The Equal Employment Opportunity Commission (EEOC) issued proposed rules (EEOC Proposed Rule) providing guidance on voluntary wellness programs under Title I of the Americans with Disabilities Act (ADA).  In recent months, the EEOC has brought multiple lawsuits challenging employer wellness programs on the basis that the wellness programs violated the ADA.  In these suits, the EEOC alleged that wellness programs that provided incentives for, or conditioned eligibility for medical benefits on, an employee’s participation in the wellness program, were not voluntary.  The EEOC Proposed Rule establishes new parameters for how wellness programs can offer incentives for participation and still be considered voluntary programs and therefore acceptable under the ADA.  While the EEOC Proposed Rule is welcome guidance for employers who offer wellness programs with incentives, questions remain.  Public comments on the EEOC Proposed Rule must be submitted by June 19, 2015.  

Background

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibits discrimination on the basis of health status.  In 2013, following changes made by the Affordable Care Act (ACA), the Department of Health and Human Services, Department of Labor, and Department of the Treasury released final regulations on nondiscriminatory wellness programs under HIPAA (HIPAA Wellness Rule).  

The ADA prohibits discrimination on the basis of disability and restricts employers from making disability-related inquiries or requiring medical examinations of employees. An exception exists under the ADA’s voluntary plan safe harbor, under which an employer may “conduct voluntary medical examinations, including voluntary medical histories, which are part of an employee health program available to employees at that worksite.”  In prior guidance, the EEOC stated that, “[a] wellness program is ‘voluntary’ as long as an employer neither requires participation nor penalizes employees who do not participate.”  Until now, the EEOC has not provided guidance on the extent to which incentives may affect the voluntary nature of wellness programs. 

The EEOC Proposed Rule establishes the requirements for wellness programs that involve disability-related inquiries or medical examinations to be considered voluntary under the ADA, and addresses the interaction between the EEOC Proposed Rule and the HIPAA Wellness Rule.  

Overview of EEOC Proposed Rule

Under the EEOC Proposed Rule, wellness programs must be reasonably designed to promote health or prevent disease and must be voluntary.  In addition, employers must keep employee medical information confidential and provide reasonable accommodations (absent undue hardship) to enable employees with disabilities to earn any financial incentive offered.  If the wellness program is a group health plan, any incentives for participation may not exceed 30 percent of the total cost of employee-only coverage, and the employer must notify employees about how their medical information may be used.  A wellness program is a group health plan if it provides medical care, which for this purpose broadly includes diagnosis, treatment, and preventive care.  Many common types of employer wellness programs meet this definition, including health risk assessments and biometric screenings.  The requirements of the EEOC Proposed Rule are explained in more detail below.

Reasonable Design

The EEOC Proposed Rule requires that a wellness program be reasonably designed to promote health or prevent disease.  In order to meet this standard, a wellness program must have a reasonable chance of improving the health of, or preventing disease in, participating employees, and must not be overly burdensome, a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.

For example, conducting a health risk assessment or a biometric screening for the purpose of alerting employees to health risks of which they may not be aware would meet this standard.  An employer using the aggregate data to design and offer health programs aimed at specific conditions prevalent in its workforce would also meet this standard.  If, on the other hand, the employer does not provide any follow-up information or advice to employees, the wellness program would not be reasonably designed.  Furthermore, a program that imposes an overly burdensome time commitment, requires unreasonably intrusive procedures, or places significant costs for medical examinations on employees would not be reasonably designed. 

Voluntary

A wellness program is voluntary as long as the employer:

• Does not require employees to participate (although programs may incentivize participation within the limits described below);

• Does not deny coverage under any of its group health plans or particular benefits packages within a group health plan for non-participation, or limit the extent of benefits for employees who do not participate; and

• Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees (e.g., for refusing to participate in the program or for filing a charge with the EEOC concerning the program).

Additionally, if a wellness program is part of a group health plan, the employer must provide employees with a notice describing certain information, discussed in more detail below.

Limits on Incentives

A wellness program that is part of a group health plan may offer an incentive (financial or in-kind) and still be considered “voluntary” if the maximum incentive available does not exceed 30 percent of the total cost of employee-only coverage.  For purposes of this requirement, it does not matter whether the incentive is characterized as a reward or a penalty.  In addition, this limit applies whether the program is participatory or health-contingent under the HIPAA Wellness Rule. 

The HIPAA Wellness Rule permits an incentive of up to 50 percent of the total employee-only cost of coverage for wellness programs related to tobacco use.  The EEOC Proposed Rule notes that if a tobacco-related wellness program does not require disability-related or medical inquiries (such as a program that simply requires attending a smoking cessation class or asks whether or not an employee uses tobacco), it may still offer incentives up to 50 percent of the total cost of employee-only coverage.  However, a tobacco-related incentive that relies upon a medical examination (such as measuring nicotine levels in a blood draw) may not exceed the 30 percent limit under the ADA.

