On Monday, May 16, the Equal Employment Opportunity Commission (EEOC) released final regulations (Final Regulations) under Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) governing wellness programs. The ADA rules cover an employer’s requests for health information from employees and the GINA rules cover requests for health information from family members.
The Final Regulations can be found here (ADA) and here (GINA). Additional Q&A guidance and information for small employers can be found here. The Final Regulations are effective for plan years beginning on or after January 1, 2017, and they apply to all workplace wellness programs, including those offered to employees or their family members that do not require participation in a particular health plan.
The rules clarify the EEOC’s stance on wellness programs and how to determine limits on incentives for spouses, although it is not all good news for employers. As discussed below, there continues to be significant disconnect between EEOC and U.S. Department of Labor (DOL) rules on wellness programs, most notably on the treatment of health risk assessments (HRAs) and biometric screenings when used as a gateway to eligibility.
Overview of the Final Regulations
The Final Regulations apply to any wellness program—both participation-based and outcome-based—that includes disability-related inquiries and/or medical examinations. In other words, if there’s no medical exam or inquiry, the program isn’t subject to the Final Regulations.
Under the ADA rules, the maximum reward (or penalty) attributable to an employee’s participation in a wellness program is 30% of the total cost of self-only coverage. Likewise, under GINA, the maximum reward (or penalty) attributable to a spouse’s participation in a wellness program is also 30% of the total cost of self-only coverage.
The Final Regulations reaffirm that the 30% limit includes financial (cash) rewards as well as in-kind incentives (e.g., time-off awards, prizes, and other items), even those of minimal value. To be clear: rewards under both participation and outcome-based wellness programs are counted toward the 30% limit, and there is no “de minimis” rule for cash or non-cash incentives.
As shown in the table below, the 30% limit applies differently depending on whether the wellness program is offered to all employees or only enrolled employees, and whether the employer also sponsors one or more group health plans.
|Wellness Program Design||Reward Limit|
|Wellness program offered only to employees enrolled in the employer's group health plan||30% of the total cost of the coverage under the benefit option in which the employee has enrolled (e.g., HMO, PPO, POS, HDHP)|
|Wellness program offered to all employees regardless of health plan participation; employer offers one group health plan||30% of the total cost of coverage under the benefit option offered by the employer|
|Wellness program offered to all employees regardless of health plan participation; employer offers multiple group health plans||30% of the total cost of coverage under the least expensive benefit options offered by the employer|
|Wellness program offered to all employees; employer does not offer a group health plan||30% of the cost of self-only coverage under the second lowest cost Silver Plan for a 40-year-old nonsmoker on the Exchange in the employer's principal place of business|
The final GINA regulations limit incentives for spouses to provide health information to a wellness program to 30% of the cost of self-only coverage under the applicable plan based on the table above. The rules also prohibit an employer from providing any incentives for an employee’s children (juvenile or adult, natural or adopted) to provide information to a wellness program. The final rule confirms that employers are prohibited from providing incentives for spouses to undergo genetic testing – only information about a spouse’s “manifestation of disease or disorder” may be obtained. For example, spouses may be induced to answer questions related to weight or blood pressure, or whether they have diabetes.
Treatment of Incentives for Spouses and Children
Tobacco Cessation Programs
The Final Regulations confirm that tobacco cessation programs that do not request any medical information from employees are not covered by the ADA.
For example, a wellness program that merely asks employees whether or not they use tobacco (or whether they ceased using tobacco by the end of the program) is not a wellness program that asks disability-related questions. This program would generally be covered by the 50% limit established by the DOL for outcome-based wellness programs, if connected to a group health plan. However, if the program includes a medical exam or inquiry, such as biometric screening or cotinine testing, then it will be subject to the 30% limit described in the Final Regulations. The EEOC does not consider medical exams or inquiries related to a spouse’s tobacco use to be a request for genetic information covered by GINA.
HRAs and Biometric Screening
There continues to be deep disconnect between the EEOC and DOL when it comes to HRAs and biometric screening. Under DOL rules, employers may require employees to complete an HRA and biometric screening in order to be eligible to enroll in benefits. However, the Final Regulations specifically prohibit an employer from denying access to the plan or a particular benefit option if an employee or spouse declines to participate in a wellness program that includes a medical exam or inquiry. The EEOC continues to assert this position, although two district courts that have examined the issue have come to a different conclusion, as discussed below.
EEOC’s Position on Recent Court Cases
Two district courts in Florida and Wisconsin have held that a certain provision in the ADA known as the “insurance safe harbor” applies to wellness programs in a way that allows employers to penalize employees who do not answer disability-related questions or undergo medical examinations in connection with wellness programs (e.g., employees who refuse to complete an HRA and/or biometric screening).
The EEOC believes both cases (Seff v. Broward County and EEOC v. Flambeau) were wrongly decided. The EEOC’s position is that the safe harbor is a relic that was included in the ADA to allow health plans to engage in some practices that are no longer permitted, such as charging enrollees higher rates based on increased risks associated with their medical conditions. The ADA’s safe harbor provision, the EEOC argues, was intended to protect this now unlawful practice, provided that any decision to treat people differently because of their medical conditions was based on risks and costs associated with those conditions.
The EEOC rejects the idea that the safe harbor could apply to employer wellness programs, since employers are not using information to determine whether employees with certain health conditions are insurable or to set insurance premiums. The Final Regulations contain a new provision explicitly stating that the safe harbor provision does not apply to wellness programs even if they are part of an employer’s health plan.
The Final Regulations affirm that a wellness program must be “reasonably designed to promote health or prevent disease” in order to offer incentives.
A wellness program will not be “reasonably designed” if the employer collects health-related information without giving any feedback to the employees or spouses who provide it, or without using the information to design a program that addresses at least a subset of conditions identified. Nor will it be “reasonably designed” if it simply shifts health costs from the employer to the employee.
Employers must also provide employees with detailed information about what medical information will be obtained through the wellness program, how it will be used, who will receive it, and the restrictions on disclosure. An employer’s existing wellness program materials may suffice, although an employer may need to revise its materials if their existing communications are not detailed enough. The EEOC also intends to provide a sample notice on its website within the next 30 days that employers may use.
Lastly, an employer may only receive information collected by a wellness program in aggregate form. The format cannot be likely to disclose the identity of specific individuals except as necessary to administer a health plan.
Your agent from Hausmann-Johnson Insurance will be folllowing up with those impacted by the recent guidance.