On Monday, May 16 the Equal Employment Opportunity Commission (“EEOC”) issued two final regulations providing guidance on how employer-sponsored wellness programs work with the general antidiscrimination requirements of Title I of the Americans with Disabilities Act (“ADA”) and Title II of the Genetic Information Nondiscrimination Act of 2008 (“GINA”). These rules were published in the May 17th Federal Register.
This blog post is designed to provide background information on wellness programs and the antidiscrimination protections of the ADA and GINA, to highlight the final regulations and note two action items relating to smoking cessation programs and tiered health plan benefit or cost-sharing structures.
What is a Wellness Program?
The term “wellness program” generally refers to programs intended to promote health and disease prevention and activities offered to employees as part of an employer-sponsored group health plan. Wellness programs may also be offered separately from as a benefit of employment. Wellness programs may ask employees to answer a health risk assessment, to undergo biometric screenings for risk factors, or may provide educational health-related programs that may include nutrition classes, weight loss programs, smoking cessation programs, or even onsite exercise facilities.
Health-contingent wellness programs may require an employee to satisfy some standard related to a health factor in order to obtain an incentive. These health-contingent programs may be either activity-only or outcome-based, requiring, for example, that an employee exercise a certain amount of exercise weekly or reduce their cholesterol level in order to earn an incentive.
Background on the ADA and GINA Antidiscrimination Protections
Title I of the ADA prohibits employers from discriminating against individuals on the basis of disability and generally restricts employers from obtaining medical information from employees. However, the ADA allows employers to inquire about employee health and authorizes medical examinations as part of a voluntary employee health program. This includes employer-sponsored wellness programs. Title I requires that all wellness programs must be made available to all employees, that reasonable accommodations must be made for employees with disabilities and that all medical information obtained through the wellness program be kept confidential.
Title II of GINA protects job applicants and current and former employees from discrimination on the basis of genetic information. It prohibits covered employers from using genetic information when making decisions about employment. GINA limits the circumstances in which covered employers may disclose any genetic information. Specifically, GINA generally restricts employers from requiring, purchasing, or requesting genetic information, unless one of six narrow exceptions applies. One such narrow exception applies when an employee voluntarily accepts health or genetic services offered by an employer, including such services that are offered as part of a wellness program.
The Final Regulations
A. Maximum Incentives Offered Under a Wellness Program
The final ADA regulation addresses the voluntary standard for health-contingent wellness programs that require individuals to satisfy a standard related to a health factor in order to obtain a reward. To be considered a voluntary program, the incentives offered with health-contingent wellness programs generally must not exceed 30 percent of the total cost of self-only health coverage. The regulations also clarify how to calculate the 30% limit on incentives offered to employees participating in health-contingent programs.
The final GINA regulation sets the same standards for spouses providing health information. That is, the value of the maximum incentive attributable to a spouse’s participation in a wellness program may not exceed 30 percent of the total cost of self-only coverage. This is the same incentive allowed for employees.
B. Notice Required Under the Regulations
The ADA regulation includes a notice requirement. For all programs that ask employees to respond to disability-related questions or to undergo a medical examination, an employer must provide a notice. This notice must clearly explain
(1) what information will be obtained,
(2) how the information will be used,
(3) who will receive the information, and
(4) the restrictions on disclosure.
Notably, the ADA regulation does not include a requirement that the employer receive prior, written, and knowing authorization for the collection of such information.
Though not available yet, the EEOC will provide a sample notice on its website that satisfies the necessary requirements of this regulation within 30 days of the publication of these rules.
The final GINA regulation does not include a notice or authorization requirement.
C. Confidentiality Requirements
Both the final ADA regulation and the final GINA regulation make it clear that the protection of confidential, individual information is a priority. The two rules state that information collected through wellness programs may be disclosed to employers only in aggregate terms. This aggregate disclosure must be in a form that does not disclose, and is not likely to disclose, identities of individuals.
Both rules also prohibit employers from requiring that employees or their family members agree to the sale, or waive the confidentiality, of their health information as a condition to participating in a wellness program or receiving an incentive.
D. Reasonably Designed Programs
Both the final ADA regulation and the final GINA regulation require that an employee wellness program must be “reasonably designed to promote health or prevent diseases.” This prevents an employer from requiring an overly burdensome amount of time for participation, using unreasonably intrusive procedures, or requiring employees to incur significant costs for medical examinations in connection with the wellness program.
E. Applicability Date
Both regulations are effective July 18, 2016. The final regulations are applicable beginning on January 1, 2017.
The provisions of the final regulation concerning the notice requirements and limits on incentives apply only prospectively to wellness programs as of the first day of the first “plan year” that begins on or after January 1, 2017. The “plan year” refers to the plan year of the health plan used to determine the level of incentive permitted under this regulation.
Action Items for Employers with Wellness Programs
For the reasons described below, employers should reevaluate their smoking cessation programs and any tiered health plan benefit structures.
Smoking Cessation Programs
Though the final ADA rule provides the general limit of incentives up to 30 percent of the total cost of self-only health coverage, smoking cessation programs may permit an incentive up to 50% of the cost of self-only coverage. In order to use this higher limit, the smoking cessation program must be structured correctly. The ability to use the higher 50 percent limit hinges on whether the program merely asks employees whether or not they use tobacco or whether the program is structured to actually test for use.
Programs that merely ask employees whether or not they use tobacco or have ceased using tobacco upon completion of the program are not considered wellness programs that include disability-related inquiries or medical examinations. As such, the incentive offered by the smoking cessation program is not capped by the 30 percent limit. Instead, these programs may offer up to 50 percent of the cost of self-only coverage as an incentive.
Programs that include any biometric screening or other medical procedure that tests for the presence of nicotine or tobacco are not afforded this higher limit. These programs are considered a medical examination under the ADA and are only permitted to provide up to the 30 percent limit as an incentive.
Tiered Health Plan Benefits and Cost-Sharing Structures
Employers sponsoring tiered health plan benefit and cost-sharing structures (or “gateway plans”) will need to reevaluate their plans in light of these final regulations. Generally, gateway plans base eligibility for a particular health plan on completion of a health risk assessment or biometric screenings. For example, gateway plans may allow employees who participate in a wellness program to enroll in a richer or more comprehensive health plan. The final ADA regulation clarifies that such plan designs are not ADA compliant.
Employers may still offer incentives of up to 30 percent based on participation in a wellness program. Thus, an employee who chooses a more comprehensive health plan and participates in a wellness program could pay less for the same comprehensive health plan than an employee who declines to participate in the wellness program. Eligibility, however, may not be denied based on participation in the wellness program.
Take-Away Action Items
Employers should review their smoking cessation programs to determine whether the program constitutes a medical examination under the ADA. If that is the case, the incentive offered must not exceed the 30 percent limit.
Employers should also review their group health plan eligibility rules and practices to determine if a tiered health plan benefit and cost sharing structure exists. If so, an employer will need to evaluate the plan to prevent discrimination in violation of the ADA by the January 1, 2017 applicability date of these regulations.