SUMMARY
The US Equal Employment Opportunity Commission (EEOC) recently released final wellness plan regulations providing guidance on how employer wellness programs may comply with Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA). The EEOC made it very clear that compliance with the HIPAA nondiscrimination rules does not necessarily mean that an employer is in compliance with the final wellness program rules under the ADA or GINA.
IN DEPTH
The US Equal Employment Opportunity Commission (EEOC) recently released final wellness plan regulations providing guidance on how employer wellness programs may comply with Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA). Title I of the ADA prohibits employers from discriminating against qualified individuals with disabilities. Title II of GINA protects employees from employment discrimination based on their genetic information, including the health status of workers' families. The EEOC made it very clear that compliance with the nondiscrimination rules under the Health Insurance Portability and Accountability Act, as amended by the Affordable Care Act (ACA) (HIPAA Nondiscrimination Rules), does not necessarily mean that an employer is in compliance with the final wellness program rules under the ADA or GINA.
ADA Final Regulations
The ADA final rule explains how employers may use incentives to encourage employees to participate in wellness programs that make disability-related inquiries or require participants to undergo medical exams, including through medical questionnaires, health risk assessments (HRAs) and biometric screening. Wellness programs that do not include disability-related inquiries or require participants to undergo medical exams would not be subject to the ADA final rule. For example, a wellness program that simply requires employees to engage in a certain activity (such as attending a nutrition or weight loss class, or walking a certain amount every week) in order to earn an incentive would not be subject to the ADA final rule. However, the ADA requires employers to provide reasonable accommodations that allow employees with disabilities to participate in such programs. Like GINA, the EEOC's rules under the ADA apply to any wellness program offered by an employer (whether or not through a group health plan). Wellness programs subject to the ADA must meet the following requirements:
- Wellness programs must be reasonably designed, similar to HIPAA's requirement for health-contingent programs. However, the ADA final rule also applies to participatory-only programs. A reasonably designed wellness program generally must have a reasonable chance of preventing disease in, or improving the health of, participating employees, without being overly burdensome, highly suspect in its chosen method of promoting health or preventing disease, or a subterfuge for violating the ADA. For instance, imposing penalties on an individual solely for failure to achieve a certain health outcome "would, in many instances, discriminate against individuals based on disability." Wellness programs that provide measurements, tests, screenings, or collections of health information "without providing results, follow-up information, or advice designed to improve the health of participating employees" are not reasonably designed, unless the collected information is used to design a program addressing at least a subset of the conditions identified.
- Wellness programs must be voluntary,
i.e.,
- Employers may not require employees to participate;
- Employers may not deny coverage under a group health plan to employees who do not participate, or limit the extent of benefits (except the limited permitted incentives described below);
- Employers may not take adverse action against, retaliate against, or coerce employees who do not participate; and
- Employers must satisfy notice requirements (described below).
- Employers must provide a notice written in language that is reasonably likely to be understood by the employee providing the medical information and that clearly explains what medical information will be obtained, how it will be used, who will receive it, the restrictions on its disclosure, and how the covered entity will prevent improper disclosure. The EEOC will provide a sample notice on its website by June 17, 2016.
- An ADA "covered entity" is an employer, employment agency, labor organization or joint labor management committee. Information that is obtained through an employee health program may only be provided to an ADA covered entity in the aggregate, in ways that do not disclose, or are not reasonably likely to disclose, the identity of any employee, except as necessary to administer a health plan. Employers may not require employees to agree to sell, exchange, share, transfer, or otherwise disclose medical information (with limited exceptions) or to waive confidentiality provisions in exchange for participating in a wellness program or earning incentives.
- The maximum share of the inducement
attributable to an employee's participation in an
employer-sponsored wellness program varies depending on the facts
and circumstances.
- Amount of incentive if one plan: If a wellness program is open only to employees enrolled in a particular plan, then the maximum allowable incentive an employer can offer is 30 percent of the total cost for self-only coverage of the plan in which the employee is enrolled. For example, if the total cost for self-only coverage for the plan in which the employee is enrolled is $6,000 annually, the employer can reward the employee up to $1,800 for participating in the wellness program and/or for achieving certain health outcomes (or penalize the employee up to the same amount for not participating and/or failing to meet health outcomes). The employer also could offer the same level of incentive if it offered only one group health plan but allowed any employee to participate in the wellness program regardless of whether he or she is enrolled in the health plan.
- Amount of incentive if more than one plan: Where an employer offers more than one group health plan, but participation in a wellness program is open to all employees regardless of whether they are enrolled in a plan, the employer may offer a maximum incentive of 30 percent of the lowest cost major medical self-only plan it offers. For example, if an employer offers three different major medical group health plans ranging in cost for self-only coverage from $5,000 to $8,000, and wants to offer an incentive to employees for participating in a wellness program and completing an HRA, the employer could offer a maximum incentive of $1,500 (30 percent of its lowest cost plan).
- Amount of incentive if no plan: If an employer does not offer health insurance but wants to offer an incentive for employees to complete an HRA or to have annual tests that check their glucose and cholesterol levels, the employer could offer an incentive of up to 30 percent of the cost that a 40-year-old non-smoker would pay for self-only coverage under the second lowest cost Silver Plan on the state or federal health care Exchange in the location that the employer identifies as its principal place of business. If such a plan would cost an employee $4,000, the employer could offer a maximum incentive of $1,200. The second lowest cost Silver Plan is used as a benchmark for determining an individual's entitlement to a premium tax credit for purchasing health insurance on the Exchange.
