Understanding Wellness Program Compliance (Benefit Minute)
There are a myriad of federal laws that impact the design and administration of wellness programs tied to a group health plan. Set forth below is an overview of these laws, including recent developments. The regulators are clear in stating that compliance with one federal law addressing wellness programs is not determinative of compliance with others. Therefore, all laws that may potentially impact wellness programs must be considered.
The Health Insurance Portability and Accountability Act (HIPAA) generally prohibits discrimination based on health factors, but there is an exception for wellness programs that meet certain criteria. Under HIPAA, a wellness program that offers a reward (or imposes a penalty) related to a health standard must:
- Be reasonably designed to promote health or prevent disease;
- Allow participants to qualify for the reward at least annually;
- Limit the reward to 30% of the total cost of the health coverage (can increase to 50% for tobacco cessation);
- Provide a reasonable alternative or waiver to allow individuals to receive the reward if they cannot meet the standard due to a health condition; and
- Disclose the availability of the reasonable alternative or waiver in health plan materials that describe the wellness program.
HIPAA does not apply to a wellness program that is participation only.
The Americans with Disabilities Act (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 completion of a health risk assessment or a biometric screening.
Under proposed regulations issued by the Equal Employment Opportunity Commission (EEOC), a wellness program would be deemed to be voluntary if:
- Participation is not required;
- Access to health coverage options is not denied or limited for any employees who choose not to participate;
- The reward (or penalty) is limited to 30% of the cost of employee-only health coverage; and
- No adverse action is taken against any employee who does not participate or fails to achieve certain health outcomes.
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 reward.
However, the ACA also includes a safe harbor which provides an exception from many of the ADA’s requirements (including the prohibition on medical exams and inquiries) for “bona fide benefit plans.” The safe harbor allows for administration of the terms of a benefit plan for purposes of underwriting risks, classifying risks, or administering such risks. Two separate courts have ruled in favor of employers with wellness programs who relied on the bona fide benefit plan safe harbor.
In the most recent case, the employer required completion of a health risk assessment and biometric screening as a condition of enrollment in the health plan. The EEOC sued the employer and argued that this was a prohibited medical exam under the ADA (it was not voluntary since it was a condition for enrollment in the plan). The employer argued that the wellness program was used to identify health risks and underwrite such risks within the plan. The information gathered was used by a third party to classify health risks, calculate insurance costs for the year and help determine plan design. The court found that these decisions are a fundamental part of developing and administering an insurance plan and held that the wellness program was permitted under the bona fide benefit plan safe harbor exception. The EEOC will likely appeal this decision.
At this point, it is not clear how the ADA exception for voluntary wellness programs and the ADA safe harbor exception for bona fide benefit plans interact. An employer that wishes to rely on the more aggressive safe harbor provision should insure that the wellness program is a term of the health plan and appropriately documented as such.
The Genetic Information Nondiscrimination Act (GINA) prohibits the use of genetic information and governs both group health plans and employers. Under Title I of GINA, a group health plan cannot collect genetic information prior to or in connection with enrollment in the plan or in exchange for a reward. This means that an employee cannot be asked to complete a health risk assessment that includes questions about the medical history of family members under either of these circumstances.
In addition, under Title II of GINA, it is an unlawful employment practice for an employer to request, require or purchase genetic information with respect to an employee except in limited circumstances. Employers have been uncertain whether providing a reward in exchange for completion of a health risk assessment by the spouse or child of an employee would violate GINA since medical information about an employee’s family members is genetic information with respect to the employee. Under proposed regulations issued by the EEOC, employers offering wellness programs as part of the group health plan would be permitted to offer a reward of up to 30% of the total cost of the plan to an employee whose spouse is covered under the health plan and participates in a wellness program that includes a health risk assessment and/or biometric screening. Other conditions apply. The proposed regulations do not extend to the children of the employee. The EEOC has stated this is because there is a significantly higher likelihood of discovering information about an employee’s genetic make-up or predisposition to disease from information about the current or past health status of an employee’s children (as compared to the spouse).
How is an Employer to Comply?
The issues and rules surrounding wellness programs are complicated and still evolving. Employers implementing or maintaining wellness programs in order to impact the health of their employees need to determine how aggressive/conservative to be designing a wellness program, understand the potential implications of various wellness program design decisions, and keep abreast of court decisions, regulations and other developments that impact wellness program compliance.