On May 16, 2016, the Equal Employment Opportunity Commission (EEOC) issued final rules governing the interaction between employer-sponsored wellness programs and both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act of 2008 (GINA).1
The ADA rules address the incentives used to encourage employees to participate in wellness programs that ask disability-related questions and/or require medical exams. The GINA rules address inducements linked to requests for information about the health of the employee’s spouse as part of a health risk assessment (HRA) or medical exam under a wellness program.
ADA final wellness regulations
The ADA prohibits employers from discriminating against employees on the basis of disability and also generally disallows disability-related inquiries or required medical examinations. There is an exception for voluntary health programs, which include voluntary wellness programs with incentives, although, until now, the EEOC had not defined the specifics.
Certain disability-based distinctions in bona fide employee benefit plans are allowed under the ADA, and employers have generally assumed this applied to disability-related provisions in their health plans. Under the final regulations, however, the ADA bona fide benefit plan safe harbor does not apply to wellness programs that include disability-related inquiries or require medical examinations (despite some federal court cases to the contrary).
Qualification as an employee health program
All wellness programs that require participants to respond to disability-related inquiries or undergo medical examinations (including biometric screenings) are subject to the ADA. Disability-related inquiries include those about an employee’s heath practices, such as exercise, smoking and alcohol use; personal and family medical history; and physiological data like weight, height, blood pressure and cholesterol level. These inquiries are usually part of an HRA.
Participatory wellness programs and those that provide general health and educational information — such as attending a nutrition or weight-loss class — or require participants to engage in an activity — such as walking a certain amount — in exchange for an incentive are not making disability-related inquiries or requiring medical exams and thus are not subject to the ADA wellness regulations (although they may be subject to other ADA requirements, such as providing reasonable accommodations to enable disabled employees to participate).
Under the ADA, a wellness program must be “reasonably designed to promote health or prevent disease,” which means the program must meet all of the following requirements:
- Have a reasonable chance of improving health or preventing disease
- Does not require an overly burdensome amount of time for participation or unreasonably intrusive procedures
- Does not require employees to incur significant costs for medical examinations
- Is not 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
The EEOC provided the following examples of “reasonably designed” wellness programs:
- Asking employees questions about their health conditions, such as in an HRA, or requiring a biometric screening or other medical examination in order to alert participants to health risks, such as high cholesterol or blood pressure
- Collecting and using aggregate information from employee HRAs to design and offer programs aimed at specific conditions prevalent in the workplace, such as diabetes
Asking employees to complete an HRA but not providing meaningful follow-up information or advice, or not using the aggregate information to design programs or treat specific conditions, does not meet the “reasonably designed” standard. A wellness program that exists mainly to shift costs from the employer to targeted employees based on their health or to obtain information to estimate future health costs is prohibited.
Voluntary participation and notice
The EEOC requires that a wellness program be voluntary. For a wellness program to be “voluntary,” an employer cannot: (1) require employees to participate; (2) deny or limit group health plan coverage (such as charging higher premiums) or take any other adverse action against employees who do not participate; or (3) take any retaliatory or adverse action against employees who refuse to answer disability-related inquiries or undergo medical examinations.
Wellness program sponsors must also provide a notice explaining what medical information will be obtained, how it will be used and who will receive it. The notice must also include restrictions on disclosing the medical information and methods used to prevent its improper disclosure. The EEOC has published a sample notice that employers may use as a guide for complying with this requirement. The EEOC also contemporaneously released a set of questions and answers about the notice requirement and use of the sample notice.
Confidentiality of medical information
The EEOC regulations expand the ADA confidentiality standards for handling employee information obtained through medical exams and activities, including medical histories. Wellness programs must meet the following requirements:
- An employee’s information must be collected and maintained on separate forms and in separate medical files, and treated as a confidential medical record.
- The wellness program administrator may receive information only in aggregate form that does not identify individuals, except as necessary to administer a health plan. If the wellness program is part of a group health plan, the information is considered protected health information (PHI) and subject to the privacy rule under the Health Insurance Portability and Accountability Act (HIPAA). Compliance with HIPAA will meet the ADA’s confidentiality requirements.
- An employer may not require an employee to agree to the sale, exchange, sharing, transfer or other disclosure of medical information, or to waive ADA confidentiality protections as a condition for participating in the wellness program or receiving an incentive (except as necessary to administer the wellness program).
The final ADA regulations limit employee incentives for wellness programs involving disability-related inquiries or medical examinations to 30% of the cost of self-only coverage (regardless of which coverage the participant has or whether spouses and dependents are eligible to participate in the wellness plan).
