New EEOC Regs Guide ADA Compliance for Employer Wellness Programs
The EEOC has proposed new regulations to help employers design their wellness programs in a manner which complies with the Americans with Disabilities Act (ADA). While the guidance is welcome, it unfortunately does not mirror the HIPAA/ACA wellness program rules. As a result, wellness programs associated with health plans will be required to follow two different sets of rules in order to ensure compliance with both HIPAA/ACA and the ADA.
If a wellness program is offered in connection with a group health plan, (e.g., a premium surcharge or discount, or a deductible differential), it is subject to the wellness program rules under HIPAA, as modified by the ACA. If the wellness program is activity-based or outcome-based there are five requirements, including the ability to requalify annually, a cap on the maximum amount of the incentive (generally 30% of the cost of coverage), the offer of a reasonable alternative for individuals with medical conditions and prescribed participant notification.
Honeywell Corporation designed its wellness program to comply with the HIPAA/ACA wellness program rules but last fall, the EEOC sued Honeywell Corporation arguing that its wellness program was not voluntary and violated the ADA. The ADA only permits employee medical examinations and information to be submitted under an employer wellness program which is voluntary. The case struck a nerve with many employers who maintain that compliance with the HIPAA/ACA wellness program rules should also constitute a voluntary wellness program for purposes of the ADA.
New EEOC Regulations
The new regulations are a response to the recent employer criticism. While the regulations generally cause a HIPAA/ACA compliant wellness program to also qualify as a voluntary wellness program under the ADA, there are some important differences.
- The cap under the HIPAA/ACA wellness program rules for an employee incentive is 30% of the cost of single health coverage or 50% to the extent the incentive is tobacco-related. If the wellness program also covers the employee’s spouse or other dependents, the 30% and 50% caps are based on the cost of the health coverage in which the family is enrolled (e.g., two-person or family). The EEOC regulations appear to cap a permissible incentive for ADA purposes at the cost of employee-only coverage regardless of whether the wellness program also applies to the employee’s family members.
- The HIPAA/ACA wellness program rules increase the cap to 50% for any tobacco-related incentive. The EEOC regulations also increase the cap to 50% for ADA purposes where the wellness program merely asks an employee about tobacco use. On the other hand, if the wellness program tests for tobacco use based on a biometric screen or medical examination, the lower 30% cap applies for ADA purposes.
- The HIPAA/ACA wellness program rules do not cap the amount of an incentive that is totally participation based (e.g., an incentive for completing a health risk assessment or undergoing a biometric screening). Only incentives relating to activity-based and outcome-based incentives are capped under the HIPAA/ACA wellness program rules. The EEOC regulations include a participation-based incentive, along with an activity-based or outcome-based incentive, under the cap for ADA purposes.
- The EEOC regulations prohibit a wellness program which denies an employee the opportunity to enroll in employer group health coverage or a benefit option under the employer’s group health plan if the employee is non-compliant. So a wellness program which, for example, provides that an employee who does not comply with the program cannot enroll in certain medical option(s) would violate the ADA’s voluntary requirement for wellness programs.
- In addition to the participant notification requirements under the HIPAA/ACA wellness program rules, in order to comply with the ADA, the new EEOC regulations require the employer to provide a notice to employees 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 plan will employ to prevent improper disclosure of medical information.
The regulations are issued in proposed form and the EEOC is inviting comments for a 60-day period.
Other Laws Impacting Wellness Programs
While HIPAA/ACA and the ADA are two of the most significant laws impacting wellness programs, employer should not overlook other laws which also come into play.
- HIPAA Privacy Rules The EEOC regulations only allow the disclosure of medical information obtained by wellness programs in aggregate form, except as needed to administer the health plan. The regulations further indicate that a wellness program that is part of a group health plan subject to the HIPAA privacy rules will likely be able to comply with the EEOC regulations by complying with the HIPAA privacy rules.
- GINA GINA (the Genetic Information Nondiscrimination Act) prohibits employers providing incentives to employees to share family medical history. If a wellness program requires a spouse to undergo biometric screens, the spouse is considered a family member for this purpose, even though not a blood relative.
- Internal Revenue Code If a reward is a gift card, a FitBit, a gym membership or some other non-health plan-related incentive, it may be taxable to the employee.
If you have any questions concerning the new regulations or employer wellness programs, please contact the author or any attorney in Miller Johnson’s Employee Benefits Practice Group or Employment Section.