Reasonable Accommodations Required for All Wellness Programs

Even if a wellness program is not part of a group health plan and/or does not include disability-related inquiries or medical examinations, the ADA requires that employers provide reasonable accommodations to enable employees with disabilities to earn the wellness program incentive. 

The EEOC position is that complying with the reasonable alternative standard requirements under the HIPAA Wellness Rule for health-contingent wellness programs would likely fulfill this obligation to provide reasonable accommodation.  However, such accommodations must be provided even if a reasonable alternative standard would not be required under the HIPAA Wellness Rule.  For example, an employer providing an incentive to attend a nutrition class would, absent an undue hardship, have to provide a sign language interpreter for a deaf employee. 

Notice to Employees

A wellness program that is part of a group health plan must also provide notice to employees that:

• Is written so employees can reasonably understand it;

• Describes what type of medical information will be obtained and the specific purpose for which it will be used; and

• Describes:

  • the restrictions on the disclosure of the employee’s medical information;

  • the employer representatives or other parties with whom such medical information will be shared; and

  • the methods the employer will use to ensure that medical information is not improperly disclosed (including whether the employer complies with HIPAA regulations).

Privacy of Information

The EEOC Proposed Rule requires wellness programs to follow existing ADA privacy regulations (e.g., maintaining separate medical files), as well as some new rules.  In particular, medical information obtained through a wellness program may not be disclosed to employers except in aggregate form.  The aggregated information may not disclose (or be reasonably likely to disclose) the identity of specific individuals, except as necessary to administer the wellness plan or as otherwise permitted under the ADA’s privacy regulations.  The EEOC Proposed Rule suggests employers adopt best practices in order to comply with these requirements.  Suggested practices include training individuals how to handle confidential medical information, encrypting information electronically, and promptly reporting breaches in confidentiality.

Interaction With Other Laws

The EEOC Proposed Rule specifies that compliance with EEOC rules does not necessarily mean wellness programs are compliant with additional regulatory requirements (such as Title VII of the Americans with Disabilities Act of 1990 (Title VII), the Age Discrimination in Employment Act of 1967 (ADEA), the Equal Pay Act of 1963, and the Genetic Information Nondiscrimination Act of 2008 (GINA), as amended).  For example, even if employers are fully compliant with the EEOC requirements, a wellness program may violate Title VII or the ADEA if it discriminates on the basis of race, sex, national origin, or age. 

In particular, Title II of GINA provides that employers cannot request or require genetic information from employees. Similarly, Title I of GINA restricts how group health plans can use genetic information; for example, plans cannot request or require genetic information in connection with enrollment.  Genetic information includes information about the genetic tests of an individual or a family member or information about a disease or disorder of a family member.  The EEOC has stated that future guidance will address the application of Title II of GINA to wellness programs. 

What’s Next for Employers?

Employers should review their wellness programs to determine how the EEOC Proposed Rule impacts their programs. Compliance with the new ADA wellness requirements is not mandatory until the EEOC Proposed Rule is finalized.  However, the EEOC stated that it is unlikely that a court or the EEOC would find that an employer violated the ADA if the employer complies with the EEOC Proposed Rule until the final rule is issued.  As a result, taking steps to comply with the EEOC Proposed Rule will likely mitigate the risk of ADA-related investigations and lawsuits in which the EEOC may seek to enjoin an employer’s wellness program or payment of compensatory and punitive damages to affected employees. 

In addition, employers should determine whether they wish to submit public comments on the EEOC Proposed Rule before the June 19, 2015 deadline.  In particular, the EEOC has asked for comments on:

• Whether instead of disclosing specific medical information to the employer, employees may provide certification from a medical professional stating that the employee is under the care of a physician and that any medical risks identified by that physician are under active treatment;

• Whether it would be appropriate to limit wellness incentives so that the cost of health insurance is not considered unaffordable to employees under the ACA;

• Whether there are any other methods to effectuate the intent of both the ‘‘voluntary’’ requirement in the ADA and the provisions in the ACA;

• Whether the proposed notice requirement should also include a requirement that employees provide prior, written, and knowing confirmation that their participation is voluntary;

• Whether the notice requirement should apply only to wellness programs that offer more than de minimis rewards or penalties (and if so, what should be considered de minimis); and

• The impact of the 30 percent limit on incentives offered with respect to wellness programs intended to prevent or reduce tobacco use where such programs ask employees to respond to disability-related inquiries and/or undergo medical examinations.