The 30% limit under the ADA regulations also applies to a tobacco-related incentive, if the reward requires the employee to submit to a medical examination (e.g., a nicotine test). This is substantially different from the HIPAA/Patient Protection and Affordable Care Act (PPACA) wellness regulations, which allow an incentive of up to 50% of the cost of the health coverage tier in which the employee is enrolled and apply that reward regardless of whether a tobacco-related biometric screening is involved or not (assuming that the spouse and dependents are eligible for the wellness program as well). If the employee is merely asked whether he or she uses tobacco, however, the ADA limits do not apply and the HIPAA/PPACA 50% limit can be used.
If the employee must be enrolled in the employer’s group health plan to participate in the wellness program, the 30% limit applies to employee-only coverage in the health plan in which the employee is enrolled. If the employer does not require health plan enrollment to participate in the wellness program, then the following guidelines apply:
- If the employer sponsors one group health plan, the 30% limit is based on the total cost of employee-only coverage under that plan.
- If the employer has two or more group health plans, the 30% incentive limit is based on the cost of the coverage under the major medical plan with the lowest cost employee-only coverage.
- If an employer provides a wellness program but does not maintain a group health plan, the 30% limit is based on the cost of self-only coverage for a 40-year-old nonsmoker under the second-lowest-cost Silver Plan on the appropriate federal or state health care exchange.
The 30% incentive cap must reflect in-kind and de minimis incentives such as gift certificates, t-shirts or coffee mugs, as well as reductions in the employee’s plan contribution and similar plan-related rewards. While some in-kind incentives, such as a parking spot, might be difficult to value, they still must be factored into the calculation (flexibility in valuation is allowed as long as the method is reasonable).
Beyond the EEOC’s specific requirements for wellness programs, the ADA requires employers to provide reasonable accommodations to enable disabled employees to participate (absent undue hardship for the employer). The EEOC provided some examples of reasonable accommodations:
- Providing a sign language interpreter for a deaf employee attending a nutrition class to understand the information communicated and earn the incentive, regardless of whether the employee reaches a healthy weight as a result of the class
- For a reward based on a biometric screening with a blood draw, offering an alternative test (or certification requirement) for an employee whose disability makes drawing blood dangerous
- For a program that requires walking, offering an alternative for an employee who uses a wheelchair
Compliance with other nondiscrimination laws
Complying with the EEOC’s ADA wellness program requirements does not signify compliance with all employment nondiscrimination laws. In structuring and administering wellness programs, employers must also avoid discrimination based on race, color, religion, national origin, age or sex (including pregnancy, gender identity, transgender status and sexual orientation). Moreover, if a wellness program requirement (such as a specific reduction in blood pressure) disproportionately affects participants who share a protected characteristic, the employer may need to provide a reasonable alternative to avoid a disparate impact.
GINA final wellness regulations
GINA restricts the collection and disclosure of employees’ genetic information and prohibits employers from using genetic information in employment decisions. While employers may acquire genetic information about employees and family members as part of voluntary wellness programs, they may not offer a wellness program inducement in exchange for genetic information. GINA applies to all employer wellness programs that request genetic information, even those offered under a group health plan, and to questions that ask for genetic information as defined under the rules.
There has been some confusion over whether providing a financial incentive to an employee for the spouse’s completion of an HRA violates GINA. Under the final rules, while employers may not offer an inducement under a wellness program in exchange for an employee’s genetic information, they may offer a limited inducement to an employee for a spouse’s health status information (i.e., manifestation of disease or disorder), as long as the employer complies with GINA’s confidentiality requirements and does not use the information to discriminate against the employee. Note that asking an employee’s spouse whether he or she uses tobacco, or to take a blood test to determine nicotine levels is not asking for genetic information because the action does not relate to the manifestation of disease or disorder.
Inducements may be in-kind, such as time off or prizes, as well as financial. While children are allowed to participate in wellness programs, the final regulations clearly state that employers may not offer inducements in exchange for health status information about employees’ children (of all ages).
Employers may request, require or purchase genetic information as part of health or genetic services in compliance with GINA only when those services are “reasonably designed” to promote health or prevent disease. The final GINA rule imposes the same reasonable design requirements as the ADA rule. As a result, the wellness program must have a reasonable chance of improving health or preventing disease, and must not be overly burdensome, a subterfuge for violating GINA or other anti-discrimination laws, or highly suspect in the method chosen.
