The U.S. Equal Employment Opportunity Commission (EEOC) published the final versions of two new rules regulating employer-sponsored wellness programs. Two main provisions of these rules go into effect in 2017 while all of the other new provisions are effective immediately. The EEOC stated that most of the new regulations are merely a "clarification" of existing law. Therefore, they are immediately (and, technically, retroactively) effective which causes confusion and concern.
Other than the ridiculous stance taken by the EEOC with respect to the “retroactive” effective dates, these rules do provide clarity to employers on wellness programs and how they are offered. Some of the new provisions do differ from current court decisions, including the recent Flambeau case which held that employers could condition eligibility in the group health plan on participation in the wellness program.
Besides the confusion over retroactive effective dates, some of rules of the Americans with Disabilities Act (ADA), The Health Insurance Portability and Accountability Act (HIPAA), the Genetic Information Non-Discrimination Act (GINA), and the Affordable Care Act (ACA) all overlap and even contradict. Now the EEOC has published its own opinions and interpretations of these rules and some further overlap and contradict other agency’s regulations.
What is a wellness program?
In general, the term “wellness program” refers to a program or activity offered by an employer to encourage its employees to improve their health and to reduce overall healthcare costs. Wellness programs must have a reasonable chance of improving the health of, or preventing disease in, its participating employees. They also must not be overly burdensome, a pretext for violating anti discrimination laws, or highly suspect in the method chosen to promote health or prevent disease.
Most employers tie their wellness plans to their major medical plans although a wellness plan can be offered to all employees. Regardless of how a wellness plan is structured, the EEOC regulations will apply if the plan includes any disability-related inquiries or medical examinations. This leads one to assume that even a basic blood draw would be a medical exam or a disability-related inquiry since basis information is asked during these blood draws.
Wellness Programs Must Be Voluntary
The EEOC has mandated several requirements that must be met in order for a wellness program to be considered voluntary.
- An employer cannot deny coverage under a major medical plan if an employee refuses to participate in the wellness plan's inquiries.
- An employer cannot condition an employee's enrollment in a "better" health plan (e.g., lower deductible, better network) upon an employee agreeing to certain participation in a wellness program.
- Employers must also provide their employees a notice that clearly explains what medical information will be obtained, how it will be used, who will receive the medical information, any restrictions on its disclosure, and the methods the employer will use to prevent the improper disclosure of medical information.
No Safe Harbor Exists
Many employers have relied on an ADA "safe harbor" for "bona fide benefit plans" as a way of ensuring that they can ask medical-related questions of employees. The safe harbor has been upheld in several court cases, including Seff v. Broward County. These EEOC regulations provide that this safe harbor is simply inapplicable to wellness programs. Therefore, an employer which wants to ensure compliance with the ADA must follow these new regulations. I expect there to be future litigation on this matter since it directly conflicts with existing case law.
What are the incentive caps?
Under the new rules, the offering of limited incentives will not render a wellness program involuntary. If a wellness program is open only to employees enrolled in a particular plan, then the maximum incentive an employer can offer is 30% of the total cost for self-only coverage of the plan in which the employee is enrolled. Compare this to the prior HIPAA rule which provided that an employer generally can offer up to 50% of the total cost of family coverage as an incentive to participate in a wellness plan. This difference in the price break could easily be thousands of dollars per year.
The new rule also explains that employers who do not offer their health insurance to certain employees may still offer them incentives to participate in wellness programs. These incentives are capped at 30% 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.
GINA Incentives for Employers
Under GINA, similar incentives are now available for employers to offer employees whose spouses are covered under the employer health plan, receives health or genetic services offered by the employer (including as part of a wellness program), and provides information about his or her current or past health status often as part of a health risk assessment or biometric screening. The incentive levels under the GINA rule are consistent with the ADA rule. That is, the same maximum incentive of 30% of the total cost of self-only coverage under the group health plan in which the employee and family members are enrolled is available.
This rule does not apply to incentives related to an employee's spouse engaging in certain activities that do not require obtaining information about current or past health status such as attending a weight loss or nutrition class, or exercising a certain number of times each week.
The new GINA regulations do require an employer to obtain a spouse's "knowing, voluntary and written authorization" before collecting the spouse's health information. The authorization form must be written and easily understood; describe the information to be obtained; the purpose(s) for which it is used; and describe any restrictions on the disclosure of the information. Unlike the ADA regulations where the EEOC has promised a model notice, no such model notice will be provided by the EEOC for these GINA regulations so employers and vendors are on their own for preparation of this notice if spousal information is collected.
These regulations also clarify that a spouse's health history is genetic information. Employers are prohibited from requiring employees (or their spouses) to agree to the sale exchange, transfer, or other distribution of their genetic information or to waive the confidentiality of the same as a condition for receiving an incentive or participating in a wellness program.
The new rule also explains that employers who do not offer health insurance to employees may still offer them rewards to participate in wellness programs. If an employer does not offer health insurance, then the maximum incentive for the spouse to provide health information is 30% of the total cost to a 40-year-old non-smoker purchasing coverage under the second-lowest cost Silver Plan available through the state or federal Exchange in the location that the employer has identified as its principal place of business.
New confidentiality requirements now exist for ADA & GINA.
There are two new requirements under the ADA confidentiality rules. First, the regulations state that only non-identifiable information may be shared with the employer, unless the employer needs more information to administer the wellness program. An employer which never receives any identifiable health information for its wellness program will have little more to do in terms of confidentiality. If the employer receives identifiable information, the employer will need to follow additional steps. It appears a wellness vendor which holds this information will also need to follow these steps. Therefore, employers and wellness vendors may need to implement all of the confidentiality measures, some of which differ from the HIPAA privacy and security rules. Second, employers may not require their employees to agree to the disclosure of their medical information or to waive the ADA’s confidentiality protections as a condition for participating in a wellness program or receiving an incentive. This rule also applies to spouses under GINA.
The EEOC also clarifies that a spouse's health history is genetic information. As a result, there is a process for a wellness program to still collect this information.
What is the effective date of these rules?
The final GINA rule for the health plan used to determine the level of incentives permitted and the ADA rule concerning the notice requirements to employees regarding what medical information will be obtained, how it will be used, and the limits on incentives applies prospectively to employer-sponsored wellness programs as of the first day of the first plan year that begins on or after January 1, 2017. All other rules are effective immediately.