The Equal Employment Opportunity Commission (EEOC) recently issued an informal discussion letter and conducted a webinar to address incentive limits under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).1 The letter responds to an employer’s request for clarification of how to apply the ADA’s 30% limit on incentives to different employer wellness program designs.

The employer asked for guidance on: (1) applying the incentive limit to wellness programs that include disability-related inquiries and/or medical examinations, but do not condition a reward or penalty on an employee’s answering such questions or taking the examination, and (2) applying the incentive limits if all employees may participate in a wellness program but only those enrolled in a specific health plan are eligible for an incentive.

The following are some key takeaways:

  • The ADA wellness rules apply only to wellness programs that require a medical examination and/or a response to a disability-related inquiry.
  • If the same incentive can be earned with or without a medical examination and/or disability-related inquiry, then the ADA wellness rules do not apply to that wellness program.
  • Employers may offer incentives only to employees who enrolled in the employer-sponsored group health plan and complete wellness activities.
  • If the wellness incentive is the same for all the employer’s health plans, the employer must use the lowest-cost option to calculate the applicable incentive limit (this point was also addressed in the EEOC wellness webinar).

Although the guidance is not official, employers should review the letter to determine what effect, if any, the EEOC’s position has on the lowest-cost plan the employer should use to apply the incentive limits under the ADA and GINA, and whether those rules apply to the employer’s wellness program.

EEOC wellness webinar

The EEOC webinar “The ADA, GINA, and Employer Wellness Programs” was intended to help employers comply with the new wellness rules (the Department of Labor also participated). A recording of the webinar can be found here.

The following are among the webinar’s key points.

Determining lowest cost plan for incentive limit

In applying the 30% incentive limit when the employer offers more than one health plan, employers should always base the calculation on their lowest-cost option. For example, even if the employer’s lowest-cost plan option was designed to meet the Hawaii Prepaid Healthcare Act requirements and is available only to employees living in Hawaii, it should be used as the basis for calculating the applicable incentive limit for all employees.

Wellness programs that only require proof/certification of physical exam

  • GINA. Incentives provided to a spouse/child for providing proof they have obtained a physical exam from a physician are not subject to GINA because providing proof of a physical does not constitute “genetic information” under GINA. If the results of the physical exam must be turned over to the employer, however, there could be no associated incentive for the child under GINA.
  • ADA. In contrast, if an employee must provide proof of having had a physical to receive wellness incentives, the program is subject to the ADA wellness rules. According to the EEOC, this is because the employee is essentially being asked to undergo a physical examination to earn the wellness incentive, which implicates the ADA’s wellness rules.

ADA notice requirement

If a wellness program requires employees to complete multiple activities throughout the year, the employer may want to provide the ADA notice more than once (although the EEOC did not say this was required). The EEOC was concerned that, in these circumstances, employees might not remember the initial ADA notice, and the agency suggested that reissuing the notice might be a good idea.

Incentives earned in 2016 but paid in 2017

Where an incentive is earned based on activities completed in the 2016 plan year, but the incentive is not paid until 2017, the ADA limits on wellness incentives do not apply. For example, the ADA wellness rules would not apply if an employee had to complete a health risk assessment (HRA) by October 31, 2016, to earn the 2017 incentive, but the rules (including the limits on incentives) would apply if the HRA deadline was March 31, 2017. Also, if an incentive is available for a wellness program at the beginning of the 2017 plan year — for example, employees must complete an HRA by January 1, 2017 — then employers should provide the ADA notice in late 2016.


1. See “EEOC issues final regulations on ADA and GINA compliance for wellness programs,” Willis Towers Watson Insider, June 2016.