Confidentiality, notice and authorization
Under GINA, employers and other covered entities that process or hold genetic information must maintain that information in a medical file that is separate from personnel files and treat it as a confidential medical record. The final rule prohibits employers from making wellness program participation or inducements conditional on agreement from an employee’s spouse or dependent to the sale, exchange, sharing, transfer or other disclosure of genetic information (with limited exception) or to waive certain protections. The employer may not deny health insurance or health benefits to an employee and/or his family, or retaliate against an employee, because the spouse refused to provide genetic information to a wellness program.
When any inducement rests on a spouse’s provision of information about his or her manifestation of disease or disorder as part of an HRA, the same written authorization requirements that apply to the employee also apply to the spouse, including that the authorization be knowing, voluntary and written.
The authorization must explain confidentiality protections and restrictions on the disclosure of genetic information. For instance, individually identifiable genetic information may be provided to the recipient of the health or genetic services and the licensed or board-certified health providers and counselors providing the services. The information may not be accessible to managers, supervisors or others who make employment decisions.
The rule confirms that, while the employer must obtain an authorization from the spouse when collecting information about the spouse’s manifestation of a disease or disorder, a separate authorization from the employee is not necessary. So the employer can use the same HRA for both the employee and spouse (with questions about family medical history and other genetic information clearly identified and a statement that the inducement does not require answers to these questions).
Limits on incentives
The limits on incentives under GINA are the same as those under the ADA: 30% of the total cost of employee-only coverage.
As explained by the rule, the calculation will vary depending on whether participation in a particular group health plan is required to participate in the wellness program, and whether the employer offers one health plan, multiple health plans or no health plan. The final GINA rule uses the same methods for calculating incentives as the ADA final rules. The final rule makes it clear that a wellness program subject to the ADA and GINA will have an incentive limit equal to twice the 30% of self-only coverage limit.
Applying ADA, GINA and HIPAA/PPACA incentive limits
Unfortunately for employers, the final incentive limits do not align with the HIPAA/PPACA wellness regulations. For example, HIPAA/PPACA limits the reward for an individual under health-contingent wellness programs to 30% of the total cost of employee-only coverage under the plan (and up to 50% for wellness programs to prevent or reduce tobacco use). If dependents (such as spouses and dependent children) may also participate in the health-contingent wellness program, the reward cannot exceed 30% of the total cost of coverage (50% if targeting tobacco use) in which the employee is enrolled (i.e., employee-plus-one or family coverage). The different incentive limits, particularly in regard to the treatment of dependents, will require employers to reevaluate their current incentives to ensure they comply with GINA, the ADA and HIPAA/PPACA. The ADA and GINA regulations apply whether the wellness program is part of a group health plan or is offered on a stand-alone basis, while the HIPAA/PPACA rules apply only to wellness programs offered through a group health plan.
The following examples show compliant implementations of incentives under the ADA, GINA and HIPAA/PPACA nondiscrimination rules that apply to activity-only and health-contingent wellness programs. In each example, the following facts apply:
- The employer offers one group health plan.
- Employees must be enrolled in the employer’s group health plan to participate in the wellness program.
- The group health plan has three coverage tiers: (1) employee-only coverage costs $6,000; (2) employee-plus-one coverage costs $10,000; and (3) family coverage is $15,000. All three tiers include both employer and employee contributions.
Example 1: Tobacco surcharge, no nicotine screening required
This wellness program offers an incentive for nonsmoking employees and spouses as well as smokers who participate in a smoking cessation class. The program neither screens for nicotine nor requires a blood test; it simply asks participants whether they use tobacco. The employee and spouse have family coverage.
- Neither the ADA rule nor the GINA rule applies.
- The HIPAA/PPACA nondiscrimination rules apply to an outcome-based health-contingent program. The incentive may not exceed 50% of the total cost of the couple’s family coverage ($7,500).
Example 2: Tobacco surcharge, nicotine screening required
The wellness program offers an incentive for nonsmoking employees and spouses, and smokers who participate in a smoking cessation class. The wellness program screens all participants for nicotine. The employee and spouse are enrolled in family coverage.
- The ADA rule applies because the wellness program requires nicotine screening. The incentive may not exceed 30% of the total cost of employee-only health coverage or $1,800.
- The GINA rule does not apply.
- The HIPAA/PPACA nondiscrimination rules apply to an outcome-based health-contingent program. While the HIPAA/PPACA nondiscrimination rules would limit the incentive to 50% of the total cost of the employee’s family coverage, the EEOC rules limit the incentive to $1,800. The spouse’s incentive could not exceed $5,700, for a combined limit of $7,500.
