August 23, 2016
Over the last few years, employers have been introducing wellness programs to their employees, mostly for health care cost containment purposes. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) formalized wellness programs to the extent most such programs could be treated as group health plans. As a result of subsequent legislation, including the Affordable Care Act (ACA) and regulatory guidance, employers must meet a specific set of guidelines for its programs to qualify as wellness programs. The two main types are: Participating Programs and Health Contingent Programs.
The purpose of this Benefits Alert is to provide employers who already have wellness programs or who intend to introduce one as of their next plan year the ability to meet current Equal Employment Opportunity Commission (EEOC) compliance requirements under the Americans with Disabilities Act (ADA).
EEOC Final Regulations Release
On May 17, 2016, the EEOC published two final rules under the ADA and Genetic Information Nondiscrimination Act (GINA) as they relate to employer wellness programs. The final regulations clarify prior inconsistencies between the EEOC’s April 2015 proposed regulations and the existing wellness program guidance issued under the HIPAA and the ACA, specifically with regards to notice requirements, wellness program eligibility restrictions, and maximum incentive limits.
- Non-Discrimination. HIPAA generally prohibits employers from discriminating against employees under a group health plan based on a health-status related factor. HIPAA provides an exception from this rule for wellness programs so long as such programs comply with a set of regulations promulgated by ACA. The ACA regulation allow for “participatory” wellness programs offered to similarly situated individuals and “health-contingent” wellness programs that follow the following conditions:
- Individuals are allowed to qualify for a reward under the wellness program at least once per year;
- Rewards may not exceed 30% of total cost of coverage (50% for rewards related to the cessation of tobacco use);
- Employer must provide notice to employees and provide them with a reasonable alternative standard to qualify for the reward; and,
- The Program must be reasonably designed to promote health/prevent disease without being overly burdensome.
- Wellness Rule. Title I of the ADA prohibits employers from discriminating against individuals on the basis of disability and limits an employer’s ability to make disability-related inquires or require medical exams unless the inquires/medical exams are provided voluntarily as part of an employee health program (e.g. a wellness program that offers medical screenings, weight control, cancer detection, etc.). The final rule requires the following conditions be met for the program to remain voluntary:
- Maximum Incentives. Wellness programs that make disability-related inquiries such as health risk assessments or require medical examinations (biometric screenings, etc.) must limit its incentives to 30% of the cost of self-only coverage (employer plus employee contributions), including tobacco cessation incentives. However, merely asking employees whether or not they use tobacco is not a disability-related question that would subject the wellness program to the ADA’s 30% limit.
- No Gateway Plans. The ADA final rule prohibits wellness program that restrict employee enrollment in the group health plan based upon the completion of an health risk assessment, or participation in a biometric screening program.
- Notice Requirement. The ADA final rule requires plan sponsors of wellness programs that make disability-related inquiries or require medical examinations to provide participating employees with a notice that clearly describes what medical information will be obtained under the program and how that information will be used and disclosed by the employer. See below for further details on the notice including a link to a sample notice.
- Reasonably Designed and Voluntary Participation. The final rules contain additional guidance on these two terms:
- Reasonably Designed. In order to meet this standard, the program:
- Must have a reasonable chance of improving the health of, or preventing disease in, participating individuals;
- Must not be overly burdensome;
- Must not be a subterfuge for violating Title II of GINA or other laws prohibiting employment discrimination; and,
- Must not be highly suspect in the method chosen to promote health or prevent disease.
To be “Reasonably Designed,” the information collected must be provided to the plan participant. This includes measurements, tests, screenings and/or follow-up information or advice designed to improve the participant’s health, or it will fail the “Reasonably Designed” requirement.
- Voluntary Participation. To be voluntary, the program:
- Must not require employees to participate;
- Must not deny coverage under any group health plan to employees for non-participation;
- Must not take any adverse action, retaliate against, or coerce employees who choose not to participate; and,
The notice requirement applies to all wellness programs, whether or not they are part of a group health plan or stand-alone.
- Final GINA Rule. Title II of GINA prohibits employers from discriminating against their employees on the basis of “genetic information” and restricts employers’ ability to request, require, or purchase genetic information with respect to an employee or an employee’s family members. Genetic information includes information about the individual’s or family member’s genetic tests, the manifestation of a disease or disorder (i.e., family medical history), and the individual’s request for or receipt of genetic services. With respect to pregnant women, genetic information specifically includes information about the fetus she is carrying.
- GINA and Wellness. The GINA final rule requires employers sponsoring wellness programs that ask for genetic information to follow the following conditions:
- Dependent Eligibility. Wellness programs that offer an inducement to answer questions about past health status or to take a medical examination may allow an employee’s spouse to participate in the program but not his or her children. Employers may offer children the opportunity to participate in wellness programs, as long as they are not offered inducements in exchange for information about their current health status or about their genetic information.
- Reasonable Design. Wellness programs subject to the GINA final rule that include the collection data related to measurements, tests, screenings, or health-related information that do not provide individuals with results, follow up information, or advice is not reasonably designed to promote health/prevent disease (i. plan sponsors cannot collect such data just to predict future health costs).
ADA Notice Requirements
The ADA final rule requires employers who offer wellness programs that collect employee health information to provide a notice to employees informing them what information will be collected, how it will be used, who will receive it, and what will be done to keep it confidential. Wellness programs often gather health information through voluntary health risk assessments or voluntary biometric screenings that include medical examinations (such as tests to detect high blood pressure, high cholesterol, or diabetes). The EEOC has published questions and answers about the notice, along with a sample notice.
- Effective Date. The requirement to provide the notice takes effect as of the first day of the plan year that begins on or after January 1, 2017 for the health plan an employer uses to calculate any incentives it offers as part of the wellness program. Once the notice requirement becomes effective, the EEOC’s rule does not require that employees get the notice at a particular time (e.g., within 10 days prior to collecting health information). But they must receive it before providing any health information, and with enough time to decide whether to participate in the program (such as in open enrollment materials).
Notice Format. So long as the required information is provided, employers need not use the precise wording in the sample notice and may tailor their notices to the specific features of their wellness programs. Employers that already provide notices under HIPAA may comply with the ADA rules by revising their notices as necessary to include all required information. Notices may be provided in hard copy or by email but should not be buried in unrelated information. Employees with disabilities may need to receive notices in an alternative format.