- Amount of incentive for spouses: The maximum incentive for spouses to provide information about themselves in an HRA is also capped at 30 percent of the total cost of the employee's self-only coverage. This is a change from the more complex proposed rule, which would have allowed inducement attributable to the spouse's completion of an HRA at 30 percent of the cost of enrolled coverage less 30 percent of the cost of self-only coverage.
- The final ADA rule makes a distinction between smoking cessation programs that require employees to be tested for nicotine use, and programs that merely ask employees if they use tobacco. 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. Therefore, the rule's 30 percent incentive limit does not apply, and an employer can offer an incentive up to 50 percent of the cost of self-only coverage, consistent with the HIPAA Nondiscrimination Rules. However, where an employer requires any biometric screening or other medical procedure that tests for the presence of nicotine or tobacco, the ADA rule's 30 percent incentive limit applies.
- In addition to compliance with the final rule, covered entities must still comply with other employment nondiscrimination laws (for example, discrimination on the basis of race, sex, national origin, age or any other grounds that are statutorily prohibited). If a wellness program requirement (for instance, achieving a certain blood pressure) disproportionately affects individuals based on some protected characteristic, employers may be able to avoid disparate impact by providing a reasonable alternative standard.
- In its final ADA rule, the EEOC declared its authority to interpret the ADA's statutory "bona fide benefit plan" safe harbor. The ADA safe harbor asserts that an insurer or other entity that administers benefit plans is not prohibited from "establishing, sponsoring, observing or administering the terms of a bona fide benefit plan based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with state law." The EEOC interprets this safe harbor to not apply to an employer's decision to incentivize or penalize individuals in connection with wellness programs including disability-related inquiries or medical examinations. However, courts in Seff v. Broward County and more recently EEOC v. Flambeau, Inc., held that the ADA safe harbor applied to employer wellness plans. The EEOC's appeal in the Flambeau case is currently pending with the US Court of Appeals for the Seventh Circuit.
GINA Final Regulations
The EEOC clarified that employers may provide limited incentives to an employee whose spouse voluntarily provides current or past health status information on an HRA as part of a wellness program. GINA generally restricts an employer's ability to acquire or disclose genetic information about its employees and prohibits employers from using genetic information to make employment-related decisions. GINA defines "genetic information" as including medical information regarding a "family member," which includes an individual's spouse. For plan years beginning on or after January 1, 2017, the following key provisions of the final GINA regulations apply:
- The final GINA regulations apply to all employer-sponsored wellness programs that request genetic information, regardless of whether they are related to or part of a group health plan.
- One of the narrow exceptions to GINA's prohibition on requesting, requiring or purchasing genetic information applies when an employee voluntarily accepts health or genetic services offered by an employer, including such services offered as part of a voluntary wellness program.
- GINA clearly prohibits wellness programs from requiring employees to provide their genetic information as a condition of receiving incentives, but does not prohibit an employee's spouse from providing information on his or her current or past health status. The spouse must provide prior knowing, voluntary and written authorization when providing his or her genetic information, and the authorization form must describe the restrictions on disclosure and other confidentiality protections of genetic information. Wellness programs offering de minimis inducements are not excluded from this authorization requirement.
- Any health or genetic services an employer offers must be reasonably designed to promote health or prevent disease. This means that the services must have a reasonable chance of improving the health of, or preventing disease in, participating individuals. Programs that only consist of a measurement, test, screening or collection of health-related information without providing any results, follow-up information or advice to improve the participant's health are not considered to be reasonably designed to promote health or prevent disease, unless the collected information helps design a program that addresses at least some of the conditions identified.
- An employer may offer, as part of its health plan, a limited incentive (in the form of a reward or penalty) to an employee whose spouse (1) is covered under the employee's health plan; (2) receives health or genetic services offered by the employer, including as part of a wellness program; and (3) provides information about his or her current or past health status. Information about current or past health status usually is provided as part of an HRA, which may include a questionnaire or medical examination, such as a blood pressure test or blood test to detect high cholesterol or high glucose levels. Employers may not deny access to group health plan coverage solely because a spouse has refused to provide information about his or her manifestation of disease or disorder to an employer wellness program.
- An employer may not provide financial inducements in return for HRA information about an employee's children, regardless of whether the children are adults, minors, biological or adopted. The rationale for this prohibition is that the possibility that an employee may be discriminated against based on genetic information is greater when an employer has access to information about the health status of the employee's children. The final GINA rule reiterates that employers may offer children the opportunity to participate in wellness programs, as long as they are not offered inducements in exchange for information about their current health status or about their genetic information.
- Information regarding tobacco use is not considered genetic information under the final GINA regulations. Thus, a wellness program is not requesting genetic information if it asks the spouse of an employee about tobacco use, as this is not information about the spouse's manifestation of a disease or disorder.
- The final GINA rule affirms that when an employer offers its employees incentives in exchange for the completion of an HRA, the HRA must comply with written disclosure requirements. The GINA rule also provides best practices for ensuring confidentiality, including establishing clear policies, training staff members who handle confidential information, encryption of information stored electronically, and prompt reporting of data breaches. These best practices are also referenced in the ADA final rule.
- Covered entities may not condition participation in an employer-sponsored wellness program or a financial incentive on an employee, employee's spouse or other covered dependent agreeing to the sale, exchange, sharing, transfer or other disclosure of genetic information (with limited exception) or waiving certain protections.
Employers should review their wellness program design in light of these final rules, while also ensuring compliance with previously existing rules applicable to wellness programs under HIPAA, the ACA and other federal discrimination laws. Please contact one of the authors or your employee benefits contact for further information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