Example 3: Health risk assessment
The wellness program offers an incentive to employees and spouses who complete an HRA. The employee and spouse are enrolled in family coverage.
- Because the wellness program requires the employee and spouse to complete an HRA, the ADA limits the incentive for the employee to 30% of the total cost of employee-only coverage ($1,800).
- Because the program requires the spouse to complete an HRA, GINA applies with regard to the spouse (and the ADA applies to the employee). Under the ADA and GINA, the combined incentive for the couple may not exceed twice the cost of 30% of employee-only coverage or $3,600 ($1,800 each for the employee and spouse).
- The HIPAA/PPACA nondiscrimination rules apply to participatory programs — including HRAs that do not require participants to satisfy a health standard — but do not limit the incentives.
Example 4: Nutrition class participation
The wellness program offers an incentive to employees who attend two nutrition classes, and the employee and spouse are enrolled in family coverage.
- The ADA rule applies only to the extent the employee is disabled and requires a reasonable accommodation to attend the class.
- The GINA rule does not apply.
- The HIPAA/PPACA nondiscrimination rules apply to participatory programs, including attending a nutrition class, but do not limit the incentives.
Example 5: Walking program participation
The wellness program offers an incentive to employees and family members who walk a certain number of miles per week. The employee and spouse have employee-plus-one coverage.
- The ADA rule applies only to the extent the employee is disabled and requires a reasonable accommodation for the walking requirement.
- The GINA rule does not apply.
- The HIPAA/PPACA nondiscrimination rules apply to activity-only health-contingent programs and limit the total incentive for both the employee and spouse to 30% of the total cost of the employee-plus-one coverage ($3,000). If walking the prescribed distance is medically inadvisable or unreasonably difficult due to a medical condition, the employer must offer a reasonable alternative standard, subject to medical verification.
While the EEOC’s final rules address compliance with the ADA and GINA, employer-sponsored wellness programs are also subject to other federal laws, including ERISA and HIPAA/PPACA. Given that wellness programs were often designed to comply with the HIPAA/PPACA rules, many employers will need to make changes to their programs to comply with the EEOC’s final rules. A path to compliance might include the following steps:
- Identify disability-related inquiries or required medical exams to which the ADA would apply, as well as inquiries about the manifestation of disease or disorder in an employee or spouse to which GINA would apply (e.g., HRAs and biometric screenings).
- Determine whether wellness programs comply with the ADA and GINA, focusing closely on program elements that are affected by differences between the ADA and GINA rules and the HIPAA/PPACA rules, including the following:
- Incentives. Employee and spouse incentives may not exceed 30% of the cost of employee-only coverage for each where the ADA or GINA applies.
- Reasonable accommodation. Wellness programs must offer reasonable accommodations to enable disabled employees to participate when appropriate (absent undue hardship), consistent with ADA general guidelines for all wellness programs, which may be more stringent than the HIPAA/PPACA reasonable alternative standard requirements for health-contingent programs.
- Reasonableness in design. Wellness programs may not impose overly burdensome time requirements, unreasonably intrusive procedures or significant costs for medical exams.
- Voluntary status. Wellness programs may not require participation or deny health coverage, retaliate, coerce or take any other adverse action for failing to participate or to provide access to medical information. In addition, “gateway” arrangements should be reviewed for compliance.
- Confidentiality. Collected medical information must be maintained on separate forms and in separate files, and be treated as confidential medical records. Programs may provide medical information to employers only in aggregate form that does not identify any individuals. Programs may not require participants to agree to the sale, exchange or other disclosure of medical information, or require a waiver of confidentiality protections to participate or receive an incentive.
- Notice/authorization. Sponsors should revise program forms, communications and other administrative documents to reflect notice and authorization requirements, including use of the same HRA for both the employee and the employee’s spouse. Questions about family medical history and other genetic information must be clearly identified, and the notice must state that answering the questions is not necessary to receive an incentive.
- Eliminate any wellness program element that provides an incentive for information about a child’s manifestation of disease or disorder (e.g., child’s HRA information).
- Verify compliance with other federal employment nondiscrimination laws (e.g., the Civil Rights Act, Equal Pay Act, Age Discrimination in Employment Act).
Provisions in the final regulations that relate to wellness programs under both the ADA and GINA, particularly the incentive limits and new notice requirements, will apply to all employer-sponsored, wellness programs as of the first plan year starting on or after January 1, 2017. Clarifications of existing requirements, such as those related to confidentiality, are already in effect.