EEOC Finally Issued Proposed Rule on Wellness Programs & the ADA (Benefit Minute)
The Equal Employment Opportunity Commission (EEOC) has issued a much-overdue proposed regulation that addresses how the Americans with Disabilities Act (ADA) applies to employer wellness programs that are part of a group health plan. The proposed regulation makes it clear that wellness programs are permitted under the ADA, but they may not be used to discriminate based on disability.
The ADA and Wellness Programs
The ADA generally prohibits employers from obtaining medical information from employees unless job related. However, medical examinations and inquiries are permitted as part of a voluntary employee health program. A medical exam or inquiry may include asking an employee to complete a health risk assessment (HRA) or submit to a biometric screening. Prior to the proposed regulation, the EEOC had not stated whether offering incentives to encourage participation in such programs would make them involuntary. The proposed regulation provides a definition of an employee health program, explains when a program is considered voluntary and gives guidance on the maximum allowable incentive amount.
Employee Health Program
A wellness program is considered an employee health program when it is reasonably designed to promote health or prevent disease. The program must not be a subterfuge for violating the ADA or other employment discrimination laws. Examples of employee health programs that are reasonably designed to promote health or prevent disease include:
- Asking employees to complete an HRA or biometric screening for the purpose of alerting them to health risks; or
- Using aggregate information from employees’ HRAs to design and offer programs aimed at specific conditions.
A wellness program would be reasonably designed to promote health if medical information obtained is used to provide feedback about risk factors or used in the aggregate to establish programs.
For participation in the employee health program to be deemed voluntary, the following requirements must be met:
- Employees cannot be required to participate;
- Access to health coverage options cannot be denied or limited for any employees who choose not to participate; and
- Employers cannot take any adverse action or retaliate against, interfere with or threaten any employee who does not participate or fails to achieve certain health outcomes.
The proposed regulation states that the maximum allowable incentive that can be offered (or penalty that can be imposed) is 30% of the total premium cost for employee-only coverage. This maximum incentive applies to both participatory wellness programs (such as completing an HRA) and outcome-based wellness programs (such as achieving a specific health score on a biometric screening). Wellness programs that offer an incentive but do not require disability-related inquiries or medical examinations are not subject to the ADA limit on incentives, but may be subject to separate HIPAA rules that apply to health-contingent wellness programs. Conversely, certain participatory wellness programs that are not subject to the HIPAA rules are included in the scope of the ADA limit on incentives.
For example, a group health plan has an annual premium of $5,000 for employee-only coverage. The plan provides a reward of $250 for completing an HRA and a separate reward of $1,500 for meeting a health standard related to cardiovascular health. Since the total reward exceeds 30% of the cost of employee-only coverage ($1,750/$5,000 = 35%), the reward violates the ADA. However, this same reward structure would comply with the HIPAA rules for a health-contingent wellness program since only 30% of the reward ($1,500/$5,000) is related to meeting a health standard. If the total reward was $1,500 or less, the program would comply with both the ADA and HIPAA.
The ADA reasonable accommodation requirement applies. An employee with an ADA-covered disability who cannot complete the program must still be given a chance to earn the incentive.
Under the HIPAA rules, the maximum incentive for tobacco cessation wellness programs is 50% of the cost of coverage. However, under the proposed regulation, the maximum incentive would be capped at 30% if the tobacco cessation program includes a biometric screening or other medical exam that tests for the presence of nicotine or tobacco. The 30% limitation does not apply to a tobacco cessation program that relies on an employee’s attestation regarding tobacco use.
The proposed rule states that an employer may only receive information collected by an employee health program in aggregate form that is not reasonably likely to disclose the identity of specific individuals. Wellness programs that are part of a group health plan are also subject to HIPAA privacy requirements.
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