricting Health Plan Enrollment or Participation in a Benefit Option?
In order to be a “voluntary” wellness program under the ADA regulations, employers cannot deny an employee enrollment in a group health plan or limit the benefit options available to the employee based on participation. In the final regulations, the EEOC indicated that this restriction also applies to “gateway” plans. An example of a gateway plan is where an employer offers a standard and an enhanced medical plan. The variance between the two plans is typically based on differences in deductible, coinsurance and/or copays. All employees are initially enrolled in the enhanced plan and their continued eligibility for the enhanced plan is based upon participation in a wellness program. If they do not complete the wellness program requirements, they are “dropped down” to the standard medical plan. Employers with this gateway design will need to make changes to comply with the new ADA regulations.

The EEOC has filed lawsuits against employers limiting health plan enrollment or benefit option availability based on participation in the employer’s wellness program. In two cases, the employer has successfully defended its practice based on another provision of the ADA known as the “insurance exception,” which allows plans to use participant health information to make decisions about insurance and the cost of insurance. In issuing the final ADA regulations, the EEOC continues to insist that the insurance exception does not apply to wellness programs. The EEOC has appealed one of the court cases. Some lawmakers in Congress say they will seek to modify the ADA to clarify the availability of the insurance exception for wellness programs. It is too early to tell if the litigation or proposed legislation will undermine the viability of the new ADA regulations, particularly the prohibition on limited health plan enrollment and available benefit options.

What are the New Participant Notification Requirements?
The ADA regulations require employees to be notified of the type of information that will be obtained under the wellness program, the specific purposes for which it will be used, the restrictions on the disclosure of the information, the employer representatives with whom the information will be shared, and how the information will be kept confidential. The EEOC plans to post a model notice on its website by mid-June 2016. Please note that these notification requirements are different than the notification requirements under the HIPAA/ADA wellness program rules – so, participant notification updates may be required.

Regarding the GINA regulations, spouses must provide written authorization before they provide genetic information. The required content for the authorization is similar to the information which must be disclosed to employees under the ADA regulations. Again, the EEOC plans to supply a model authorization form.

What is the Effective Date of the New ADA and GINA Regulations?
In terms of the rules on the maximum cap under the ADA and GINA for wellness incentives and the new ADA notice requirement, those rules are effective as of the first day of the first plan year beginning on or after January 1, 2017. While employers have time to react to those aspects of the new regulations, the EEOC considers the remaining portions of the regulations to be clarifications of current law, meaning they are already in effect.