Final EEOC Employer Program Wellness Rules

On May 17, 2016, the Equal Employment Opportunity Commission (EEOC) issued final regulations on employer wellness programs in order to coordinate several federal laws, including the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA).  As more and more employers implement wellness programs in an effort to control their health care costs, the EEOC has raised concerns that such programs are not truly voluntary and may negatively impact employee protections under the ADA and GINA.  According to the EEOC, the new rules “seek to ensure that wellness programs actually promote good health and are not just used to collect or sell sensitive medical information about employees and family members or to impermissibly shift health insurance costs to them.”

Impacted Programs

The final rule requires wellness programs to be considered voluntary. Employers may not require employees to participate, deny access to health insurance or limit the plan options available if an employee does not participate, or take adverse or retaliatory action against anyone who does not participate in a wellness program. The rule also clarifies that a wellness program must be “reasonably designed to promote health and prevent disease.” For example, a program that required employees to complete an Health Risk Assessment (HRA) but did not provide them with feedback on risk factors would not be compliant.

The ADA limits inquiries that could be considered disability-related and medical examinations related to wellness programs, regardless of how the information obtained is ultimately used. Therefore, the EEOC’s final rule limits incentives applied to any wellness program that requires employees to answer disability-related questions or undergo medical examinations (whether it is participatory or health contingent). Commonly used wellness programming such as HRAs and biometric screenings are impacted, but the new rule does not apply to a program that requires employees to engage in certain activities to earn an incentive, such as attending a nutrition class or participating in a walking challenge.

New Incentive Restrictions

For wellness programs that require an employee to undergo a medical examination or answer disability-related questions, wellness incentives will be subject to the following limits as of January 1, 2017:

• If a wellness program is open only to employees enrolled in a particular plan, 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.
  • 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).
• If an employer offers more than one group health plan, but participation in a wellness program is open to all employees regardless of whether or not 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.
  • 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 a HRA, the employer could offer a maximum incentive of $1,500 (30 percent of $5,000)

Smoking Cessation Programs

The final rule also distinguishes between smoking cessation programs that require employees to be tested for nicotine use and programs that ask employees if they smoke. 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 considered to ask a disability-related question.  Therefore, a program that does not require employees to be tested for tobacco use can continue to apply an incentive up to 50% of self-only coverage (which is consistent with HIPAA regulations as amended by the Affordable Care Act).  However, if an employer requires any biometric screening, blood test, or other medical procedure that tests for the presence of nicotine or tobacco, the rule’s 30 percent incentive limit applies to its lowest cost plan.