On April 20, the Equal Employment Opportunity Commission (“EEOC”) issued a notice of proposed rulemaking regarding how Title I of the Americans with Disabilities Act (“ADA”) applies to employer wellness programs, specifically programs that are part of group health plans. If the proposed regulations are adopted, employers will be required to send out specific notices regarding their wellness programs, and employers might be required to re-examine their existing programs to ensure any incentive structures align with the proposed new rules.
Title I of the ADA generally restricts employers from obtaining medical information about employees but allows examination and inquiries about employees' health so long as they take part in “voluntary” employee health programs (commonly referred to as “wellness programs”). Such wellness programs may include nutrition classes, onsite exercise facilities, and weight loss and smoking cessation programs. Additionally, wellness programs may incorporate health risk assessments and biometric screenings that measure employees' health risk factors, such as body weight, cholesterol, blood glucose and blood pressure levels. The “voluntary” aspect of a wellness program has been under scrutiny for some time now, and the proposed regulations seek to clarify what types of wellness programs are in fact voluntary.
The proposed regulations state that in order for a wellness program that includes disability-related inquiries or medical examinations to be considered voluntary, an employer:
- Cannot require employees to participate in the wellness program.
- Cannot deny coverage under any of its group health plans or particular benefits packages within a group.
- Cannot take any adverse employment action or retaliate against, interfere with, coerce, intimidate or threaten employees.
In addition, the proposed regulations set forth a new requirement for employers to provide specific notices to employees when a wellness program is part of a group health plan. Such notice must:
- Be written in a manner so that employees from whom medical information is being obtained can reasonably understand it.
- Describe the type of medical information that will be obtained and the specific purposes for which it will be used.
- Describe restrictions on the disclosure of employees' medical information, the employer representatives or other parties with whom the information will be shared, and the methods that will be used to ensure that medical information is not improperly disclosed.
Furthermore, the proposed regulations address whether the incentives offered to employees (which can be framed as rewards or penalties) truly make a wellness program voluntary. Prior to the proposed regulations, the EEOC had filed suits against employers alleging that wellness programs with excessive surcharges and/or large deductions in health savings account contributions for failing to participate were not voluntary. Generally, the use of limited incentives (including financial and in-kind incentives such as prizes and time off awards) will not render a program involuntary. However, the proposed regulations have offered clarification, stating that wellness programs involving disability-related inquiries or medical examinations are voluntary if the maximum allowable incentive (i.e., reward or penalty) available under the program does not exceed 30% of the total cost of employee-only coverage.
It should be noted that tobacco-related wellness programs, such as a smoking cessation program, may offer incentives up to 50% of the total cost of employee coverage, provided the smoking cessation program simply asks employees whether or not they use tobacco (or have ceased using tobacco upon completion of the program). To the extent a smoking cessation program includes a disability-related inquiry or medical examination (such as a program that involves a blood test for tobacco use), the program is subject to the proposed 30% rule.
Finally, the EEOC emphasized that even when employers comply with the ADA wellness program rules, they still must comply with the other laws enforced by the EEOC, including Title I of the ADA which restricts the medical information employers may obtain from applicants and employees and makes it illegal to discriminate against individuals based on disability. Employers must also comply with other laws enforced by the EEOC that prohibit discrimination based on race, color, sex (including pregnancy), national origin, religion, compensation, age or genetic information. Lastly, wellness programs that are part of group health plans must comply with the requirements of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Patient Protection and Affordable Care Act (“ACA”), which generally prohibit discrimination in group health plans based on any health factor.
In its fact sheet for small business, which was released concurrently with the proposed regulations, the EEOC stressed some fundamental points for wellness programs that all employers should keep in mind:
- Wellness programs must be reasonably designed to promote health or prevent disease.
- Wellness programs must be voluntary.
- Employers may offer limited incentives for employees to participate in wellness programs or to achieve certain health outcomes.
- Medical information obtained as part of a wellness program must be kept confidential.
- Employers must provide reasonable accommodations that enable employees with disabilities to participate and to earn whatever incentive is offered.
Interested members of the public have 60 days from the date of publication of the proposed rule to provide comments, or until June 19. Please feel free to contact the Taft professionals listed here with any questions.