Earlier this year, the US Equal Employment Opportunity Commission (EEOC) published a Notice of Proposed Rulemaking (NPRM) that addresses how Title I of the Americans with Disabilities Act (ADA) applies to employer wellness programs that are integrated with a group health plan. Although the EEOC has previously initiated litigation associated with wellness programs, it has never released any related regulations and has come under significant pressure from employers and Congress to address when wellness programs are “voluntary” under the ADA.

The NPRM includes provisions that, if finalized, would likely require changes to an employer’s wellness programs. Certain NPRM provisions are in addition to or are not consistent with the existing wellness program regulations issued by the Department of Labor, Internal Revenue Service, and Department of Health and Human Services (Tri-Agencies) under the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA). Key proposed provisions include the following:

1. The NPRM clarifies that a wellness program is considered “voluntary” only if an employer (1) does not require employees to participate; (2) does not deny coverage under any of its group health plans or particular benefits packages within a group health plan for nonparticipation, or limit the extent of such coverage (except pursuant to allowed incentives); and (3) does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees who do not participate or who fail to achieve certain health outcomes.

2. A notable provision provides that, under the ADA, employers may offer incentives up to a limit of 30% of the total cost of employee-only coverage in connection with wellness programs. Although the 30% limitation is generally consistent with regulations issued by the Tri-Agencies under HIPAA and the ACA that concern health-contingent wellness programs that are not tobacco related, it is not consistent with the HIPAA and ACA regulations that concern participatory wellness programs and health-contingent wellness programs with tobacco prevention or reduction incentives. The HIPAA and ACA regulations do not limit the incentive amounts for participatory wellness programs and permit incentives of up to 50% of the cost of coverage for health-contingent tobacco prevention or reduction programs. In addition, the HIPAA and ACA regulations do not limit the 30% to the cost of employee-only coverage if spouses and dependents are allowed to participate in the wellness programs. Employers will need to pay attention to these types of discrepancies between the EEOC regulations and the Tri-Agencies’ regulations issued under HIPAA and the ACA.

3. The NPRM also requires employers to provide employees with a written notice that clearly explains (1) what medical information will be obtained, (2) how the medical information will be used, (3) who will receive the medical information, (4) restrictions on the medical information’s disclosure, and (5) the methods used to prevent improper disclosure of the medical information. This new notice will add to the numerous required health and welfare notices that employers already distribute.

Employers should review the proposed EEOC wellness regulations to determine whether they will need to adjust their current programs if these provisions are finalized.

For more information about the NPRM, please see our LawFlash “EEOC Issues Proposed ADA Regulations Regarding Wellness Programs” (April 23, 2015).