The EEOC has proposed amendments to its regulations under the Americans with Disabilities Act (“ADA”) as they relate to employer wellness programs.  These proposed amendments were published on Monday, April 20, triggering a 60-day public notice and comment period.  The proposed amendments aim to define which employer wellness programs are valid under the ADA, which is much needed.

The Need for Amendments

Although the ADA generally restricts employers from making disability-related inquiries and requiring medical examinations, it makes an exception for “voluntary medical examinations, including voluntary medical histories, which are part of an employee health program,” such as a workplace wellness program.  Previously, the EEOC provided that an employer wellness program is “voluntary” as long as an employer “neither requires participation nor penalizes employees who do not participate.”  It has remained unclear, however, to what extent financial incentives used in an employer wellness program (either rewards or penalties, such as prizes, cash, or a reduction or increase in health care premiums or cost sharing) might undermine the “voluntary” nature of the program and result in a violation of the ADA.

Due to this lack of clarity, some employers have shied away from implementing employer wellness programs or have even landed in hot water with the EEOC.  Indeed, the EEOC filed three lawsuits in late 2014 alleging that certain employer-sponsored wellness plans, which imposed financial penalties on employees for non-participation in health risk assessments and medical exams (such as requiring them to pay the full amount of their health care premiums), rendered the plans involuntary and thus violated the ADA.  In an attempt to provide much-needed guidance, the proposed amendments are designed to allow “certain incentives” related to wellness programs, “while limiting them to prevent economic coercion that could render provision of medical information involuntary.”

The Proposed Amendments

Specifically, the EEOC-proposed amendments would:

• Continue to permit an employer to conduct voluntary medical examinations and inquiries as part of voluntary employer wellness program.

• Require an employer wellness program, along with any disability-related inquiries or medical examinations included in the program, to be “reasonably designed to promote health or prevent disease.”  This means the program must (1) have a reasonable chance of improving health or preventing disease; (2) not be overly burdensome; (3) not be a subterfuge for violating the ADA or other anti‑discrimination law; and (4) not be “highly suspect” in its methods of promoting health or preventing disease.

• Deem as “voluntary” an employer wellness program, which includes disability‑related inquiries or medical examinations, in which the employer (1) does not require employees to participate; (2) does not deny group health coverage or limit benefits for non-participation; (3) does not take any adverse employment action or other unlawful action (e.g., retaliation, coercion, etc.) under the ADA; and (4) if the program is part of a group health plan, provides a written notice to employees that describes the type of medical information that will be obtained, the specific purposes for which this information will be used, the restrictions on disclosure, and the methods used to ensure non-disclosure of this information.

• Limit incentives used in connection with an employer wellness program that is part of a group health plan so that the maximum allowable incentive available under the program does not exceed 30 percent of the total cost of employee-only coverage.

• Generally restrict the disclosure made to an employer of obtained employee medical information or history to information in aggregate terms that does not disclose the identity of any employee, with certain limited exceptions.

Noteworthy is that the “30 percent” limit on incentives is in large part consistent with a 2013 joint agency regulation that permits incentives in health-contingent employer wellness programs up to 30 percent of the total cost of employee-only coverage without violating HIPPA.  The proposed ADA amendment, however, limits this incentive for all employer wellness programs that are part of a group health plan (participatory and health-contingent programs) rather than just health-contingent programs.  (“Participatory” programs do not provide a reward or include any condition for obtaining a reward based on satisfying a health standard.  “Health-contingent” programs require individuals to satisfy a standard related to a health factor to obtain a reward or to undertake more than another individual based on a health standard to obtain the same reward.)

Also noteworthy is that the proposed amendments place additional restrictions on employer wellness programs that include disability‑related inquiries or medical examinations and that are part of a group health plan, such as a written notice requirement and the limitation on incentives.  The proposed amendments do not contain any restriction on incentives for employer wellness programs that do not require disability‑related inquiries or medical examinations (such as a program that requires only class attendance).  They also do not contain any restriction on incentives for employer wellness programs that are not part of a group health plan.

Finally, these proposed amendments address employer wellness plans only under the ADA and not under other non-discrimination laws, with the EEOC suggesting that there will be further rulemaking with respect to employer wellness programs under the Genetic Information Nondiscrimination Act (GINA).

Stay Tuned

After the public comment period, the EEOC will review received comments and ultimately publish a final rule.  At that time, employers with established employer wellness programs will need to review them for compliance with the final regulations.  Employers without established employer wellness programs may decide at that time, after it becomes clear which programs violate the ADA, to implement such a program.